What to Consider When Choosing a Digital Bank

Introduction to Digital Banks

Digital banks are taking Nigeria by storm. Ever since the advent of the first digital bank in 2017, the concept of neobanks or internet-only banks has gained a lot of traction.

Digital banks should not be confused with online banking or mobile banking platforms. Neobanks have no affiliation with traditional banks. They do not have a banking hall or a physical branch which you can enter. But like their brick-and-mortar counterparts, they offer similar services one would get from a physical bank.

The difference between a digital bank and a physical bank is in the banking process. For digital banks, the entire banking process is online.

In the case of mobile banking or internet banking, these are not the same as digital banking because they are complimentary services offered by traditional banks. They allow users to perform some transactions remotely. Such transactions include payment of electricity or cable bills, fund transfers, and data subscription.

Internet banking requires mobile devices to have internet access before users can perform banking transactions. Usually, such transactions will be carried out using a mobile app. However, mobile banking takes an offline approach to banking with the use of USSD codes (Unstructured Supplementary Service Data).

Kuda Bank and Its Services

A famous example of one digital bank is Kuda bank owned by Babs Ogundeyi and Musty Mustapha. In 2018, an online saving and lending platform Kudibank, re-launched as the digital bank that we know today as Kuda bank.

Many people argue that Kuda bank is the first “real” digital bank to launch in Nigeria since it has no affiliations to a physical bank. However, Wema bank’s ALAT still holds bragging rights as the first virtual bank in Nigeria and Africa.

The bank prides itself on being the bank of the free, claiming that they are not like other banks that tie you down with ridiculous charges. To sign up for a free account, download the app from your app store. After that, they’ll send you a debit card at no cost.

Like most digital banks, Kuda is 100% paperless. You can open an account anywhere and anytime without paperwork. The Central Bank of Nigeria licenses the bank, so you can rest easy knowing your money is safe and insured.

Have you lost your ATM card? Not to worry, simply login to your app and freeze the card. This will render the card useless to anyone who has unauthorized access to it. If you find it later login to your app and unfreeze it. Voila, your card is working like it never left.

Finally, enjoy the bank’s top-notch customer service through its various communication channels.

What to Consider When Choosing a Digital Bank

Are there other banks like Kuda bank out there? Yes, there are. And if you are having a hard time figuring out which one to choose, this guide on factors to consider before selecting a digital bank will help you out.

1.     What You Can do with your Bank

Remember that neobanks are supposed to transcend traditional banks in all ramifications. Zero wait time that comes with long queues. 24/7 customer service for any problems you might encounter. And so on.

Is there any point in signing up with a virtual bank, that does not offer more incentive that the physical bank you have an account with? Your virtual bank should be precisely what the name states, a virtual bank.

You should be able to open an account, verify your details, make and receive payments, and so much more. Your virtual bank should be your bank in your pocket. And if it is not, then why sign up with them?

2.     Charges! Charges!! Charges!!!

We all know about them, and we all dislike them- bank charges. Those little inescapable debit alerts for inter-bank transfers, stamp duties, and the most annoying one of them all- card maintenance fees.

Some banks offer different account types where they may charge more or less. Some account types may not even attract any charges at all. But are you aware of how well each account type will suit your pocket?

If you are the type to carry out a large number of transactions, and you opt for an account with zero charges, how do you cope with knowing the account only allows a limited number of transactions?

3.     Multiple Payment Options

Even before the COVID-19 outbreak, many businesses had resorted to a cashless policy. There are also cases where we may not have the exact amount of money we need to pay for an item or service. In such a situation, what happens next? Do you rack your brain on how to pay or does your virtual bank offer multiple payment options?

A typical payment method is Point-of-Sales (POS). In the absence of cash, you should be able to use your virtual bank’s debit card to pay for goods. And what if the POS isn’t working? You should be able to make a transfer to the seller’s account. QR codes are another great way of making payments.

Whatever bank you sign up with, ensure they have multiple outlets for you to make payments, so you’re never stranded.

4.     Notification System

If any bank cannot guarantee near-instant notifications for your transactions, then you should reconsider being their customer. People need alerts to be sure that transactions that they carried out were completed successfully and recorded. And that scheduled transactions have taken place.

But more importantly, they notify us of when our accounts have been compromised. If someone gains access to your card details and attempts to make an online payment with it, it is expected that your bank will notify you of a pending debit on your account. And may ask you to verify that you are the one carrying out the transaction by providing an OTP.

Knowing very well that you made no such transaction, you can leverage the notification to contact your bank and have the matter investigated.

