7 Reasons Why Digital Banks are the Next Big Thing for Small Businesses


Banking used to be a time-consuming activity. Now digital banking has transformed the traditional world of banking. A digital bank is essentially an online bank without a physical presence. However, they can have video banking machines and service terminals at different locations, where customers can contact service agents.

Digital banks provide an online platform for all bank-related activities offering all the services provided by a traditional bank. You can avail any of these services 24/7 from the comfort of your home over the internet. Digital banking also eliminates paper use, making it an environmentally-friendly alternative.

The easy access to information and finances with a simple press of a button is valuable for a busy entrepreneur. Small businesses are privately owned companies with fewer employees and lesser revenue. They need efficient digital solutions for their banking procedures. It is critical for a small business to have an efficient banking system to grow and maintain its business. Digital banks offer special digital tools to small businesses to help them handle their business-related finances conveniently, securely, and cost-effectively, hence making digital banking a sought-after digital service by small business owners.

If you’re a small business looking into a digital bank and having trouble making a decision, a Digital supermarket provides you with an overview, comparing various features of several digital banks along with their prices. It can assist you in choosing a bank that meets the financial needs of your business.

This article is an in-depth analysis of the various digital banking benefits that can help small enterprises grow and persevere.

1. Data-Driven Advice

Digital banks collect and interpret financial data using artificial intelligence and provide valuable insights to entrepreneurs on how to improve performance. For example, the trend analysis may suggest ways to effectively manage inventory or may recommend investment in an inventory management system.

2. Enhanced Security

Threats exist everywhere, even in digital banks, which can either break down or get hacked. However, digital banks use modern technologies that add extra security layers. These improved safety measures protect data and minimize cyber threats. Some of the safety measures taken by digital banks may include;

  • A biometric authentication to log in
  • The bank may ask for additional verification if it recognizes a login attempt from an unknown device
  • Allowing you to set up multifactor authentication for your digital bank account

As an entrepreneur, you may need someone else to manage your finances from time to time. A digital banking system allows you to customize your account access. It allows you to share specific bank details with select employee logins. Hence, increasing the overall security of your company.

Additionally, you can also take several measures to improve the security of your account. For example, make sure that your digital bank has been insured by Federal Deposit Insurance Corporation (FDIC). It will cover you for losses up to $250,000 per bank. You can create strong usernames and passwords and learn to spot scam emails and fake websites.

Since digital payments and e-wallets are considered a more secure option, digital banking is safer for small businesses.

3. Performance Measurement

This feature of digital banks helps you keep track of several performance metrics like the revenue growth of your business. It also keeps track of your company’s real-time financial data to assess its financial performance. Then compares it with your competitors in the industry and may provide you with valuable insights and advice.

4. Convenience

Digital banks are always open and provide you with worldwide access to your account. You can easily take care of all your bank-related tasks anytime from anywhere in the world. Digital banking can be a real-time saver for a busy entrepreneur like you as it helps you deposit checks, transfer funds, check your balance and take care of all your bank-related tasks from anywhere in the world. Some digital banks help you effectively manage your business by setting up a text alert system for your business account to track your company’s payments and notify you in case of a low balance. Instant access to your business account gives you more control over your finances. You can easily log in to your digital bank on your laptop or phone to view your company’s balance, statements, and transactions. It also allows you to transfer funds between your personal and business account.

Several traditional banks offer similar services but they can’t provide those services on the go. Therefore, small enterprises can benefit a lot from digital banks.

5. No Additional Costs

No fees are one of the biggest differences between traditional and digital banks. Traditional banks charge a wide range of costs like late fees, minimum balance fees, check-related fees, debit card fees, and over-limit fees. The reduced manual labor in the digital banking system minimizes bank processing costs. With low operating costs, digital banks do not charge small businesses additional fees. Therefore, digital banking can help small enterprises to save up money.

6. Direct Loans

Digital banks offer small loans in a self-serve digital channel. They specifically allow small businesses to apply for loans to stay afloat. With a business account, you can easily log in to your account and apply for loans that your company is qualified for. Additionally, you may accept pre-approved loans. Small business loans are processed within minutes and maybe deposited within 24 hours. It is a beneficial initiative for small businesses.

7. Phone Check Deposit

Digital banks allow you to deposit checks through your phone. For depositing a check, follow the instructions of your digital bank. Easy-to-follow instructions will be visible on your screen. The bank will indicate the amount you can deposit in one day. It will also inquire about how fast you want your fund to be deposited.

You may be able to access your funds instantly for an additional fee. Mobile check deposits are a convenient alternative to going to an ATM.

The Bottom Line

Digital banking is the future. It is going to be the next big thing for small businesses because of its various benefits. It helps entrepreneurs maintain better control over their finances by providing them with the tools that a traditional bank may not offer. Digital banks understand the banking requirements of a modern business and deliver a comprehensive banking experience specifically designed for a particular company. They realize the power of big data and use machine learning and data analytics to become true business partners to their small business customers.

Small businesses are also recognizing these benefits and are willing to shift to digital banking for their several uses. More and more digital banking platforms are popping up, advancing their technologies, upgrading their features, and offering a better banking experience. Hopefully, this article can help you understand why digital banking is a better banking option for your small business.

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