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Traditional Banks Vs Mobile Banking, Pros and Cons

September 1, 2022

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In recent years, the world has seen a technological revolution in its financial sector.

The introduction of top mobile banking apps on digital banks like WeBank in China, Ally Bank in America, and Nubank in Brazil gathered billions of users who decided to transition from traditional banks to digital ones.

Nowadays, users looking for banking options have the often hard task of choosing between the benefits of traditional banking versus the practicalities that digital banks offer.

What Is Traditional Banking?

The traditional brick-and-mortar banks, as we well know them today, have been in existence since the 1900s (although banking started in 2000 BC), following the need for a more improved system of safekeeping money and storing wealth. It is the most common form of banking.

Traditional banking has been around for centuries.

Businesses running some sort of banking, i.e. a business securing assets like currency or other goods while also giving out loans to people, can be traced to 2000 years BC.

Traditional banking can be described as a bank with a physical location. Usually, traditional banks have several different branches across the country, and the client can visit the bank’s physical location in order to perform bank-related actions like withdrawing money, transferring money, and taking out loans and insurances.

What is Digital Banking?

Digital Banking, also known as online banking is the result of the transition from traditional banks to the internet. Many brands exist today from Chime to CashApp to TransferWise’s Wise.

On digital banks, you can perform most of the actions you’d do on a physical bank, without the need to visit the physical location of a bank.

This means that digital bank clients can transfer money, pay their bills, and ask for loans all without even needing to leave the house.

Today, most digital banks offer smartphone apps capable of performing all the banking needs on your phone, this is known as mobile banking.

Today, most banks offer their clients a digital version of its banking platform. Today clients have a large list of mobile banking platforms which they can choose from.

Traditional Banks vs Mobile Banks

Each form of baking has its own benefits and counterparts.

There are cases where the client might prefer the personalized assistance that traditional banks can offer. However, the practicality of Mobile Banks can also be a huge positive for certain types of clients.

Traditional Banks Pros:

Variety of financial services: Traditional banks offer a wider variety of services that can’t be performed digitally.

Personalized Customer Service: The fact that traditional banks can offer personalized person-to-person services is a big positive factor. Often, clients prefer the perk of having the chance of meeting with a bank manager that they can meet in person.

Better ATM network: Traditional banks have been around for decades and already have a high-quality network of ATM machines spread all across the nation. If a person needs to constantly withdraw cash, traditional banks have a lot more options for ATMs.

Lower Withdrawal Fees: Traditional banks charge way fewer fees when clients withdraw cash from their ATMs. In fact, the larger, more established institutions do not charge any fee on withdrawals.

Traditional Banks Cons:

Having to visit the bank location: Having to visit a bank in person can be bothersome. Especially given that banks only open during business days, having to visit a bank in person could mean taking hours off of a day’s work.

Human Error: Traditional Banks rely on their managers and employees to assist clients. Although not common, the assistance provided by human employees can be prone to mistakes.

Mobile Bank Pros:

Practicality: Mobile Banks have the ability to solve a client’s problem in just under a few clicks. On a mobile banking application, users can open new accounts, transfer money, and pay their bills in seconds!

Convenience: With mobile banks, clients can perform most of their banking needs without leaving the house. In fact, users can manage their accounts from anywhere in the world, which would not be possible on regular traditional banks.

Mobile Bank Cons:

ATM Fees: Mobile banks do not have the widespread ATM network that traditional banks have. This means that withdrawing money from ATMs can get pretty costly for mobile bank users, due to the high amount of fees necessary for the monetary transaction.

Limited Customer Service: Digital mobile bank platforms have limited support when compared to traditional banks’ person-to-person customer service.

Usability limitations: Due to being digital, only clients that are well versed in using a computer or smartphone are gonna be able to use mobile banks properly. For customers that cannot properly use a smartphone, like the elderly, Mobile Banking might be a challenge.

Conclusion

While online and mobile banking normally places an emphasis on digital convenience and user-friendly interfaces, traditional banking generally provides a greater range of services overall.

In fact, most traditional banks today also offer digital banking services.

However, mobile banking is a growing industry, today, users can research top mobile banking apps that are constantly improving their services while growing their outreach.