The microfinance sector has witnessed one of the most disruptive changes in the past decade. The introduction of fintech like Revolut and Cash App, cryptocurrencies, and even revolutionary banking systems such as mobile and online banking have contributed to the numerous options available today.
The abundance of options can be categorized into mobile banking apps, cryptocurrency banks, and traditional financial institutions. A significant portion of the population has accepted the paradigm shift to recent financial developments that provide flexibility and efficiency. So what are the significant differences between traditional, mobile, and crypto banking? Let’s have a look.
Mobile Banking Apps
M-banking requires the use of smartphones. A good example of a mobile banking app is Cash App. Such apps have become popular over time because of their efficiency, eliminating the need to walk into a physical bank to access funds.
Mobile banking allows users to make payments through their phones to multiple outlets efficiently.
- Availability 24/7
Mobile and online banking provide 24-hour access to funds, which gives users the desired financial flexibility like Revolut fintech.
- Real-time service.
Mobile banking is instant as it utilizes top-notch banking technology that allows the system to serve multiple clients simultaneously without having to queue.
- Account securities: Banking apps are prone to hacking, which could lead to loss of deposited funds. The top security issues are worthy of being known.
- Transaction fees: The convenience provided by mobile applications often translate to higher transaction fees.
- Technical delays: Regular technical maintenance could cause payment delays to customers unaware of the scheduled maintenance.
Commonly known as Special Purpose Depository Institutions (SPDI), cryptocurrency banks are financial institutions that accept cryptocurrency deposits. Most of these financial institutions are traditional financial firms, which have yielded to the need to accept cryptocurrencies as a store of value and currency.
The cryptocurrency market has continued to increase over the years, and many traditional financial institutions cannot ignore it. Before the infamous bear market, the crypto market had a total market cap of over $2 trillion, drawing the attention of top financial institutions like JP Morgan, Barclays, and Goldman Sachs, which are all crypto banks today.
- No maintenance fees – Holding cryptocurrencies for prolonged periods do not attract any further fees as opposed to traditional financial institutions that charge monthly fees.
- Privacy – cryptocurrencies can be owned anonymously. It provides privacy to users who do not wish to be identified.
- Flexibility of money transfer – Interoperability was one of the fundamental challenges of blockchain technology; however, today, nearly all cryptocurrencies can be transferred seamlessly across multiple networks.
- Crypto volatility – According to Coinbase, holding cryptocurrencies is a great investment but still risky since the value of each token changes continuously. Holding one BTC in a crypto bank could mean your cash value fluctuates as the price of BTC changes.
- Gas fees – Transferring cryptocurrencies from one address to another often result in high gas fees, making it less convenient.
Traditional Financial Institutions
Conventional financial institutions continue to exist and are critical participants in the financial sector. Arguably, these institutions handle the most significant portions of fiat currencies and provide unique experiences that make them extremely useful.
The traditional financial institutions provide direct human interaction and offer services to users over the counter in specific locations. These institutions provide unique experiences with distinguishable pros and cons.
- Security: These institutions have secure systems with reduced exposure to risks than mobile banking.
- Bulk transactions: Through traditional banks, one can make bulk transactions easily.
- Personalized services: The over-the-counter human interaction allows personalized attention to solving unique customer needs.
- Time-consuming – Queueing consumes time and slows down service delivery.
- Fees – Traditional financial institutions often charge monthly fees for account management.
Traditional and modern banking solutions discussed above have unique merits and demerits, and the best solution depends on one’s financial needs. Combining these financial solutions can provide users with an optimal banking experience.
Additional Resources on Mobile Banking:
- Differences of Traditional, Crypto, & Mobile Banking
- List of Free Top Mobile Banking Apps For iPhone (iOs)
- Where To Get A Metal Credit Card like Apple Pay
- Scotland Bank Made World’s 1st Mobile Banking App
- Top Security Issues in Mobile Banking