What is an app-only bank?

The widespread use of smartphones and tablets has led to the digitization of many services. Now you can shop, pay your bills and even bank by only using your smartphone. Just like cash machines negate the need to visit the branch during open hours to withdraw money, the Internet is challenging the assumption that we need bank branches on every street corner.

The demand for safe, secure and convenient banking, mixed with the capabilities of modern smartphones has not only pushed banks towards rolling out their own banking apps, but also saw the emergence of digital-only banks. Banking is changing before our eyes.

What is an app-only bank?

App-only (or digital-only) challenger banks offer accounts that are set up and managed solely via an app on your smartphone. They belong to the financial technology (fintech) sector as they don’t have costly branch networks or vast call centres to maintain, but it’s all about the app. With its emphasis on convenience, mobile-only banking is becoming increasingly popular, with an emphasis on real-time balance information, biometric security, simple money transfers, and predictive banking.

App-only banks allow you to easily move money between accounts, check balances, pay bills, apply for loans and mortgages, and many more, all available at your fingertips. They give you the convenience to access your accounts on the go and to make secure payments from your smartphone. Unlike traditional banks, app-only banks are available at any time of the day.

Some of the most popular digital-only banks like Atom, Monzo, Starling and Tandem, have already attracted a great number of customers globally.

How secure are they?

Today a bank’s biggest asset is not the money it holds but the data of its customers. App-only banks provide an emphasis on personalized customer services, including greater transparency around where your money is going.

Banks which are regulated by regulatory bodies are considered safe. Each country will have its own financial regulators so do check your online bank is covered if you’re interested in opening an account.

How safe are online-only banks also depends on the user. One important key to protecting yourself online is to make sure your username and password are secure. Stolen passwords are at the root of the problem with online banking security, and Internet security overall. That is why a second authentication factor, such as finger-print, is a strong security measure. Most app-only banks feature two-factor authentication, which gives an assurance of their safety. The Biometrics Institute has been working to promote the adoption of biometric technology since 2001, highlighting its convenience and security. Today, many banks are already using biometrics like fingerprint, facial and voice recognition and iris scan, to ensure a secure and easy access to their online applications.

And finally, we’d recommend to not access your app-only bank while using a public Wi-Fi because such connections are not always secure, which means that you might be exposing your personal and financial details to threat.

We have created a checklist of warning signs to look out for when banking on your mobile.

Do you have any questions on what app-only banks are and how secure they are? Let us know by commenting below or tweeting to us @JustAskGemalto.