What Makes a Good Bank in 2024, According to a Banking Expert
Written by
Nicole Spector
Edited by
Nick Friedman
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Online and digital banks aren’t exactly new. They date back to the mid ’90s, in fact. But with the booming rise of technology and the growing consumer demand for web and mobile convenience, the presence of these types of banks is rapidly expanding.
That means consumers have more choices than ever. So what exactly makes a bank good in 2024? What should customers expect?
We sat down with Andrew Harris, managing director, head of product, marketing and customer at Jenius Bankᵀᴹ. Launched in 2023, Jenius Bank has since become a standout in the industry with its impressive APY¹ on savings accounts.
We talked to Harris about Jenius Bank’s offerings and philosophy, his takes on trends for 2024 and what customers should expect from a bank in 2024.
How do you see the digital banking world evolving in 2024?
“Some of what we’re seeing is a continuation of what the pandemic accelerated in 2020 – an increase in digital services in general.
Real-time payments in the U.S. are still significantly behind other parts of the world, and in terms of speed of payments, we’re somewhat dated compared to Europe. We strive to make progress there, as well as in giving more data to customers. We’ve seen only a select few banks make a big effort to empower customers with more of their data.
In all, I expect a continuation of the improvement of services. AI and machine learning will help. Banks have an enormous amount of data – almost too much data. Now, with these tools, it is easier to truly help customers really deep dive into their patterns and trends to find value in how they’re spending their money.”
What are some unique advantages to using a digital bank?
“It begins with the cost structure and nature of a digital bank. Because these banks have lower operational overhead costs (no physical branches, less paper-based communication, etc.), you can pass that effective savings back to the consumer. It’s a value exchange: ‘Hey, we don’t have a branch; we’ll give you better pricing.’
I have worked for both branch-based institutions and digital institutions, and when a bank doesn’t have a branch to fall back on, it requires them to develop a strong appreciation for all aspects of the customer experience and a deeper understanding of the friction they face with phone, web, and mobile app interactions.
Digital banks have gotten much better at phone as well as online [services] – when sometimes they were kept separate. There’s better alignment with those services, and the data exchange there is much better, too. So if you’re struggling online, you make a call; they’re better able to help you than 10 years ago.
Additionally, during the pandemic, customers learned that their pretty regular banking activities can be done digitally.
Finally, for a branch-based institution, it’s hard because you’re trying to make sure all your channels are really good. You have to spread your investment and focus. We know our customers choose to bank digitally, so we’re all-in on making sure our service is better than anything else they can get.”
Jenius is backed by a real bank and isn’t a ‘neobank’ – can you explain the difference? And the advantages?
“As for real banks versus neobanks, we have a blog on that. I am not here to advocate that real banks are better than neobanks, but there are several differences. The largest difference is the lack of a banking charter. This doesn’t mean a particular neobank isn’t offering FDIC-insured saving, but that is something to check.”
Jenius currently has an impressively high APY of on its Savings Account. How is that possible, and how might this APY change this year, not just for Jenius, but for all digital banks?
“As a new bank, paired with a well-established one, we can be more aggressive with pricing.
There are predictions that the Fed will not increase rates and may start dropping them toward the end of the year. The market gets ahead of that. So, brokers’ deposits will drop in price, and that drives changes in digital pricing.
Normally some of the big banks move. That starts the rollercoaster of competitive pricing within your market in terms of deposit-account pricing versus other funding sources for banks.
It’s awesome that the design of Jenius Bank allows us to give such a great rate. We also offer personal loans with very competitive rates as well.
Our brand is very young and has not reached a point of mass awareness, so to be competitive with well-known banks, we plan to price aggressively.
We will always look to give the best rates available and the aggregators track for that. We won’t be doing a lot of rate fluctuation, unless it becomes unaffordable.”
When considering a digital bank, what should customers seek, and what should they steer clear of?
“Digital aggregators are so prominent and do a great job at summarizing a bank. It’s really easy for customers to get quick information, especially on rates. But customers also want to visit the website and learn more about what is important to that bank and how they want to interact with you.
Simplicity of product design is also important. What fees are being called out? Do you get a sense of this as a good rate but see there are some rules attached? Is this a teaser? In the last few years, we’ve seen a lot of banks offer introductory rates or cash bonuses. These offers may look attractive, but how long will they stay that way?
Customers should look a bit into what the bank is talking about in terms of: Do they see you as a human or as an account holder? Is the bank saying, ‘We understand you as a customer and your life goals, and we are here to help you?’ Some institutions really just promote the product.
Watch for fee structures. Depending on the nature of the bank, some may depend on fees for revenues. Loans are a good example. Do customers truly understand that origination fees are a choice? Half of the personal loans on the market won’t have an origination fee. So customers should check the cost of the loan, including the origination fee, if included, when comparing offers.
Look at the bank’s APR (Annual Percentage Rate), APY and origination fees or prepaid fees. Is there some threshold? A rate-tiering system? What if you do more than, say, six transactions in a month? Will you be charged a fee for that?
How transparent is the bank’s website? We literally say ‘no fees,’ so it’s really obvious. And if you’re waiting long to talk with the call center, or if you’re getting stuck in the digital processes, shop around and find out about the best banks right now.
Another question to ask: How does a bank handle fraud? Some person-to-person payment methods are experiencing fraud problems. So many people are falling for scams. What is your bank’s attitude toward that? How do they help you in that process and help prevent fraud in the first place? Are you feeling valued? Are you being treated like a customer and a human?”
Jenius Bank is a division of SMBC MANUBANK. Member FDIC.
¹ Variable Annual Percentage Yield (APY) as of 02/13/2024 and subject to change at any time.
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