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Do you really need a bank?

Key takeaways

  • You may not need a bank to manage your spending and saving anymore. There are multiple options that could fit your needs and priorities.
  • Banks are still great for loans, and most have locations for in-person transactions and customer service. Being able to speak with someone face-to-face is still important for many people in the new digital age.
  • Credit unions, neobanks, online banks, and brokerages may all fulfill your spending and saving needs—potentially with lower fees and higher yields than traditional banks.

Consumers have a dizzying number of options when it comes to managing your cash. Your local bank or credit union is one of them, but there are other choices out there. Driven by the preferences and spending power of Gen Z and millennials, banking products and services are evolving to fit the digital landscape.

Here are 6 features that may play a big role in the new spending and saving landscape:

  • Mobile first. Apps matter, a lot. Three out of 4 people in the millennial generation say they would switch financial institutions if there were better apps out there.1
  • Low or no fees. Overdraft fees, service fees, out-of-network ATM fees, and even inactivity fees can take a significant bite out of your savings over time. They may hit young people disproportionately. 46% of Gen Z and 42% of millennials pay monthly fees—compared to 22% of Gen X and 14% of Baby Boomers.2
  • Fast payments to individuals and businesses. Money transfer apps changed the game for sending money electronically. Features, fees, and specialties vary—the best app for sending money internationally may not be the same one that's best for splitting rent or last night's dinner.
  • High levels of security against fraud and identity theft. Multi-factor authentication, suspicious activity alerts, and the ability to block debit cards or money transfers can all help provide a robust defense for consumers. For example, Fidelity employs a concept called defense-in-depth and focuses on 3 factors: prevention, detection, and recovery.
  • Customer service. Older generations may prefer visiting a bank branch to speak with someone face-to-face, while younger generations say they are comfortable asking for help through an app or online, particularly if it's available 24/7.1
  • Cool perks. To entice new customers, many financial institutions offer checking account bonuses, above average yields, and new perks like early direct deposit and cash back rewards.
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How to find the financial service providers you want

Before signing up for an account, think about your priorities, the features that are most important for you, and the various options for getting them. Online banking and a mobile app are a minimum requirement these days, but some providers may be more advanced than others.

Consider the pros and cons of these 5 major banking options:

1. Traditional brick-and-mortar: Cutting edge may not be the way most people would describe traditional banks, but many are trying hard to get there. There's a wide variety of banks from small and local to huge and national.

What you get:

  • Ability to deposit cash.
  • Checking/saving.
  • CDs/money market deposit accounts.
  • Money wires.
  • Cashier's checks.
  • Loans/credit.
  • Face-to-face customer service and other teller services.
  • Some banks offer early direct deposit.

What to look out for:

  • Check the fee schedule to understand how to avoid or minimize fees.
  • Check the limits on features you may use frequently, like mobile deposit or ATM withdrawals, to make sure your bank meshes well with your lifestyle.

2. Credit union: Very similar to banks but credit unions are non-profits, while banks are for-profit. Deposits at credit unions are insured by a government agency, the National Credit Union Administration, the same way deposits at banks are insured by the FDIC.

What you get:

  • Credit unions largely provide the same services and products as banks.
  • Because they are non-profit, credit unions may offer higher rates on savings and lower rates on loans than similar banks.
  • Credit unions may charge fewer fees than traditional banks.

What to look out for:

  • Credit unions are member-owned and membership may be limited to specific groups: for example, members of the military and their relatives, or you may need to live in a specific region.

3. Online bank: Online banks are banks with no physical locations but they generally offer all of the products and services a brick-and-mortar bank would have.

What you get:

  • Convenient online banking.
  • Checking, savings, CDs and other traditional bank products.
  • Online banks tend to pay higher rates on savings and offer lower rates on loans than a brick-and-mortar bank.
  • Online banks may charge fewer fees than traditional banks.

What to look out for:

  • Depositing cash directly may not be possible.
  • Customer service will likely be through chat or on the phone.
  • ATM withdrawals may have a daily limit.

