Primary Differences Between Online Banking and Traditional Banking

Over the past 25 years, online banking has grown steadily to become an increasingly dominant component of the banking world. Now there are even banks that exist wholly on the internet. Even traditional brick-and-mortar banks typically have very strong online presences these days, allowing customers to choose a combination of traditional banking and online banking that suits them.

Because online banking is becoming more and more commonplace, it’s worth looking at the differences between online banking and traditional banking to help you better understand which one is going to meet your needs.


Online Banks: One of the greatest advantages of online banking is that your bank is always accessible to you, provided you can access the Internet. And the Internet is so ubiquitous these days that you can even get connected in the middle of a forest or on the other side of the planet. That means if you have a good data plan and a smartphone on you, you’ll be able to do your banking just about anytime, anywhere.

Additionally, online banks increase accessibility in a different way. If leaving your house is physically difficult sometimes, online banking presents a very simple and easy-to-use alternative. Likewise, if you are hard of hearing or have impaired vision, some tools can allow you to easily access all the features of the bank’s website. Additionally, most online banks offer numerous language options, which isn’t typically available when banking in person.

Traditional Banks: Although there is something to be said for the in-person touch of going into a traditional bank and speaking face-to-face with a customer service representative, the fact is that you have to be in town during business hours to get to your bank in the traditional way. This represents a distinct limitation when you compare it to what online banking can offer.


Online Banks: Costs and fees are an area where online banking really sets itself apart. Because more and more banks are either entirely available online or have diversified to offer online banking services, competition is fierce. Many online banks are willing to offer you checking accounts and saving accounts that come with no fees whatsoever. You can typically get credit cards with low rates, and there are often other perks available when you use online banks for your financial needs.

Traditional Banks: Most in-person banks still follow traditional rules when it comes to fees. That means if you open a new savings account, you may end up paying a certain monthly fee to keep it open. There can also be other costs associated with banking such as a minimum balance requirement, NSF fees, and overdraft fees. Although it is not unheard of, it is rare to find a traditional bank that will allow you to do your banking without charging at least a few monthly fees for the services that you use.


Online Banks: Even though some banks exist entirely online and don’t have brick-and-mortar locations, the level of service available with online banking is extensive. That said, there are a few services that many online banks don’t offer.

Traditional Banks: There are certain services that may require a brick-and-mortar bank to complete, including notary services and safe deposit boxes. And while you can deposit cash if you use an online bank, it can be a slightly cumbersome process. To deposit cash, it isn’t uncommon for online banks to require you to use a deposit-accepting ATM.

The Bottom Line

At the end of the day, whether you decide an online bank or a traditional bank is right for you is a personal decision. However, the modern world is becoming more and more geared towards performing tasks online. While traditional banking certainly has some benefits, online banking has most of the same benefits, plus greater accessibility and fewer fees. For that reason, online banking is definitely worth considering.