Traditional banking, where customers visit brick-and-mortar branches to conduct business, has its uses. But unlike online and mobile banking, bank branches are only available for limited hours and can become crowded, making it time-consuming to conduct even basic transactions. Online and mobile banking provide easy access and flexibility. And while some people might think that traditional banks are safer than online banking, the fact is that even traditional banks store your data in large data centers that can be vulnerable to hackers.
Traditional Banking Is Time-Consuming
To do business at a traditional bank branch, you first have to get there, which means driving, walking or taking public transportation. You also might have to take time off from work or give up part of your lunch break to get to the bank during banking hours. Some banks are reducing the number of branches they have since online banking is becoming more popular. This means that your nearest branch might move if it hasn’t already, making it necessary for you to travel even further to do your banking in person.
Once at a branch, you often have to wait in line to see a teller or even to use an ATM, taking more time out of your day. By contrast, online and mobile banking are available instantly anywhere you have a phone or a computer with an internet connection. You can use online banking to check your balance, transfer funds or even deposit checks by uploading an image, which means fewer reasons to visit a physical branch. Direct deposit of paychecks and other types of payments also means less reason to physically visit a branch and more immediate access to your funds.
Often, you can contact a bank by phone for customer service, even if you opened your account online, so you can even ask questions of a bank employee without having to set foot in your local branch.
Better Rates and Terms Online
Online-only banks, and online-first accounts at traditional banks, often provide better terms than accounts that are opened at a traditional bank branch. That's because online accounts don't have the overhead of maintaining physical branches and are often willing to offer more incentives to compensate for the lack of a physical presence. You can generally also access your statements, including historical ones, online, which means you can keep track of your accounts without having to physically file a lot of paperwork.
Some online banks will also offer ATM fee refunds when you use ATMs belonging to other financial institutions since they don't have ATMs of their own that you can use for free.
- Reuters: Number of U.S. Bank Branches to Shrink 20 Percent in Five Years
- First Citizens Bank: Remote Image Deposit
- Consumer Reports: Earn More on Your Savings Account at an Online Bank
- Charles Schwab: Schwab Bank High Yield Investor Checking® Account
- Business Insider: Here's Why Online Banks Are Better Than Traditional Banks