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Banking apps are set to overtake online banking, but what does this mean for you?

Rise of the banking apps

The online banking revolution is something people have talked about for a while. But it turns out it’s less of an online revolution than an app revolution.

In fact, banking apps are becoming so popular, they’re set to overtake online banking by 2019.

But what does this mean for the future of banking, how can you make the most of banking apps and is it safe?

How many of us are using banking apps?

In 2017, 22 million people used their smartphone to manage their current account, according to industry analyst CACI and these people racked-up 5.5 billion log-ins to banking apps, according to UK Finance.

On top of this, banks sent 512 million alerts via apps to let people know their salary had been paid, or they were about to go into their overdraft.

Unsurprisingly, millennials are the biggest users of banking apps, while just one in ten of over-65s log-in.

What are banking apps good for?

As recently as a few years ago, banking apps were very limited. You could see your bank balance, recent transactions and use some basic functions.

But today, there is almost nothing you can’t do via your bank’s smartphone app.

Set up and edit standing orders, transfer money, order replacement cards, manage your overdraft and even apply for credit cards and loans. Other than paying in the cheque grandma gave you for your birthday, there’s almost no need to go into a bank branch.

They can even help you with budgeting, by breaking down your expenses and showing you how much you’re spending on utilities, shopping and food.

What about security?

Now, this is the really big question when it comes to online and app-based banking. Is it safe?

In the age of major data breaches and cyber-warfare, many are understandably worried about having all of their banking information stored on their phone.

While banks use some of the most secure systems available, nothing is completely safe.

However, by taking a few sensible precautions, such as only using secure connections, not sharing information and having anti-virus software installed, you can stay safe when banking online.

Is this the end of the bank branch?

This is what a lot of people, particularly in rural areas are worried about.

Online banking, and now banking apps, have meant fewer people are going into bank branches. In fact, on average customers only visit a bank branch twice a year, according to CACI.

This has meant many high street banks are closing branches, particularly in less populated areas.

On top of this, many complain the lack of broadband and 4G data access outside of big cities means many people are being excluded not just from online and app-based banking, but from banking services altogether.

However, several banks have announced they will be offering mobile bank branches that will travel the country to make sure people do have access.

Does this mean we’re going cashless?

The reality is, banking apps are just the latest in a long line of technological advancements, which have seen cash become less popular.

Using your banking app, you can now transfer money in seconds without needing to run to a cash machine, or walk around with money in your pocket.

Combine this with contactless cards and phone-based payments such as Apple and Google Pay and it's clear cash cash is becoming less popular.

Aren’t some banks already branch free?

While the major high street banks make the headlines when they announce branch closures, it’s important to remember many of the new entrants into the banking industry already don’t have branches.

First Direct, Atom Bank, Monzo and many others are online-only and offer some services over the telephone, but have no physical branches.

Not having to pay for buildings is why these challenger banks claim to be able to offer better interest rates on their accounts.

What about Open Banking?

Over the last few months, you might have heard about something called Open Banking.

This was a set of technologies and rules which came in at the start of the year to make it easier and safer to share your banking information online.

Among other things, this would allow you to see all your bank accounts in one app, easily compare deals online, set spending limits and track financial goals.

While none of the major high street banks have started using this yet, many of the new banks, in particular those who don’t have branches are using it.

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