Is Traditional Banking Still Relevant?

I can’t remember the last time I walked into a bank or credit union lobby….it’s been years. The advantages of online banking have recently affected the way that many traditional banks do their business. 

Many online-only banks have simplified opening an account. You must be at least 18 years old and supply just the following information:

• Legal name
• Date of birth
• Social Security number or tax identification number
• Residential street address in the U.S.

You also might be asked to submit a copy of your driver's license or another form of ID.

Aside from submitting an account application online, you might be able to apply over the phone or by mail.

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Some of the reasons many folks are switching to online banks are:

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• Lower Fees - For instance, most digital banks don't charge a monthly account maintenance fee, whereas many traditional banks do.

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• Better interest rates – Many online-only banks will pay a higher interest rate on checking and savings accounts than you would get at traditional banks.

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• Large ATM networks – Plenty of online-only banks provide access to networks with thousands of ATMs—perhaps more ATMs than traditional banks.

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• Other services – Several now offer more products and services, such as certificates of deposit (CDs), money market accounts, mortgages, auto and personal loans, and even investment options. 

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With all those features, why do you need to get into a car and drive to a bank when you can just do all your banking from your phone?

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There are still some great advantages to a traditional bank. Most large, traditional banks also now offer comprehensive mobile apps, where consumers can complete basic banking transactions such as transferring funds between accounts, checking account balances, and making mobile check deposits. Some of these apps even come with advanced tools like automatic savings features.

Brick-and-mortar banks usually provide many paper-based payment services, which can include:

• Personal checks are usually ordered as checkbooks.
• Cashier’s checks.
• Certified (or official) checks.
• Money orders.
• Coin deposits and requests.
• Check cashing and cash deposits, both at bank-branded ATMs and branches.

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There are more specialty banking services available with a traditional bank that you can’t get with an online bank like safe deposit boxes, currency exchanges, and wire transfers. 

And let’s not forget that personal touch that you just can’t get with online banks. Although most banking (such as applying for a mortgage, funding a small business, or even just opening an IRA) can be done online, nothing beats sitting down with someone to discuss your personal decisions. 

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While it’s easy and convenient to deposit a check via a mobile app, you can’t deposit cash. You also can’t make larger cash withdrawals because most banks impose a daily limit for ATM withdrawals. 

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And there’s always the fear of losing access to your online accounts due to the instability of technology. Even though a traditional bank could also encounter the same technical problems with online functions, you should still be able to access your money at a branch. 

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Whether you go to your local branch down the street or go completely online is up to you.

If you value a face-to-face customer experience and are willing to forfeit a higher return on your money for it, then a brick-and-mortar savings account is for you.

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On the other hand, if you care most about high-interest rates and low fees, an online high-yield savings account is the better choice.

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Keeping your money safe and accessible is most what’s important. We are fortunate to live in a world where there is so much information at our disposal. 

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Remember, with a little knowledge and discipline, financial freedom is possible!

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