Online Banking vs. Traditional Banking: Advantages & Disadvantages

Article Summary:

Online banking versus traditional banking is more of a gray area than black and white. Banking online offers convenience and cost savings, while traditional banking provides personalized service and a wider range of services. Online banking has advantages like lower fees and advanced technology, but it lacks the personal touch and may have limited product offerings. Both online and traditional banking have pros and cons, so choosing depends on individual preferences and needs.

If you have a bank account and live in the present day, you probably have a banking app. Sometimes it feels like we couldn’t live without virtual tools like online banking. However, traditional banks have been making it work since the beginning of modern civilization. Today, we’re seeing a crossover with traditional banks now offering online features. Still, you might find that traditional banking, although a thing of the past, is still necessary in the present. Keep reading to determine once and for all the advantages and disadvantages of online banking versus traditional banking.

What is online banking?

Online banking is precisely what its name suggests. Its banking services are offered through a computer or mobile device — online. Online banking allows you to manage your checking account, transfer funds, deposit checks, and pay bills electronically.

Most brick-and-mortar banks offer online banking, meaning customers can access their accounts and manage their funds virtually. However, online-only banks have been gaining popularity. With an online-only bank, you’ll never have to go to a branch, not even to open an account, but you’ll get complete banking services from the convenience of your phone or computer.

Online banking vs. traditional banking

Traditional banking has tried to keep up with modern technology, and it’s done a pretty good job. Still, brick-and-mortar bank branches are at the foundation of many apps you probably use to bank today. Physical locations or analog — call them what you will — traditional banks are how we’ve done banking forever until the introduction of the Internet.

Often, traditional banks offer online banking except for a few actions — such as opening a new account or depositing large lumps of cash — that require you to visit your nearest branch. Other than these exceptions, you can take care of your account virtually. Just because traditional banks are older than online banks doesn’t mean they’re worse on all accounts (no pun intended). Let’s compare the advantages and disadvantages of both online banking and traditional banking.

Pros and cons of online banking

Online banking is the way of the future, and it makes our lives a lot easier. We don’t have to go to the ATM to deposit a check. And we don’t have to visit our local branch to transfer funds from one account to another. We enjoy these benefits and more with online banking, but there are a few downsides too. So we asked banking and personal finance experts for their opinion on the pros and cons of online banking. Read on to see what they had to say.


Here is a preview of the pros and cons we will go over in more detail below.

  • Lower fees
  • Technology
  • Convenience and speed
  • ATM networks
  • Lacking customer service
  • Limited product offerings
  • Security

Pros of online banking

Lower fees

Due to lower overhead costs, online banking offers cost savings and higher interest rates on savings accounts. Taylor Kovar, CFP and CEO at and Kovar Wealth Management says,


Online banking employs new technologies that make it as valuable in ways traditional banks never could. Joseph Catanzaro, Financial Advisor at Oak and Stone Capital Advisors, agrees that

Convenience and speed

24/7 access to your bank account is the main advantage for many people. As long as you have Internet access, you can access your online banking services anywhere, anytime. In addition, online banking is fast. Swati Chalmuri is a personal finance advisor and entrepreneur at, featured in Forbes and Reader’s Digest. She suggests

ATM networks

Online banks often provide access to vast networks of ATMs nationwide, some even more than traditional banks. Not to mention you can order a debit card virtually, have it sent to you, and then use it at any of the associated ATMs.

Cons of online banking

Lacking customer service

The same lack of human involvement that can be a positive by speeding things up can be a negative. Swati Chalmuri says that

Sometimes speaking to an actual human is the best way to answer your banking questions and solve problems. That can be trickier with online banking as you may have to navigate through several links, phone numbers, or automated chat responses.

Limited product offerings

Online banks offer many of the same services as traditional banks, including money market accounts, certificates of deposit, mortgages, personal loans, investment options, and more. However, without a traditional bank branch, accessing particular services like notary or cashier’s checks or cash withdrawals can be trickier, says Taylor Kovar. Limited physical locations mean fewer product offerings. Some services may be impossible with online-only banks.


Joseph Catanzaro points out that

While security is a risk in traditional banks, the risks are also different, with arguably higher stakes, when it comes to online banking. Yes, online banks have strong cybersecurity, but cybercriminals could access your privileged information if that’s broken down.

Pro tip

Enhance your online banking security with two-factor authentication. It adds an extra layer of defense by requiring a second form of verification, like a unique code or biometric identifier. Protect against unauthorized access and phishing attacks, and receive early alerts for suspicious activity by enabling two-factor identification!

