Mobile-first banking:
Pros and Cons

Whether we like it or not, the traditional banking landscape is now a thing from the past. No longer is a banker an old man in an expensive suit spending their day in a high-rise office building somewhere downtown. And just like that, you can enjoy a long-term mutually beneficial relationship with a bank without ever visiting one of the branches or even speaking to any human beings at all! Is this a good thing or is it the beginning of the end of personal finance as we know it? FintechCompass investigates.

Mobile banking can be done on a tablet as well

Benefits of mobile-first banking

  • Saving time. Not ever having to go to a branch for something that could easily be sorted out online is definitely something you will not miss after switching to online-only. Besides, in-app chat for support beats listening to infuriating music while hanging on the line, that's for sure.
  • Convenience. Funnily enough, countries that developed their banking systems at a later date (like China or Russia) are now ahead of Western EU countries in terms of mobile payment adoption. In these countries, people only really need their cell phone to go about their day-to-day, performing all transactions via Google Pay or Apple Pay.
  • Eco-friendliness. Not having dozens of printed out agreements and contracts doesn't sound like a big deal, but becomes one when you consider the fact that almost every person and business on Earth has a bank account (or even a couple!).
  • Customer support available at all times. Sure, having a person to talk to face-to-face might seem like a huge benefit, but being able to message customer support at night even when you're out of town (or even country!) is just too good of an option to pass up.
  • Faster evolution of services. Partially due to their smaller scale, partially because of having to compete from behind, challenger banks are quicker to adopt new technology and more willing to expand their networks of partners.
  • More transparency in fees. Contrary to popular belief, these banks are doing their best to earn consumers' trust. Part of these efforts is being crystal-clear in pricing rules. Less fine print, more transparency - what's not to like?
Mobile banking can be done on a phone or via desktop apps

Downsides: Are there any?

  • Unavailable offline. Only a few neobanks offer "offline" customer support, so losing your phone abroad can lead to a very stressful experience.
  • Face-to-face is not an option. If you're one of these people who prefers having a dedicated account manager to reach out to in case of concerns, you might not like the impersonal approach of the digital age.
  • Security concerns. While it's not a disadvantage of these banks specifically, you can get punished by criminals if you prefer to auto-fill your passwords and have no fingerprint nor PIN code enabled on your phone in case you lose it!
  • Pushy marketing tactics. Just like these banks like adding features, they also absolutely love to update their users about everything! Needless to say, being bombarded with emails and notifications from the app can easily get annoying after a while. Fortunately, these can be turned off at any time.
  • IBAN Discrimination. Despite being illegal, European companies frequently require their employees to have a local bank account. For example, an Italian fan of the Dutch bunq bank with an NL account number might face pressure from his employer's payroll company. Yes, it rarely ever happens and yes, it's illegal, but we still felt like it should be mentioned.

Is mobile banking a good choice today?

Despite their benefits (and, of course, numerous pitfalls!), mobile banks are entering our life full-swing - you can see that by just following some of the bigger banks' (for example, Revolut's) annual reports - some of them boast up to 300% year-on-year growth! This means that they are already severely impacting the landscape of banking. So even if you did not intend to try them out yourself, chances are, you would still feel their impact - "legacy" traditional banks are now pushed out of their comfort zones and forced to compete in a modern borderless digital-first environment. The impact of increased competition, combined with the new rules of the game brought to us by the COVID-19 pandemic, result in banking veterans facing new demands from the consumers. People now expect total control over their money, clear and transparent pricing and flexibility in the range of products offered by the financial institutions.

Overall, it is a very interesting time in the industry when old-timers like ING, Barclay's and Chase are now forced to adapt or start slowly bleeding customers. And - as we all know - it never hurts to introduce some competition to a swamp that banking became in the last decades. "Get on with the times or face extinction!" might as well become the tagline of aspiring challengers popping up all over Europe.

Fintech Compass - Your financial navigator