What are digital banks: how do they work and who are the biggest names in the market?

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What are digital banks: how do they work and who are the biggest names in the market?

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Digital banks are primarily online financial institutions, which offer common banking services, but do not have physical branches and maintain customer service and relationships through digital channels or by telephone. This business model is increasingly common and its popularity generates curiosity and more and more research on what are digital banks?

We are currently monitoring not only innovation in the means of payment, but the total revolution of the financial market and its relationship with consumers.

A clear example of this is the popularization of digital banks in the country and around the world.

In Brazil, they are still new – they were regularized in 2016, only through the National Monetary Council (CMN). Since then, many changes in financial products and services they gave a breath to the sector, as a whole.

To know what are digital banks, how does it work and what are the biggest digital banks do Brasil, we invite you to continue reading this post!

In the topics below, we will understand better about these companies and the reasons why millions of consumers are already opting for them!

What are digital banks?

Perhaps the term fintech is now more familiar to you. After all, digital banks were born by that term – startups that focus on the financial market, exclusively.

In general, they are institutions that share some characteristics in common, regardless of their specialization niches, such as:

  • companies primarily online, without a physical agency;
  • independent of the use of ATMs – outsource the service to independent ATMs;
  • centralizing figures, such as the bank manager, cease to exist as well;
  • customer service and relationships are handled by digital channels or by telephone.

There are also other questions about what digital banks are, which we will discuss later, and which bring even more popularity to this model of institution, especially when compared to traditional banks.

What are digital banks

Digital banking: how does it work?

In addition to the characteristics that we have presented above, digital banks differentiate themselves by seeking continuous innovation, creating a structure in stark contrast to traditional banks – even if they are digitalizing more.

For example: a digital platform and applications with interactive channels are not enough to turn the country's oldest institutions into digital banks.

As we have seen, the entire infrastructure of this company model is based on the online universe – physically, inclusive. There are no agencies, for example, as we said.

Other interesting points that can be highlighted in relation to digital banks are:

  • the presence of the account holder is not necessary. Even to open an account, documents and information are captured digitally;
  • banking inclusion is a collective goal of this type of company. One in three UK citizens does not have a bank account, and this can change with the reduction of bureaucracy and ease of access promoted by these companies;
  • specialization in a few (or just one) services shows the care to become a reference in its sector, unlike traditional banks that offer dozens of products and services.

Another point of attention about what digital banks are: they have already impacted the sector. Currently, there has been a 147% growth in the number of companies of this type in the country. Clear sign that the consumer has absorbed the benefits pointed out by these institutions.

To know a little more about them, we recommend reading the article, “Meet the 11 largest fintechs in Brazil”. Enjoy reading it as soon as you finish this post 🙂

What are the largest digital banks in Brazil?

Now that we have seen the main characteristics of these companies in the financial sector, how about we get to know some of the names of the best digital banks in Brazil and get to know the institutions that have made a difference in the country, attracting thousands of people?

The largest digital banks in Brazil are:

  • Nubank;
  • Inter;
  • Neon;
  • Original;
  • Agibank.

Next, read more about each one.

Nubank

Nubank's initial success is explained by the innovation in offering a credit card with no annual fee – something that many consumers complained to exhaustion with traditional banking institutions.

With its growth, the company has developed new methods to reduce bureaucracy in the relationship with the consumer, such as opening a checking account with no maintenance fee or costs for transfers between banks.

Banco Inter

Born out of what Banco Intermedium was, Inter emerges as one of the first digital banks in Brazil.

Compared to Nubank, he also does not charge:

  • maintenance fees;
  • withdraw from ATMs;
  • transfers between different institutions.

Neon

One more, among digital banks, that does not charge annual fees or monthly fees from its customers – however, there are services that can be paid by customers.

That's because Neon allows free of charge only for the following services each month:

  • first serve;
  • first transfer;
  • first deposit by boleto.

Thus, those who use these services more than once, per month, have to bear the expenses and fees related to each one of them.

Original

In addition to behaving like a digital bank since its structure, Original has a differential that few companies have worked on today, and it is a trend in constant expansion: the cashback.

For those unfamiliar with the term, it is a program in which people accumulate points when making purchases on the card and then, can convert them into credits on their own account, next month.

Agibank

Agibank also offers the opening of a current account at no cost to its customers, but has been betting on the diversification of its service portfolio. Some examples of this:

  • investments in CDB (Bank Deposit Certificate);
  • consortia;
  • insurance;
  • loans.

Another interesting point is that the digital bank allows account holders to receive their wages directly in the current account. An attractive one for those who want to save money in their relationship with financial institutions, making their money pay off.

How to use the new payment methods

Digital banks are not the only novelty in the digital financial market. On-demand pay is one of the business models that are part of the future of payment methods in Brazil. A future that is already present, in fact.

On-demand pay is the possibility to make your employees request the balance of days already worked when they need or wish, quickly and efficiently.

Through the on-demand salary, employees no longer depend on fixed dates for receipt days worked and this is an important benefit to maintain the financial health and productivity of employees.

It is worth mentioning that this model has been widely considered, throughout Brazil, as a way of innovate corporately without changing the payroll.

The future of payment methods in Brazil has already arrived for HR Consultant UK! Like HR Consultant UKy, people have access to their wages balance when they need it. All through an application which transfers, in a few hours, the amount to their respective bank accounts.

And, the best thing: without changing the financial routine of your company in any way. We have an article that explains exactly how it all works! To find out more, take a look at everything you need to know about HR Consultant UKy!

So, did you get to know a little more about digital banks and how they offer services and products more easily to your customers? Now, if you have any questions about the subject, or want to share your experiences with us, leave a comment in the field below!

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