Pros and cons of traditional banking

Traditional banking has its perks, but you can’t deny certain inconveniences that come along with it. Let’s check out the experts’ takes on traditional banking.


Here is a preview of the pros and cons we will go over in more detail below.

  • Personal touch
  • Broader range of services and products
  • Higher fees
  • Limited accessibility
  • Security

Pros of traditional banking

Personal touch

Traditional banking relies on relationships more than online banking. Traditional banks offer personalized customer service, resulting in greater loyalty and care for their members. They have physical branches for face-to-face interactions and transactions, allowing you to have a more personal experience with room to ask questions and tailor services.

Broader range of services and products

Taylor Kovar of agrees that

Therefore, traditional banks often offer a more comprehensive range of services, including specialized loans, investment products, higher-limit deposits, and more.

Cons of traditional banking

Higher fees

“On the downside, traditional banks typically have higher fees and lower interest rates on savings accounts,” says Joseph Catanzaro. Increased overhead for bank branches results in higher fees for customers. If you open a savings account at a traditional bank, you can expect lower interest rates than an online bank.

Limited accessibility

Accessibility is a limiting factor for traditional banks. The convenience of location and hours of operation are of the utmost importance when visiting brick-and-mortar banks. If your branch’s distance or timing doesn’t align with your life and schedule, it is hard to accomplish banking tasks in person.

The bottom line: are online banks better than traditional banks?

Neither online banking nor traditional banking is better than the other. The truth is that it’s a gray area, and it depends on the individual’s finances, goals, and needs. Online banking would work wonderfully if you mostly need to deposit paychecks and pay bills. If you need to deposit cash often and get cashier’s checks, a traditional bank might be better for you. Ultimately, when we compare banks, we have to look at the individual bank offerings and how they match our current needs.

Expert Taylor Kovar says it best:


Is online banking safer than traditional banking?

When it comes to online banking, it is critical to have appropriate security measures in place to ensure safety, including using strong passwords and implementing two-factor authentication. However, it is important to note that both online and traditional banking come with their own set of security risks.

What is the disadvantage of using a traditional bank?

A disadvantage of traditional banking is the limited accessibility, as you often need to physically visit a branch during specific hours, which may not be convenient for everyone.

What makes mobile banking somewhat less secure than regular online banking?

Mobile banking may be less secure because of factors such as the possibility of device theft or malware attacks. Unsecured Wi-Fi networks can also raise the risk of unauthorized access to sensitive information.

Why are traditional banks better?

Traditional banks can provide in-person customer service, personalized financial advice, and physical locations for cash deposits and withdrawals, which may be preferable for certain individuals or specific banking needs.

What are online banking’s advantages and disadvantages?

Advantages of online banking include convenience, 24/7 access, easy fund transfers, and streamlined account management. However, disadvantages may include potential security vulnerabilities, reliance on Internet connectivity, and limited assistance for complex financial matters.

Is it better to open a bank account online?

Opening a bank account online offers convenience and saves time compared to visiting a branch. However, it’s essential to research the bank’s reputation and security measures and ensure the online process is secure before proceeding.

Key takeaways

  • Online banking offers lower fees, advanced technology, convenience, speed, and extensive ATM networks. These benefits come at the cost of impersonal customer service, limited product offerings, and cybersecurity risks.
  • Traditional banking offers a personal touch and broader services but also higher fees, limited accessibility, and potentially lower interest rates.
  • Choosing between online and traditional banking depends on individual preferences, financial needs, and lifestyle. Understanding your requirements will help you choose the option that meets your banking needs best.
More help choosing your next bank: What are America’s best and worst banks today? Find the answer once and for all with SuperMoney’s comprehensive review of the top and bottom banks in the country.
View Article Sources
  1. Background articles from Chime and Experian, and from personal banking sites — Various
  2. Online and mobile banking tips for beginners — Non-Consumer Financial Protection Bureau
  3. Mobile Banking: Rewards and Risks — Federal Deposit Insurance Corporation
  4. 15 Banks that Don’t Use ChexSystems — SuperMoney
  5. America’s Best And Worst Banks — SuperMoney
  6. Can You Have Two Checking Accounts at the Same Bank? — SuperMoney
  7. Mobile Check Deposit Limits for the Top U.S. Banks — SuperMoney
  8. SoFi vs. Citizens Bank — SuperMoney
    In addition to these sources, readers may find additional helpful links in the article above.