5.     24/7 Availability

Your virtual bank should be operational 24 hours a day, 7 days a week. Why sign up with a virtual bank that claims to transcend the issues you would most likely face with a traditional bank, that still operates like a conventional bank.

If you are someone who travels a lot, imagine getting to a country with a different time zone from yours. Upon getting there, you discover that your online bank does not let you perform transactions outside of business hours in your local time zone. Imagine how frustrating that can be.

Even traditional banks with complementary services such as internet banking allow you to carry out transactions from anywhere in the world, at any time. So why can’t your virtual bank follow suit?

Always find out that the virtual bank you’re interested in signing up with is available 24/7.

Top 3 Alternatives to Kuda Bank

1.     Mintyn Bank

Mintyn Bank is a relatively new virtual bank on the market. Mintyn Bank accounts are provided by Finex microfinance bank, a licensed bank by the Central Bank of Nigeria.

Like other virtual banks, this one removes the stressor of waiting in a long line. Not to mention, there are no hidden charges on your money.

Mintyn Online Bank easy interface allows you to recharge your phone, renew subscriptions, and transfer funds with the click of a button.

Banks with strict minimum deposit policies can make saving frustrating for users who want to deposit less than the minimum amount. Mintyn Bank has a flexible saving policy that allows you to save as it suits you.

Time is money, and customer care lines that are permanently flooded with calls make your wait time longer- and that costs you money. Having to contact customer care in the first place is frustrating but what’s worse is dealing with agents who can’t solve your problem.

Mintyn Bank’s 24/7 customer care service is staffed with trained agents who can always solve any problem you have.

2.      ALAT by Wema

ALAT launched in 2017, and until today is praised for being the first virtual bank in not just Nigeria but also in Africa. It was created with simplicity, reliability, and convenience in mind. When the bank launched, it immediately became popular with millennials and recorded over 250,000 customers within its first year.

The bank has received multiple awards such as “Best Digital Bank in Africa” “Best Mobile Banking App” and “Best Digital Bank for 2017.”

The bank may have affiliations with a traditional bank, but there is no denying that having a Wema account is not the same thing as having an ALAT account.

You can register on the ALAT platform using your mobile phone or computer within 5 minutes after downloading the application. Not big on apps? That’s fine; they also have a web app that allows you to use the platform online without downloading the app.

The mobile app interface is easy to navigate, and with it, you can perform more than the average banking app.

There are no hidden charges associated with using an ALAT account. They follow the CBN rate for all bank transfers.

When it comes to payment channels, asides funds transfers, you are also provided with a debit card that can be used for POS transactions. Customers request for cards in-app and get to choose their favourite card design. The first card is free and can be delivered to any Nigerian address free of charge.

The bank also provides other services such as loans, investment schemes, and discount deals on food, entertainment, and travel. One of the best features of ALAT is their virtual dollar card which allows you to make payments and receive money in dollars.

The notification system is commendable as they even inform you of every time you log onto the application. And most of the time, the system is always up and running.

3.     Rubies Bank

Remember what we said about annoying charges? Rubies bank does, and that’s why they offer zero-fee banking. The virtual bank is targeted at millennials, small-medium scale enterprises (SMEs), and even other fintech companies, as well as quasi-financial institutions.

Rubies bank takes allowing customers to take charge of their banking to another level. For example, customers are allowed to customize their account numbers- some people choose to use their phone numbers.

Like ALAT, they deliver your debit card to your address at no cost. But they took it a step further to allow customers to use their preferred name, including nicknames on their debit cards.

Two features that Rubies used to impress us enough to get on this list is its money request and proximity transfer feature. The money request feature functions as an invoice where you can send a payment request to someone, and they approve it for you to get paid. It’s that easy.

The proximity transfer feature depicts just how much Rubies is powered by advanced technology. Imagine being able to send money to someone based on their location. The feature functions using your phone’s Bluetooth to transfer money to someone.

Conclusion

Digital banks are an opportunity for Nigerian to take charge of their banking. No more hidden charges, long queues, and cumbersome paperwork.

Everything is made easy with the click of a button. However, like traditional banks, digital banks have their downsides. And that’s why you must know what to consider before signing up with one.

While this list of digital banks is far from exhaustive, we believe it gives you an idea of what we consider the top 3 digital banks in Nigeria.

If you’re looking for a bank that with robust services that allow you to carry out any type of transaction you can think of, ALAT is the way to go.

Whereas, people who want to avoid strict savings policies and bad customer service are safe in Bank with Mint’s hands.

Finally, for users who are more tech-savvy and interested in ditching annoying bank charges, Rubies is just a click away.

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