4. Neobank: PayPal® is an example of a neobank. You can deposit checks, pay bills, get a debit card for your account balance, and open a savings account—in addition to sending money to your friends or paying businesses. PayPal provides the technology for the app, user interface, and security, and Synchrony Bank provides banking technology and expertise and FDIC insurance. One interesting quirk: Money saved in your PayPal balance is not FDIC-insured unless you request a debit card. You should know that some neobanks are FDIC-insured, chartered banks, so accounts opened with them have the FDIC guarantee. Sofi is one example.

What you get:

  • It varies but in general you'll find a narrower list of offerings compared to a traditional bank.
  • Some neobanks focus on specific populations or communities.
  • Generally, no fees for basic offerings.
  • May offer unique benefits like fractional shares of stock for shopping specific brands, rounding up on debit card purchases and investing it for you, and no-interest cash advances.

What to look out for:

  • Some neobanks offer tiered subscriptions for access to higher interest rates on savings or monthly fees for all the perks.
  • There are no branches to visit: Everything is done online or on a mobile app.
  • Customer support will be mostly online, through an app, or on the phone.
  • Neobanks may not offer all of the products and services banks do.

5. Brokerage: Fidelity is an example of a brokerage and investment company. We offer products and services to help people buy and sell investments like mutual funds, stocks, and bonds. But brokerages can also offer other financial services, like cash management. A cash management account at a firm like Fidelity is an account with FDIC insurance for cash balances, provided by banks Fidelity works with.

What you get:

  • Traditional bank features: Check writing, debit cards, online bill pay, mobile check deposit, and wire transfers.
  • Potentially higher levels of FDIC insurance than is possible at a bank. Cash balances are swept into deposit accounts with bank partners. Once you reach the maximum deposit limit at one bank, there are other banks that can hold additional money.3 Get all the details: Safeguarding Your Accounts
  • Generally, cash management accounts pay a higher yield than a bank checking account.
  • No maintenance fees and no minimums to open account at Fidelity.
  • ATM fee reimbursement at Fidelity.
  • Fidelity takes security very seriously, safeguarding accounts with strong encryption, firewalls, and proactive system surveillance 24 hours a day, 7 days a week. Read about our security measures: We're committed to your security.
  • Having your savings and investments in one place can make it easy to keep track of everything.

What to look out for:

  • You can't deposit cash or get a cashier's check.

Banking options for everyone

The good news is you don't have to choose just one financial provider—unless consolidating your financial life is one of your priorities. If that's the case, Fidelity has got you covered, offering retirement savings, investments, and cash management, all in one place.

Pay bills. Track spending. Pay $0 in account fees.

Manage your cash and spending right alongside your investments with Cash Management Solutions.

More to explore

1. Orecchia, JB, "Banking attitudes generation by generation" 05/16/2023,, 2. Bennett, Rene, "Preventing overdraft fees," 03/02/2023,, 3. The Fidelity® Cash Management Account is a brokerage account designed for spending and cash management. It is not intended to serve as your main account for securities trading. Customers interested in securities trading should consider a Fidelity Account®.

​The Cash Balance in the Fidelity Cash Management Account is swept into an FDIC-Insured interest-bearing account at one or more program banks and, under certain circumstances, a Money Market mutual fund (the "Money Market Overflow"). The deposits swept into the program bank(s) are eligible for FDIC Insurance, subject to FDIC insurance coverage limits. Balances that are swept to the Money Market Overflow are not eligible for FDIC insurance but are eligible for SIPC coverage under SIPC rules. At a minimum, there are 20 banks available to accept these deposits, providing for up to $5,000,000.00 of FDIC insurance. If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be higher or lower. All assets of the account holder at the depository institution will generally be counted toward the aggregate limit. For more information on FDIC insurance coverage, please visit Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at Program Banks are not covered by SIPC. For additional information please see the Fidelity Cash Management Account FDIC Disclosure Document (PDF).

Your Fidelity Cash Management account will automatically be reimbursed for all ATM fees charged by other institutions while using the Fidelity® Debit Card at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited. Please note, for foreign transactions, there may be a 1% fee included in the amount charged to your account.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

The trademarks and service marks appearing herein are the property of their respective owners.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917