The banking sector is gradually continuing its metamorphosis. Faced with traditional banks characterized by a large network of bank branches. New players have appeared in succession: online banks, mobile banks and neo-banks. In recent years, online banks have forced their way onto the banking market and the African continent is not left out.
The first online banks appeared on the market about twenty years ago while traditional banks were born almost hundreds of years ago.
But what exactly is internet banking?
A bank is a company authorized to receive funds from the public, issue and administer means of payment, collect savings and make loans.
But as the name suggests, an online bank is a bank that is present on the internet. Online banks are distinguished by their fully dematerialized services. That is, they do not have physical establishments like traditional establishments. Exchanges with customers happen entirely via email, chat, telephone, social networks, etc. These services respond more or less depending on the online banks.
This type of bank establishment is therefore reserved for individuals who are autonomous in the management of their accounts and who do not require specific assistance in their procedures.
So how does an online bank work?
Before opening an account with an internet bank, it is important to understand how it works. This is because the operation of an online bank is not quite similar to that of a brick-and-mortar bank in terms of the pricing system, eligibility requirements and also in terms of customer support.
Online banks do not have physical branches to receive customers like traditional banks. To this end, all banking services are performed online: i.e. all its services are completely dematerialized. All you need is a device connected to the internet (computer, tablet or smartphone) to take advantage of this.
From opening an account to taking out a loan or savings account, including requesting information about any problem. All daily operations take place via the online platform. With an online bank, the procedures and formalities are much simpler. In general, opening a bank account with an online bank does not cost any setup fees.
Even if most online banks do not have physical branches, they all offer services intended to compensate for a possible shortcoming such as:
• A website and mobile applications optimized to meet the daily needs of customers. Both on a computer and via a smartphone or tablet.
• More flexible contacts via phone, email, chat, video conference and social networks.
• Solutions adapted to all circumstances such as depositing cash or checks using the post office services or via bank transfer.
Customer service at online banks is very strict and competent as it has to answer all questions from customers.
Online banks are ideal for independent customers. Their growth is explained by low costs and a number of free services such as free bank accounts and bank cards and a recommendation system that is very effective.
However, an online bank still has staff (e.g. client advisors, portfolio managers, financial analysts, etc.) but in significantly smaller numbers compared to that of a traditional bank. This is also one of the reasons why the rates charged by online banks are relatively cheaper.
Which banking products are offered online?
The range of online banking products meets most customer needs. To better understand how an online bank works, you need to know the different banking services and products it makes available to customers.
Indeed, the majority of this type of bank markets a wide range of products and services comparable to traditional branches namely:
• The bank account: individual or joint
• Payment methods: bank cards, checkbooks, virtual cards, etc.
• Regulated and unregulated savings accounts
• Life insurance
• Exhibition products
• Credit offers: personal loan or mortgage, etc., even if these offers are not necessarily offered by all online banks.
Signing up with an online bank is very simple. You just need to connect to the desired site and follow these few steps:
• Choose the bank offer: an individual or joint account
• Fill in the special form
• Download the obligatory supporting documents: identity card, proof of address, etc.
• Activate your digital account
• Make the first mandatory minimum payment
• Activate your credit card
Some examples of online banks
Online banks are usually subsidiaries of traditional banks. To take France’s example, the vast majority of online banks belong to large traditional banking groups. This shows that in addition to the fact that only the services are dematerialized, these online banks are reliable players in the banking sector and that their performance is based on the expertise of their parent company. Let’s name a few such as:
• ING Direct: belonging to the Dutch group ING. It specializes in banking and insurance
• Boursorama: the online bank Boursorama is a subsidiary of Société Générale
• Fortuneo: the parent company is Crédit Mutuel. She also specialized in the stock market
• Monabanq: belonging to Crédit Mutuel-CIC: Monabanq. It differs from other online banks in their customer focus
• HelloBank: owned by BNP Paribas
• B for Bank: B for Bank is owned by Crédit Agricole
The benefits of internet banking
As we know, traditional banks have a network of branches that pose a significant burden to these banks: payment of thousands of employees, maintenance of numerous real estate assets, computer equipment, etc. However, online banks do not have to bear this burden. Their structure costs are reduced, and this advantage is passed on in the pricing of services. This is why online banks often offer cheaper rates than traditional banks. Because these remote banks do not have a branch network, which is a significant burden for traditional banks that have to. The structural costs of online banks are thus reduced, and this advantage is passed on to the pricing of the customers.
Direct banks focus their investments in IT tools and innovation to optimize customer relationships. So direct banks don’t have to hire a substantial payroll.
In addition, online banks offer attractive interest rates for savings accounts and promotional offers such as several tens of euros for opening online savings accounts or current accounts.
They also use the partnership card to motivate customers to open an account by, for example, offering shopping vouchers on the Internet and by promoting them.
Moreover, opening an account with an online bank can become a way to earn money. This makes it possible to receive bonuses instead of paying bank commissions. Such as welcome bonuses or sponsor bonuses by offering money to the sponsor and to the new customer.
Médiatrice NKURUNZIZA
