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The Pros and Cons of Switching to a Mobile-Only Bank

Byline profile imageWritten by Rebecca Lake, CEPF®
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Byline profile imageEdited by Marie White, CEPF®
Updated on
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Mobile-only banks are one of the latest innovations to hit the banking industry as financial institutions adapt to keep up with changing consumer demand. Although the concept is relatively new, it’s quickly catching on, especially among millennials who overwhelmingly prefer digital banking services. Mobile-only banks like BankMobile, GoBank and Moven combine convenience with lower fees, but there are some trade-offs to consider before moving your money into one of these accounts. These are the pros and cons of switching to a mobile-only bank.

A financial advisor can help you determine whether a traditional or mobile-only bank is right for you based on your financial goals. 

How Mobile-Only Banks Operate

Instead of relying on a physical branch or a website to perform basic banking tasks, mobile-only banks allow you to do everything through a mobile app that’s downloaded to your smartphone or tablet. That includes opening a new account and funding it, paying bills, checking your balances and transferring money to other people. You get a debit card for making purchases, and you can add money to your account through direct deposit, mobile check deposit or by transferring funds from another bank.

Mobile-only banks are generally backed by separate financial institutions so your account is covered by the same FDIC insurance limits as a brick-and-mortar or online bank (something you should always check before putting your money into any bank). 

Some mobile-only banks offer customer service support for their accounts right through their apps, so if you run into a problem, you can get help without making a phone call. From a security standpoint, many of these apps offer the same level of protection as you’d get from banking online.

What Makes Mobile-Only Banks So Appealing

Overwhelmingly, it’s the simplicity of mobile-only banking that’s attracting customers. The apps themselves aren’t overly complicated, and using them for basic functions is a breeze. 

For example, if you prefer to pay bills online, the BankMobile app allows you to set up payments just by taking a picture of the bill. If you need to pay a friend back for buying you a snack, you can send them money instantly through your phone using their email address, so there is no need to go to the ATM.

Aside from the range of features these apps offer, the lack of high bank fees is another point in their favor. GoBank does not assess any overdraft fees up to $10, and BankMobile does not charge any fees at all.

Where Mobile-Only Banks Fall Short

A line of people on their phones.

Mobile-only banking is ideal for someone who needs a straightforward way to manage their money, but it can be problematic if you need to move beyond the basics. For example, mobile-only apps are usually designed to be used by a single person, so if you want to open a joint account, you might have to take your business to a different bank.

You are also out of luck if you need something other than a basic checking account. Things like money market accounts and mortgage loans currently aren’t available on these platforms, and of the two mobile-only banks we mentioned, only BankMobile offers a high-yield savings option.

Most importantly, mobile banks lack that face-to-face support that’s sometimes necessary to manage your money. If you need a check or money order, for example, you’d have to go to another bank and possibly pay a fee for these services. Depositing cash can also be an obstacle since you’d have to add it to another account or your debit card first before transferring it to your mobile-only bank.

How to Choose a Mobile-Only Bank

When selecting a mobile-only bank, start by identifying the core features you need, such as no-fee checking, access to a wide ATM network or budgeting tools. Not all mobile banks offer the same services, so it is important to compare account types, direct deposit options and any savings or checking features. Some apps also include early access to paychecks or automatic savings tools, which can be helpful, depending on your financial habits.

Next, check whether the mobile bank is backed by an FDIC-insured institution. Most mobile-only banks partner with a chartered bank to provide deposit insurance, but it’s essential to verify this for peace of mind. You should also confirm the bank’s policies for depositing cash, since many mobile-only platforms don’t accept in-person cash deposits and may rely on third-party networks to handle those transactions.

Finally, evaluate the app’s interface and customer support options. Since your entire banking experience will happen through the mobile app, it should be easy to navigate and regularly updated. Look at app store reviews to get a sense of how the bank handles technical issues and customer service. Some banks offer live chat or messaging support within the app, which can be useful if you need assistance without making a phone call.

Should You Make the Switch?

If you already do the bulk of your banking online, going with a mobile-only bank isn’t likely to be that much of a change from the norm. However, you might need to hang on to your existing checking account or set up an account at an online bank if you want to build up your savings, have access to checks or take advantage of premium banking services.

Bottom Line

A woman looks at a banking app on her phone.

Mobile-only banks offer low fees and digital convenience, making them appealing to tech-savvy users who manage finances through their phones. However, they may lack features like joint accounts, full-service products and in-person support. If you already bank online, a mobile-only bank could be a good fit, but you may still need another account for more complex financial needs. Before opening an account, be sure to weigh the pros and cons of switching to a mobile-only bank to ensure it is the right choice for you. You can also work with a financial advisor to choose the right types of accounts based on your long-term financial strategy.

Tips on Banking

  • Consider working with a financial advisor as you chose what type of bank to use. SmartAsset’s free tool matches you with financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Use our no-cost savings calculator to get a quick estimate of how your savings will grow over time.

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