Mozo guides

Online banks: Everything you need to know

Person doing online banking

The popularity of online banks has risen in tandem with our increasingly digitised lives – and for good reason, too! Online banking virtually gets rid of the need to visit your bank branch or deposit money in person. 

Instead, with the help of a decent broadband connection, online banking users can transfer funds, make payments and check their account at any hour of the day or night. That makes buying a kebab at three o’clock in the morning that much more convenient.

Findings from a Mozo survey showed that in 2021, 62% of Australians would consider taking out a mortgage with an online lender. Some of the reasons for this were more competitive interest rates, lower fees, easier applications and faster approval times.

This all sounds good, but you may still have questions or concerns about online banking. Let's run through some of the big ones here.

Online-only banks vs online banking

Online banks, which are often referred to as ‘digital banks’, offer many of the same products and services as traditional everyday bank accounts, only they let you carry out all your banking activities purely online.

This means you can make your credit card repayments, set up direct debits for your electricity account, use BPAY to pay your rent and check your account statement by tapping away on your laptop or smartphone.

Most banks and financial providers in Australia offer online banking services, but there are some online-only banks that don’t have any branches. However, even though these banks don’t offer face to face banking, they let you manage your money through internet banking, on your phone, and have ATMs. Some of the popular online banks in Australia include, ING, RaboDirect and UBank.

So, what are neobanks?

Sorry to disappoint any Matrix fans out there, but we’re not referring to Keanu’s character. 

Neobanks are a new type of bank (hence the ‘neo’) that operate 100% online. Generally they offer all of the same financial services as traditional banks, such as savings accounts, money transfers and loans. 

One of the only differences with neobanks is that they don’t have physical bank branches, so you won’t be able to deposit money in person. 

Instead, these tech-driven new banks put all their efforts into creating services that collect personalised data and customise the online banking experience, all with the intention of targeting the tech-savvy, smartphone-using demographic.

As more people feel comfortable with this banking technology, fresh neobanks are beginning to emerge. This rise of neobanks is driven by their competitive approach to challenging traditional banks (especially the big four) with low interest rates, minimal fees and innovative app features, as well as other tech-savvy advances.

There are plenty of neobanks entering the market, and they are increasingly accessing unrestricted Authorised Deposit-taking Institution (ADI) licences. This means more neobanks have the same licensing as traditional players.

Key advantages of an online bank account

Some of the main benefits of online banking are:

  • You can apply online: One of the most convenient things about opening an online bank account is that you don’t need to visit a branch in person to submit an application. Simply compare the best bank accounts with Mozo, head over to the bank’s website, fill out the form, enter the required information, upload documents and hit the apply button. The entire process hardly takes any time and can be done from the comfort of your couch.
  • You can access your funds on the go: Online banking lets you access your cash from anywhere in the world as long as you’re connected to the Internet. So whether you’re on the bus to work or vacationing in Bali, if you suddenly realise you need to pay a bill, you can tick it off with ease online. 
  • You can set up automatic debits: Online banking lets you set up automatic payments via direct debits and BPAY, which means you don’t need to worry about being stuck with late payment fees ever again.
  • You can schedule payment alerts: If you’re not comfortable setting up direct debits through your bank account, and would prefer to be notified as to how much you’re being charged for different services every month, you can schedule reminders to tell you about payment deadlines.    
  • Transfer money overseas: You can easily transfer money to bank accounts not just in Australia but also overseas using online banking.   
  • Paperless banking: With instant access to all your banking information online, you won’t need printed statements and other documents, meaning online bank accounts waste less paper.
  • One platform to manage all accounts: The online banking dashboard lets you manage all your linked accounts in one place. So if you have an everyday transaction account, a savings account and a super account with one bank, you can view your balance, set up transfers and schedule transactions for all accounts through one online login or mobile app.

FAQs about Online Banks

Are online-only banks safe?

Online banks operating in Australia are as safe as regular banks and your funds are protected by the Australian Government Deposit Guarantee Scheme. This scheme guarantees deposits up to $250,000 in Authorised Deposit-taking Institutions such as banks, building societies and credit unions.

However, it’s always good to be cautious while sharing your personal and financial details online, particularly if you’re using a shared device. Your bank will have a range of security measures like system encryption and firewalls to protect you from fraudulent transactions online, but it never hurts to be extra careful and login to your bank account only when you’re connected through a secure network. You should also make sure you never share your password or PIN with anyone.

What customer support is available?

While most online bank accounts also come with branch access for customer support, some financial providers are online only. But you don’t need to worry about that because you can have any concerns addressed online via email or online chat services as well as over the phone.

Do online banks provide access to ATM withdrawals?

Yes, like any other bank, online banks in Australia let you access your money through ATMs. Online banks generally tie up with a wide network of ATMs, which means if you have an online account, you should be able to access most ATMs in Australia for free. Some online banks may have conditions, like needing to deposit a certain amount in the account every month for the ATM withdrawal fee to be waived.

How useful are mobile banking apps?

Most major banks these days let you manage your money through a mobile banking app, which is at your fingertips 24 hours a day. Features include letting you transfer money across different accounts, check your bank balance, pay your credit card bill, find the nearest ATM and lock a lost debit card from your smartphone.

How do I find and apply for an online bank account?

Finding an online bank account these days is very easy considering almost every financial institution in Australia offers online banking services. Shortlist your options by using Mozo’s bank accounts comparison table down below and then choose one that suits you best.

Are online bank transfers instant?

If the online bank you’re looking at uses Osko payments, then your transfers will be near-instant.

What online bank has the highest interest rate?

As interest rates change all the time, it’s hard to say what the highest rate is at the time you’re reading this. However, you can compare high interest savings account rates right now to see if anything catches your eye.

Compare bank accounts

Bank account comparisons on Mozo - last updated 16 April 2024

Search promoted bank accounts below or do a full Mozo database search. Advertiser disclosure
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Olivia Gee
Olivia Gee
Money writer

Olivia has two years experience as a finance journalist, working across insurance, property and banking.

Jack Dona
Jack Dona
Money writer

Jack is degree-qualified in communications and creative writing, with a talent for simplifying financial jargon. His approach helps consumers make better decisions. Jack is RG146 certified in generic knowledge and uses flair to make finance interesting.

^See information about the Mozo Experts Choice Bank Account Awards

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