The realm of banking, a sector as old as currency itself, has seen an exponential shift in the past few years courtesy of the digital revolution. As the world becomes increasingly interconnected, a significant number of financial transactions have moved online, prompting the rise of online banks. This transformation is especially pertinent to small businesses, which often rely heavily on efficient and convenient banking services.

Online banks offer a number of advantages to small businesses, including lower fees, higher interest rates on deposits, and 24/7 access to banking services. However, selecting the right online bank for your small business can be a daunting task. Here are six insights that I wish I had known before choosing an online bank for my small business.

• The Importance Of FDIC Insurance: The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects the funds depositors place in banks and savings associations. FDIC insurance is backed by the full faith and credit of the U.S. government, meaning that even if the bank or savings association fails, the depositors still have a level of protection for their money. This security is paramount when choosing an online bank for your small business.
• Understanding The Business Model: Online banks primarily operate on a lower cost model by eliminating physical branches, thus saving on rent and employee wages. These savings are generally passed on to the customers in the form of lower fees and higher interest rates. However, some online banks may adopt other business models such as peer-to-peer lending, which might present a higher risk. Therefore, understanding how the bank makes money is crucial in assessing its long-term viability.
• Transitioning From Traditional To Online Banking: Shifting from a traditional bank to an online bank isn't always a seamless transition. There might be technical hurdles, differences in banking processes or a lack of physical presence for support. To mitigate this, it's beneficial to choose an online bank that offers comprehensive customer support, preferably with a live chat or phone call facility.
• Evaluating The Digital Infrastructure: The robustness of a bank's digital infrastructure is a key consideration. This includes the bank's website, mobile application, security features and integration with other digital tools such as accounting software or payment gateways. Given that the entirety of transactions occur online, any technical glitches can disrupt your business operations.
• Assessing The Range Of Services: While online banks generally offer a range of financial services, some might specialize in certain areas like business loans or merchant services. Depending on your business needs, you might prefer a bank that offers a particular service. Additionally, some online banks may offer benefits for bundling services, which could result in cost savings.
• Considering The Scalability: As your small business grows, your banking needs might evolve. Your online bank should be able to scale its services to match your business growth. This includes providing higher credit limits, offering more complex financial products, or accommodating a larger volume of transactions.

In conclusion, choosing an online bank for your small business is a critical decision that requires careful consideration and research. It's not just about finding a bank with low fees or a user-friendly app. It's about finding a financial partner that understands your business needs and can support your growth in the long run. So, take the time to assess your options, ask the right questions, and make an informed choice.