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Traditional banking vs. online and mobile banking: Exploring the differences

Consumers today have a variety of options for their banking needs. For many years, traditional banking was the default option to conduct bank business. Today’s technology, however, gives customers access to banking services that may be entirely online or mobile. As you’ll see below, each option has its differences.

Traditional banks

Traditional banks typically refer to the physical location of your local bank branch. Most people are likely to be familiar with this option.

Traditional bank pros

  • Greater range of financial services: Traditional banks sometimes offer financial services that aren’t available to customers on digital platforms. The ability to deposit cash, for example, is an advantage of traditional banking.
  • Developed ATM network: Traditional banks often have a well-developed network of ATMs available to customers. Larger institutions may even have tens of thousands of machines nationwide. These ATMs typically don't require a transaction fee if you have a bank account with the bank or its partners.
  • More options for customer service: Traditional banks can offer in-person support at a local branch. The same can't always be said of online and mobile banks. Additionally, traditional banks usually also have phone and web-based support.
  • Relationship banking: Traditional banks give customers a chance to develop a face-to-face relationship with the bank staff. This familiarity may come in handy when you need some extra help.

Traditional bank cons

  • Visiting in person: Traditional banks typically require you to do certain things in person, which may prove inconvenient at times.
  • Variable service experience: Traditional banks rely on their human element. As such, service levels may vary from one branch to another depending on what you need. For instance, some branches may have more bilingual representatives or more financial advisors available than others.

Online banks

Online banks allow for many banking functions to be performed through a website. Many traditional banks offer online banking services, but there are some newer banks that exist entirely online and have no physical locations at all.

Online bank pros

  • Streamlined experience: Online banks typically emphasize the digital experience. Opening a bank account can sometimes be done in relatively few clicks.
  • Convenience factor: Online banks offer convenience as a major selling point. You can get your banking done almost anywhere, anytime.

Online bank cons

  • Limited customer support: Online banks typically offer customer support solely via their website or automated phone lines. Reaching an actual person may take longer than you would like.
  • Accessibility limitations: Online banks may offer fewer options for customers needing extra help. Since they’re online-only, these banks tend to cater to customers who are more computer-savvy and have steady internet access.
  • ATM fees: Online banks typically have a smaller network of ATMs, if at all, compared to traditional banks. ATM services for these banks may incur fees.

Mobile banks

Mobile banks work via mobile applications on a smartphone or tablet device. Many traditional banks offer a mobile app to supplement their online and physical presence. Some newer banks exist primarily on mobile platforms.

What is the difference between online banking and mobile banking?

Mobile banking is done on a mobile or tablet device via a specific application. Online banking doesn't require a mobile app. Almost any internet-connected device, including smartphones and tablets, can access online banking through a web browser.

Beyond that, however, mobile banking offers similar services to online banking. The pros and cons between them are similar as well.

In summary

Traditional banking tends to offer a wider range of services overall, while online and mobile banking typically prioritize digital convenience and user-friendly interfaces. These days, many traditional banks offer online and mobile options, too. It's nice to know you have plenty of viable options to explore when working out what’s best for you.

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