Online Banks VS Traditional Banks: Which One Is Best For You?

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Last updated on April 28, 2021

When comparing online banks vs traditional banks, it helps to know the pros and cons of each.

From bank charges to customer service to available products, there’s no shortage of details that deserve your attention.

Below, we provide you with all the information you need to compare mobile banks vs brick and mortar banks.

What Are Online Banks?

Online banks, digital banks, mobile banks, online banks, neobanks, and challenger banks. All of these phrases are used to describe the same type of bank.

Regardless of what you call it, these financial institutions operate differently than traditional banks, as they rely more heavily on technology. Furthermore, there are no physical branches, so you complete all your banking online.

As you compare digital banks vs traditional banks, it becomes easier to see which path you should follow.

Comparing Mobile Banks with Traditional Brick-and-Mortar Banks

online banks vs traditional banks handing over money

While no two people will take the same approach to compare virtual banks vs brick and mortar banks, there are some details that you must take into consideration.

Set-Up and Approval Process

With an online bank, there’s no physical branch to visit when setting up an account. Everything from the application to the approval process is completed online.

Bank Charges

Due to lower overhead costs, online banks often have lower (or no) bank charges. That’s in stark contrast to traditional banks that often have a long list of potential charges to contend with.

Interest Rates

Just the same as bank charges, an online-only bank often has more competitive interest rates than a traditional brick-and-mortar bank.

If you’re looking to earn money on your savings, an online bank may be your best option.

Banking Services

Despite a lack of physical locations, online banks are generally able to offer the same services.

For example, most major online banks have a large network of ATMs across the country. Best yet, you can use these for free.


Regardless of the bank you choose, you can generally be rest assured that they’re taking steps to maintain a high level of security.

Customer Service

Should you require assistance with your account, the way you go about getting it depends on the type of bank.

With an online bank, you’ll ask questions through a mobile banking app, email, live chat, or phone.

With a traditional bank, you also have the option of visiting a local branch for guidance.

Physical Branch Access

If this is important to you, a regular bank is the way to go. Online banks don’t have physical branches, so you must conduct all business online or over the phone.


Online banking provides a high level of flexibility, as you don’t have to leave home to manage your account.


The word “convenience” means something different to everyone.

You may consider it most convenient to be able to bank online. But the next person may be more interested in a traditional bank, as they associate convenience with the ability to communicate with banking professionals in person.


Regardless of what type of bank you choose, you can set up a direct deposit with your employer.

Just the same, if you need to deposit a check, you can generally do so through your bank’s mobile app.

Depositing cash is easier with a regular bank, as you can use an ATM or visit a teller in person.

ATM Network

Online banks understand the importance of a large ATM network, so most of them have this in place.

As you compare online banks, pay attention to the number of ATMs in the network as well as any fees.

Mobile Banking Apps vs Traditional Banking Apps

Mobile banking apps are designed for you to do all of your banking on the go.

Conversely, traditional banking apps are not always as powerful. You may be able to view your account and transfer money, but it doesn’t have the same level of services as a mobile banking app.

Borderless Banking

With borderless banking, you can easily manage your accounts from anywhere in the world. You also have the opportunity to manage funds in several currencies.

Generally speaking, online banks are more open to borderless banking than brick and mortar financial institutions.

Innovation and Technology

Online banks are typically out in front in regards to innovation and technology. This is due to the fact that their technology is their number one selling feature.


A growing number of individuals are interested in cryptocurrency banking. Both online and traditional banks are implementing the ability to pay and be paid in cryptocurrency.

It’s these app-related features that help you answer the question “is online banking easy?” Most people agree that the answer is yes.

Which is the Best Type of Bank for You?

You may be asking yourself what are the pros and cons of online banking? You may also be wondering what are the pros and cons of traditional banking?

