How to switch from your bank to a fintech app
A practical guide to switching from a traditional bank to a fintech app: how fintech banking actually works, what to check first, and how to make the move.
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This content is for general educational purposes and is not intended as financial, legal, investment, or tax advice and should not be relied on as such. We do not guarantee the accuracy or completeness of the information found in this post.
Summary
Switching banks is mostly about timing: update your direct deposit, move your bills, and keep your old account open for a short overlap before closing it.
Fintech apps run on the same rails as traditional banks. Behind the scenes, a partner bank or sponsor bank actually holds your money and provides the FDIC insurance.
Look for a fintech app that's FDIC-insured through a named partner bank, keeps fees low, and fits how you actually spend and save.
KYC verification ( Know Your Customer), basically an ID check, happens the moment you open any new account, fintech or traditional.
None of this requires closing your old bank account immediately. Most people run both accounts for a few weeks before fully switching.
Fintech apps have made switching banks a lot less painful than it used to be. You don't need a trip to a branch, a notary, or much paperwork (if any). Most of the process happens in a mobile app you can set up on your phone in a few minutes, whether that's OnePay or another fintech app.
Here's how the actual switch works, what's different behind the scenes, and how to know if it's worth doing.
What counts as a fintech app, exactly?
Financial technology companies, or fintechs, sometimes referred to as neobanks, build the mobile app and the customer experience, but most don't hold a banking license themselves. Instead, they rely on banking as a service, sometimes shortened to BaaS, to plug into the infrastructure of an actual bank behind the scenes. This is also called embedded finance: banking features built directly into a non-bank company's product.
Traditional banks build and hold everything themselves, from the branch to the vault. Fintechs split that up. The app and the experience come from a financial technology company, while a partner bank, sometimes called a sponsor bank, holds your actual deposits and handles the regulatory heavy lifting.
OnePay, for example, is built this way: a financial technology company, not a bank itself, with banking services provided through partner banks. Digital banking, in other words, is only part of the story. The bank relationship underneath it matters just as much.
Why your money is still FDIC insured
The word “bank” in an app's name doesn't tell you much on its own. What matters is whether your bank account is actually FDIC-insured, and through which bank. Most fintech apps that offer an account, whether it's called a checking account, a spending account, or something else, hold your money at a partner bank that's a Member FDIC institution. OnePay's deposits, for instance, are held at partner banks that are both Member FDIC. And your deposits are eligible for FDIC insurance up to $250,000 per depositor, per bank, provided the partner bank is FDIC-insured and the account satisfies the FDIC's pass-through conditions.1
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What you'll notice day to day
Day to day, the differences show up in smaller ways. Fintech apps tend to lean harder on digital payments and payment apps for moving money, sometimes skipping paper checks almost entirely. Debit cards still work the same way, but with a lot of fintech apps, you get built-in safety controls like freezing or unfreezing your card right from the app, plus tools like round-up savings to automatically build your savings balance or a savings backup as overdraft protection.
For example, when you bank through OnePay there are:
No monthly fees
No minimum balance required
Debit, savings, and credit card options
Credit building features2
And other financial products to help streamline your financial life
Signing up: what to expect
Opening an account with a fintech app usually takes less time than opening one at a traditional bank, but you'll go through the same basic identity check either way. This is called KYC, short for know your customer, and it's a standard requirement for any regulated financial institution, fintech or not. Expect to provide your name, address, date of birth, and Social Security number, and possibly a photo of your ID. This step protects against fraud and money laundering, and it isn't unique to fintech apps. Opening a bank account typically involves some version of it.
The switch itself
Switching from a traditional bank to fintech or neobank like OnePay is mostly logistics, not paperwork. There are a few things you’ll want to do first:
Update your direct deposit with your employer first, since that's usually the slowest piece to change.
Move any recurring bills or subscriptions over once a paycheck or two has landed in the new account.
Keep your old account open during this overlap so nothing bounces while things transition.
Once everything's moved over and cleared, you can close the old account or just leave it open with a small balance as a backup.
The big picture: open banking and data
There's a broader shift happening behind all of this, usually called open banking: the idea that you should be able to access and share your own financial data with other providers you choose, rather than having it locked inside one bank's systems. Federal regulators have been working on standardizing this in the U.S., and it's a growing part of personal finance generally, not something specific to any one app.
Separately, if you've read anything about data privacy in fintech, you may have seen GDPR mentioned. That's a European Union data privacy law, and while it mainly applies to companies handling EU residents' data, it's part of a broader global push toward giving people more say over their own financial data, wherever they bank.
Worth considering when you compare apps
Whichever app you land on, confirm the partner bank by name, check what it actually costs to use day to day, and make sure the switch fits how you already spend, save, budget, and get paid.
Frequently Asked Questions
No. Most people keep both accounts open for a few weeks to a couple of months while direct deposits and bills transfer over. Closing too early risks a bounced payment if something hasn't fully moved yet.
Not exactly. An online bank usually holds its own banking charter. A fintech app is a financial technology company that partners with a chartered bank behind the scenes to offer banking services, even though the app itself isn't a bank.
Check whether the app discloses a specific partner bank or sponsor bank by name, and confirm that bank is Member FDIC. If an app can't tell you which bank actually holds your deposits, that's worth asking about before you fund the account.
Opening a deposit account on its own typically doesn't involve a credit check the way applying for a credit card would. Some apps run a soft check for identity verification purposes, which doesn't affect your credit score.
Any bills set up to pull from your old account will keep pulling from it until you update them individually with each biller. There's no universal switch that moves them all at once, so it helps to make a list before you start.
It varies by neobank, but many fintech apps built for individual consumers advertise no monthly fees, no minimum balance requirements, and often no overdraft fees, which is a common selling point over traditional banks.
Most fintech banking apps issue a physical or virtual debit card tied to your account, usable anywhere the card network is accepted. ATM access and fees vary, so check the app's specific network before assuming it's free everywhere.
The initial identity check happens once, when you open the account. Financial institutions may ask you to reverify your identity later if your information changes or certain account activity triggers a review.
Some do, though it's typically less universal than personal checking and savings. If a business account matters to you, confirm that specifically before assuming a consumer-focused fintech app supports it.
It depends on what you're not getting from your current bank. If lower fees, a better customer experience, or features like getting paid early and no minimum balance would genuinely change how you manage money, the switch may be more straightforward than people expect.