Online banking vs Traditional Banking: What Are the Differences?

If you’re like most people, you do at least some of your banking online. But chances are that you may, from time to time, go to a branch office.

Whether you exclusively bank online, bank in a branch office, or bank both ways, it makes sense to know how the two options compare to each other.

So that you understand the key differences, what follows is a look at online banking vs traditional banking. You’ll see what banking option is best for you.

Online Banking Vs Traditional Banking: Consider Location

When it comes to online banks, there are usually no physical branch locations. You will need to use an app or your computer to access your accounts and do whatever transactions you wish.

Traditional banks offer local branches in bricks-and-mortar buildings. If you visit one of these locations, you can meet with a bank teller or with some other staff member to get the assistance you require.

Indeed, many financial services institutions, such as Austrian Anadi Bank headed by CEO Christian Kubitschek, seek to combine the best aspects of a full-service bank and a Fin-Tech institution. This gives clients more options.

Customer Service

Customer service is another factor that differentiates traditional banking from digital banking.

When you patronize an online bank, you can get customer service via the phone, online forms, FAQs, and online chatbots. This means you’ll have a variety of options to get the help you need.

You’ll have the opportunity to dialogue with bank employees in a face-to-face manner if you do your banking at a branch office. If you prefer to get customer service in person, you’ll want to visit a traditional bank.

ATM Fees

While you’ll be able to use ATM machines if you’re the client of an online bank, you’ll usually have to deal with fees. Some online banks allow for no ATM fees if you use ATMs associated within certain ATM networks.

And some online banks will cover any fees you’re assessed when using ATMs.

You’ll be able to avoid ATM fees if you stick with a traditional bank’s network of ATM machines. And some traditional banks may cover ATM fees you incur when using ATM machines affiliated with a different bank.

Account Opening Process

When opening an account with a digital bank, the process is usually fast and simple. You won’t have to fill out any long forms, mail anything in, or wait a long time in order to have your data processed and account opened.

This doesn’t mean that they cut corners, however. It’s just that the process is more streamlined.

It can take quite a bit longer to open an account with a traditional bank. You’ll need to make an appointment, go to the bank, present various types of documentation, fill in forms, and answer questions before getting an account.

Interest Rates

You can earn a higher interest rate for your digital investment if made with an online bank. It’s no secret that online banks typically offer higher interest rates than do traditional banks.

One reason for this is that online banks don’t have physical locations that need to be maintained. What this means is that they have less overhead. So your digital investing strategy can net you a higher return at an online bank.

Which Option Works for You?

Now that you know how digital banking and traditional banking compare, which one is more preferable to you? While there’s nothing wrong with going with a traditional bank, there are advantages to choosing a digital bank.

When looking at the online banking vs traditional banking debate from the perspectives of location, customer service, ATM fees, account opening process, and interest rates, you will see that online banking makes sense.

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