If so, you’re on the right track. It’s important to understand these details. Here’s a good starting point:

Online Bank Pros

  • Access to your account from anywhere in the world
  • Better rates and lower fees
  • The convenience of banking without visiting a local branch

Online Bank Cons

  • No personal relationship
  • Potentially smaller ATM network
  • Less flexibility, such as with depositing cash

Traditional Bank Pros

  • The ability to visit in person
  • A personal relationship with your local banking professionals
  • Access to a larger number of products and services

Traditional Bank Cons

  • Less advanced technology
  • Some banks lack a powerful mobile app
  • More overhead means lower savings rates

The Best Online-Only Banks

The difference between internet banking and traditional banking is often small. The same holds true if you’re comparing online banks.

If you’re searching for a web-only bank, here are three of the best options:

1. Chime

Chime logo 210x100Chime is one of the fastest-growing online banks, and it’s not because of its clever commercials.

Chime offers all the services you’ve come to expect from an online bank, including those associated with security and service.

Add in fee-free overdraft, and it’s easy to see why Chime is leading the online banking revolution.

Finally, with Chime, you never have to ask yourself “are digital banks safe?” This one definitely is!

2. North One

NorthOne LogoNorth One is known for being a leading online bank for small businesses and freelancers.

Along with a full suite of smart digital banking tools, North One provides high-level features such as: business debit card, deposit checks on the go, and a network of tens of thousands of ATMs.

3. Bank Novo

Bank Novo logo 210x100You can’t have a conversation about the best online banks without considering Bank Novo.

Just the same as North One, Bank Novo is a small business banking platform. It’s built across the board for small business owners, with features such as: no hidden fees, easy transfers, and human-powered customer service.

The Best Brick-and-Mortar Banks

Even with a growing number of people turning to online banks, brick and mortar options still exist.

When comparing virtual banks vs brick and mortar banks, these traditional options should be somewhere near the top of your list:

1. Chase Bank

Chase FinanceAn industry leader, thanks to its long-standing reputation for customer service and reliability, Chase Bank is one of the top traditional financial institutions.

You’ll fall in love with its competitive savings rates and robust mobile app.

2. Bank of America

BOA logo 210x100Bank of America is doing its best to sell itself as both an online and traditional bank.

New physical locations are popping up all over the country. Along with this, Bank of America continues to build out its online banking platform.

The combination of the two gives Bank of America a leg up on anyone who is unsure of which type of bank is best for them.

3. Wells Fargo

Wells Fargo is one of those banks that has everything you’re looking for — plus some.

From competitive savings rates to a large network of branches, there’s no question as to why Wells Fargo is an industry leader.

Also, this bank is known for its variety of products in addition to bank accounts, such as mortgages and personal loans.


Everyone has different questions when comparing challenger banks vs traditional banks. However, some questions are more common than others.

Here are some frequently asked questions to address:

What is online banking and is online banking easy?

Online banking provides the opportunity to manage your money in a digital manner, as opposed to visiting a local bank.

How is mobile banking different from traditional banking?

The biggest difference is the ability to manage all your banking needs without ever walking into a physical location.

Why might you need a brick-and-mortar bank?

If you like to bank in person, a brick-and-mortar bank is what you need. The same holds true if you like the personal relationship with a local banker.

Which accounts can make me the most money?

Online banks are known for having higher savings rates than traditional banks. Savings and money market accounts will earn you the most money.

What is a challenger bank?

A challenger bank is a small, digital bank created to compete with larger brick and mortar financial institutions.

Can you deposit cash in an online bank?

Yes. The best way of doing so is to deposit cash into a separate bank account and then electronically transfer it to your online bank account. You can also do so at a cash-accepting ATM.

Do online banks have ATMs?

Yes, most online banks have an arrangement with a large ATM network to provide customers access to cash throughout the country.

What are the risks of online banking?

For most, the biggest risk is related to safety and security. They’re concerned that someone will steal their account details, thus giving them access to personal and financial information.

As you compare virtual banks vs traditional banks, answer these questions along with any others associated with your financial situation.

Final Thoughts

Gone are the days of focusing your search solely on the best traditional banks.

In today’s world, you need to compare traditional banks vs online banks to ensure yourself of making an informed and confident decision.

Now that you’ve answered the question “how does online banking differ from traditional banking,” you can make a final decision. From there, you can be sure that you have the right bank on your side.

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