Traditional Banking vs. Online Banking vs. Mobile Banking: Differences, Pros and Cons

Banking has never been easier. You can deposit a paper check and move money from one account to the other without even leaving home. In fact, 27% of banking customers now use an online-only bank, and that doesn’t include the many traditional bank customers who do the bulk of their banking online.

woman mobile banking

Whether you use your bank’s online banking services or you’re digital only, there are some pros and cons to each. Here’s what you need to know if you’re shopping for a bank account.

Traditional Banking

Traditional banks have been around for centuries, offering checking and savings accounts, loans, and investment services. Consumers had to travel to a nearby physical location to deposit money, transfer money, withdraw cash, and handle account issues, which could be inconvenient, particularly since banking hours are often limited to weekdays.

But even as the number of online banks has grown, brick-and-mortar banks have held steady. In addition to adding digital banking to their offerings, traditional banks offer benefits not found in an online bank account.

Pros of traditional banking

  • Easier for cash transactions: One of the most compelling reasons to go with a traditional bank is the ease of cash transactions. You can withdraw and deposit cash without relying on an ATM or accruing extra fees.
  • Personal service: For some people, in-person customer service is a huge perk. Even knowing you can walk into a local branch and speak to someone face to face can give you peace of mind.
  • Available to everyone: Not everyone has an internet connection, making traditional bank branches a necessity. Those who can get online might not have access to a mobile device to be able to make check deposits. Even if you have everything you need to bank online, local branches will let you manage your finances if your internet goes down.

Cons of traditional banking

  • Higher fees: To remain competitive, many online banks reduce fees. Some traditional banks have lowered their fees to compete, but you will often find better rates on savings and CDs with online-only banks.
  • Accessibility limitations: Depending on the bank, you might find that your options are limited at your local branch. Not all physical locations will have bilingual representatives, for instance, and some buildings aren’t accessible to those with physical limitations.
  • Limited service hours: Banks have such limited hours, the term “banking hours” has become a part of the English language. Most banks are open at the same time its customers are working. Unless your bank offers weekend hours, this means you have to either take time off work or visit a branch on your lunch hour.

Online Banking

One thing to remember when considering traditional banking vs. online vs. mobile banking is that many traditional banks offer all three. With these banks, you can visit a traditional bank branch if you’d prefer, but you also get the convenience of online banking.

Then, there are online-only banks. Some of these allow you to use ATMs for cash-related banking activities, but you might find yourself paying ATM fees. On the other hand, many online banks offer low or no banking fees, so the costs might cancel each other out.

Pros of online banking

  • Ease of use: As convenient as brick-and-mortar locations can be for depositing and withdrawing cash, online banking makes managing your accounts a breeze. Using the website or mobile app, you can typically pay bills, move money between bank accounts, and deposit paper checks.
  • Lower fees: Online-only banks know they’re competing with corporate lenders. For that reason, you’ll also find online banking comes with lower fees. As a result, many traditional banks have lowered their rates and increased digital offerings to compete.
  • Competitive rates: In addition to lower fees, online-only banks boost interest rates on online savings accounts, checking accounts, and CDs. Best of all, the internet makes it easy to compare annual percentage yield online across multiple banks and find the best deal.

Cons of online banking

  • Limited cash options: Before you sign up for an online bank, consider how you’ll handle financial transactions like cash. Your online bank should offer an option for ATM access, but this can come with limitations and fees, so read the fine print.
  • Account setup: Setting up an online bank account can be more complicated. With most traditional banks, you simply hand over some identification, complete an application, and make a minimum deposit. With an online bank, you’ll need to meet these qualifications remotely, which can slow down the process a little.
  • Customer support limitations: With an online savings account or checking account, you’re usually limited to chat or phone support, and wait times can sometimes be excessive. Traditional banks typically offer phone and online support, too, but you’ll also have physical branches if you need them.

Mobile Banking

Online banks typically offer both web-based and mobile banking, but there’s a difference between the two. With both online and mobile banking, you can access your checking and savings accounts through a web browser. But some traditional and online-only banks offer a mobile app to make banking easy.

Some banks offer a wider range of services through their app. If mobile banking is your priority, take a look at the offerings in each bank’s app and choose one that offers all the services you need.

Pros of mobile banking

  • Ease of use: A mobile app means you can do everything from your phone, including paying bills, transferring money to friends, and moving money between your savings account and checking account.
  • Increased account awareness: Banking apps typically include push notifications, which you can control in the settings. If your account is overdrawn or suspicious activity is detected, these alerts can help you take action quickly.
  • Access to camera: Mobile devices have built-in cameras, making it easy to snap a photo of a check. That makes remote deposit easier than if you were stuck simply using a laptop or desktop webcam.

Cons of mobile banking

  • Security concerns: One major difference between online banking and mobile banking is that you can access it on the go. This can be bad if you’re on an open Wi-Fi and someone hacks into your account. Make sure your online bank’s mobile app uses multi-factor authentication to avoid someone accessing your account from an unfamiliar device.
  • Limited cash options: If your only financial transactions are electronic, digital banking should work fine for you. But if you deal heavily in cash, traditional banking services might be more your speed.


Weighing online banks vs. traditional banking can be tough, considering traditional banks offer so many online banking options. Although online-only banks can discount fees and boost interest earnings, they can come with limited customer service offerings. Compare multiple banks to make sure you’re getting the best deal for your banking needs.

Stephanie Faris
Meet the author

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling, and Benzinga.