SELECTING AN ONLINE BANK

More and more bank customers are using online financial-service providers. Online-only (digital) banks provide traditional financial services in an online format.  FinTech companies (neobanks) offer innovative banking services with an emphasis on emerging technology, often through apps.

When deciding which online bank to use, consider these factors:

• FDIC Insurance, Federal Deposit Insurance Corporation (FDIC) covers deposit accounts against bank failure up to $250,000 per depositor and type of ownership category. To determine if a bank is protected by the FDIC, go to https://banks.data.fdic.gov/bankfind-suite/bankfind
• Fee-free ATMs, to avoid costly charges. Many online banks have an extensive network of ATMs, while others do not have ATM access.
• High-yield savings accounts, with lower operating costs many online banks offer savings accounts with higher yields. Be sure to compare the rates, rules, and regulations at various online banks, such as the required minimum deposit and minimum balance. 
• Multiple banking products, depending on your goals and needs, you might choose a bank that offers an array of financial services–checking, saving, CDs, debit card, ATMs, credit card, and loans.
• Financial management tools, FinTech apps and online banks offer innovative financial planning tools to help you save money, such as with a round-up savings component, automatic savings deposits, and low-cost investment funds. Other apps include features for achieving goals to pay off debts or save for a vacation, or savings based on your spending patterns.
• Investment guidance, robo-advisors provide portfolio suggestions based on financial goals and risk tolerance with the use of artificial intelligence. 

For additional information on selecting an online bank, click here.

Teaching Suggestions

• Have students talk to others to learn about factors that were considered when selecting a bank or other financial-service provider.
• Have students create a visual proposal (poster, slide presentation, or other format) to highlight the main factors to consider when selecting an online bank.

Discussion Questions 

1. What online banking features could help a person improve their financial position?
2. Describe actions a person might take to select an online bank.