Written by Kady Potter
Posted on 18/06/2014

The next step in alternative business finance: alternative banking

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Digital and online banking methods have been slow to catch on, compared to the headway made other industries and by even the very businesses those banks serve. The tide may finally be turning, evidenced by the introduction of new, pioneering online banking facilities and more Smartphone app compatibility.


A digital revolution that passed banking by
The internet caused a shift in consumer behaviours and business practices in almost every industry. However, banks have remained much more immune to the change in tide and have clung to non-digital methods of operation. Cheques, as an example, weren’t withdrawn in Poland until as recently as 2006 – Finnish banks stopped issuing them in 1993, and in the UK they aren’t being phased out fully until 2018.

Innovators must disrupt to make industry adapt
A growth in the visibility and popularity of banking and other services wholly online or via an app has in part been attributed to the success of taxi cab app Uber.

Analysts have been looking at the Uber business model and evaluating whether it could eventually be applied to the financial sector. There are no significant overheads, such as for physical facilities, and it deliberately sets out to disrupt the monopoly held over a particular industry. Consumers are crying out for choice, and an alternative, simpler banking service would deliver.|

Businesses save time and money through online banking
GoBank is being hailed as the first fully online bank, specifically created for Smartphone users. It has been established by Green Dot, the biggest provider of prepaid debit cards in the US, and is designed to be ‘mobile first’ with apps for iPhone and Android.

As news and media blog Mashable explained: “GoBank has also eliminated some of the most derided aspects of traditional banks, including overdraft fees, minimum balance requirements and overly complicated fee disclosure forms.”

The business benefit is primarily time. The need to take time from a working day to visit a bank branch or pay a bill at a participating store is eliminated. Account details and transactions are available instantly without having to wait– no queuing, no filling out forms and no delay in receiving statements.

A focus on security and convenience will improve the service
Many big banks already provide account holders with a mobile app to check their balance, make payments and view other information. The difference is that the bank itself still has a physical or high street presence and retains more traditional methods of operation.

For businesses concerned that a solely online facility presents a risk to account security, one reassurance is that, in the majority of cases, using a Smartphone can be more secure than a standard desktop computer. Viruses and malicious software are still primarily targeted at computers, and users who are careful as to which apps they download should remain protected. Banking via an app is a quick, safe method that can be accomplished at a desk, on the commute or during a break in meetings.