I don’t have a bank anymore.  Well thats not exactly true, but I don’t have a physical bank I can go into anymore.  I now bank with Ally (Formerly GMAC) and have been happily with them for the past year.  They don’t have any locations or branches that I can physically walk into.  I do all my banking online, via mobile, or through the mail now.  This is a big departure from how I started out and I thought it was worth writing about here.

My main reason for switching away from my previous brick and mortar bank was ATM fees.  With Ally you can withdraw money from ANY ATM, regardless of the fee, for free.  This includes fees from a different bank, large chain bank, small boutique bank, and shady deli ATM machine.  They simply credit you back at the end of each month.  Interest rates were another factor, but the convenience of having no fees made up a large difference.  Let me be clear here – I actually went through the switch to be able to pull cash from anywhere and get the ATM charges back at the end of the month.

I now understand the idea of “switching costs” much more.  Switching costs are the incalculable costs associated with changing providers, brands, or your current choice with a new option.  It took me a while to decouple all my automatic bill payments, direct deposits, and bill payees into a new bank – but it was worth the switch.

So how do I bank now without a bank?

Deposits

I deposit checks INSTANTLY with payapl on my android phone.  This is much like the Chase iPhone app, but does not require you to have a Chase account.  I now understand that Charles Schwab does something similar.  Check reading and depositing into Paypal happens as quickly as you can take two photos of your check and enter the amount.  Its not so instant if you need the money quickly as it takes a few business days to show up in my paypal account.  I then have to transfer the money (withdraw) from paypal to my checking account.  This was my biggest apprehension thinking it would be a pain and too slow.  After doing this process a few times I cannot imagine going back.

I fire up the app via my phone – snap photos of the checks and wait for the deposits.

I also sometimes, but rarely, can mail in a check in a prepaid envelope.  The option above is faster for me and much safer as I have all the old checks.  Once deposited I shred the old checks.

Withdrawals

As described above I can take out money from any ATM, and not pay the fee.  I have been in airports, restaurants, and other areas where there is a $2.00-$4.00 ATM fee and never blinked as I know I will get the money back from Ally.  The savings add up as you can see the monthly amount every 30 days – last month I saved about $30.00 in fees.  This also saves time as you can pull money from anywhere making life a little easier on a busy day.

Service

I don’t miss a branch at all.  I never really used a branch for anything – and am not sure I would ever go back.  I understand the apprehension people have, but 12 months later I don’t feel that I am missing out.  I have been following the payments space for awhile and there have been some great innovations in the past few years.  Its clear there is much room for disruption in the banking space.  Companies like Square and BankSimple are doing very interesting things.

I don’t mind operating on the bleeding edge of banking as I know in the future everyone will be transacting via their phone, depositing via photos, and transacting via mobile.