Internet Banking vs Traditional Banking: Which One is Better?

Gone are those days when you had to plan your trip to the bank to get some important work done before you left for work or class. Today, you can complete any and all bank transactions from the tips of your fingers on your bed without moving a limb. However, talking about the realm of reality, you can yet find a bunch of people running bank errands to date, well after all, it’s just a personal choice at the end of the day. So, in this concise article, we will be discussing Internet banking vs traditional banking. Both types of banking deliver more or less the same kind of services, but there are some key differences.

What is Internet Banking?

On our quest for online banking vs traditional banking, we will discuss our first metric: internet banking. Basically, internet banking is banking that takes place through a computer or a smartphone. Financial institutions grant their customers a user ID and password so that they can access their banking details, such as statements, inquiries, new card orders, and financial transactions.

Did you know? There are online banks, like Ally Bank, Vio Bank, and Axos Bank, where the entire company has based its workings on the web with little to no paperwork. However, like traditional banks, these online banks are insured by the FDIC to keep deposits safe. Below is a brief list of what services online banking renders;

1. Opening new account
2. Money Transfer
3. Bill Payments (Autopay/ Manual pay)
4. Expense statements
5. Loan Request
6. Store Debit and Credit Cards
7. Mutual Fund & Stocks

What is Traditional Banking?

The workings of traditional banks are quite familiar to all since they were the old conventional method that was followed since the dawn of man. However, when talking about Internet banking vs traditional banking, the offline or traditional banking system has a physical location with several branches. To break the bubble, traditional banking is as important as online banking; certain tasks or transactions need to be done in person, especially when the servers are down.

Did you know? According to the fintech firm Galileo, out of 100%, only 27% of customers opted for online banking in 2022. This is due to lower interest rates on savings accounts and personalised services, although it is opted by people mainly from the 50-75 age bracket.

Internet Banking vs Traditional Banking

There isn’t a major note-worthy difference between Internet banking and traditional banking; they work and serve the public for the same motive. Each type has its share of advantages and disadvantages. For instance, online banking is made available 24/7 for customers to conveniently and efficiently manage their finances with the Internet. On the other hand, traditional banking requires physical presence with real-life interactions but also offers high-security measures and personalised services. Let’s explore the difference between digital banking and traditional banking below;

Internet Banking vs Traditional Banking: Advantages

Both Internet banking and traditional banking have an ultimate aim and motto: to serve customers and win their loyalty and trust. However, in the modern era, digital life is a new normal, and as we go forward, we should accept and embrace it. Let’s explore below a few solid sets of Internet banking advantages and traditional too.

Internet banking

On our journey of online vs traditional banking, let us first explore the advantages of Internet banking. The reason why you must opt for this alternative is given below:

1. Autopayments: Online banks allow you to easily plan electronic bill payments, which helps you stay on top of payments and manage when funds are taken out of your account.
2. Efficiency And Convenience: The process is made much simpler by having access to your bank account online at any time and from any location. Customers can benefit from a paperless working environment with a digital bank. Transactions are processed much more quickly.
3. Streamlined Process: Online banks generally emphasise the digital experience. Sometimes, opening a bank account only requires a few clicks.
4. Lower Fees: With online banking, you may compare many financial institutions and services to find the one that best meets your needs and preferences. Before we continue, here is a detailed list of hidden bank charges and how to avoid bank fees.

Traditional Banking

Moving on with the topic of online vs traditional banking, it is time we reconsider and acknowledge the real advantages of conventional banking services which may benefit us:

1. Better Customer Service: Traditional banks can provide in-person assistance with regard to online and mobile banking, but this isn't always the case. Conventional banks typically offer web-based and phone help as well.
2. ATM Network: Customers of traditional banks typically have access to an extensive network of ATMs. Larger organisations might even possess tens of thousands of devices nationwide. 
3. Financial Services: In some instances, users can access financial services provided by traditional banks using digital channels. Traditional banking has advantages, such as the opportunity to deposit cash.

Internet Banking vs Traditional Banking: Disadvantages

One needs to know the arguments on both sides of a coin. While the advantages of both banking systems seem overwhelming, they always come with some drawbacks. Let’s explore the downsides of online and traditional banking.

Internet Banking

Every aspect has a curse and a boon. While scouting for details on Internet banking vs traditional banking, let's explore the disadvantages of e-banking.

1. Limited customer support: Usually, online banks only provide customer service through their website or automated phone lines. It can take longer than you would want to get in touch with a real person.
2. Accessibility limitations: Online banking might provide fewer options for clients who require more assistance. These banks typically serve clients who are more computer-oriented and have consistent internet connectivity.
3. Cash deposits and withdrawals: Certain banks allow you to deposit cash using an ATM, while others don't take any deposits at all. Certain internet banks may require you to conduct payments online or you will need to move the money to an external account in order to take it out.

Traditional Banking

Now, it is time to dwell on the disadvantages or show the downsides of traditional banking in the quest for Internet banking vs traditional banking.

1. In-person visit: It might occasionally be inconvenient to have to do certain tasks in person at traditional banks.
2. Service Experience: Conventional banks rely on their employees so service quality may differ between branches based on your requirements. 
3. Higher fees: Compared to digital banks, traditional banks usually have higher monthly costs.

Internet Banking vs Traditional Banking: Which Banks Students Should Go For?

Students should think about their unique needs, preferences, and situations while choosing between Internet banking vs traditional banking. Here are some things to think about:

1. Convenience: Students desire the ease of accessing accounts, completing transactions, and handling finances from any location with an internet connection; that’s when online banking comes in handy. But traditional banking requires you to go to the bank during working hours.
2. Personal Interaction: In-person conversations with bank employees can be beneficial for students who require complex financial services or prefer personalised support. Although it doesn't have the same human touch, internet banking also offers strong customer service by phone, email, and online chat.
3. Technology and Security: Online banking solely relies on technology for accounts and transactions; problems regarding data privacy and cybersecurity may arise. To secure their accounts, students should select online banks that use security features like authentication and gated apps.
4. Financial Education: A number of traditional banks provide financial literacy courses and materials to help students learn about budgeting, credit building, and money management. These materials could be very helpful to students.
5. Global Access: the ability of a bank to offer its services globally. This can be helpful for international students with bank accounts back home.

The ideal option for students ultimately depends on their needs, interests, and comfort with technology. Finding the best fit requires careful consideration and a comparison between Internet banking vs traditional banking. For more information, refer to our article on international wire transfers for students for cross-border investments or personal transactions.

The argument between Internet banking vs traditional banking ultimately comes down to personal choices, needs, and situations. Due to its accessibility, ease of use, and cheaper costs, online banking is a popular choice among busy people and students. However, traditional banking offers a more personal touch, in-person communication, and maybe more opportunities for financial education. To secure your financial future and assets, refer to our article on the best bank accounts for students in 2024.