With new digital-only bank accounts are being opened in there millions every month globally how are people choosing which ones to choose? In the US alone there are over 40 that offer some form of checking account. Competition is as fierce here as amongst the conventional banks and that can lead to some bad behaviors.
To help you, dear reader, here is our guide on how not to choose a new digital bank:
- It’s for the kids
- Our app is so cool
- You have to do X, Y, and Z (in that order)
- Bait and switch (a classic)
- We have a metal card!
- Get $XXX when you sign up (a favorite of the more upscale traditional banks)
If you avoid all these you are doing pretty well and we wish you all the best with your new banking partner
- It’s for the kids! We are changing the way the world does X! Saving the poor, helping the infirm etc.
Your response should be: so you are a not-for-profit? oh, for profit. Then you will give away all your equity to the world’s orphans? oh, you won’t be? that’s all great then but how much more will I make with you than anyone else? WIIFM?
- Our App is so cool!
Your response should be: honestly, I don’t care — show me the money, your swanky app features don’t pay me squat
- You have to do X, Y and Z e.g. minimum number of debit card transactions per month.
Your response should be: I get why this is important for you but it’s your problem and don’t design your value proposition by spreadsheet. If your product is not sufficiently compelling or a good fit for me lets all be adults about it and tell me upfront.
- Bait and switch — 3%, 4% up to 7% (all real examples)
Your response should be: comparing yourself to the standard bank’s rate (a headline like 20x or 40x higher than Chase etc.) is a red flag. This better not be limited e.g. apply to the first $X, or require me to do things like visit your app every day, or introduce hundreds of people to your service or have a cap. (pretty much-guaranteed anything over 1.8% for a non cd/savings account has all of these and more).
- We have a “metal” card!!
Your response should be: WTF — since when did I choose my financial services partners by weight.
- Get $XXX when you sign up
Your response should be: do a spreadsheet, work out what the minimum deposit is and how much interest you would be earning on that elsewhere — chances are near 100% this is a zero or near zero checking account — they are giving you a fraction of what they may from your deposit and assume you will be with them for years. Don’t take the penny and give up the pound.