No one doubts that the world is changing by leaps and bounds every day and in every way. The world of banking has been undergoing major changes for years. The number of people who use the full range of traditional banking services falls each year. More people, especially youngsters, are likely to do their banking online. They tend to do more things online than their parents and grandparents. But what form of banking is best for you and your needs?
Millennials, the largest generation of Americans, are alleged to have 70% of their members use online banking. The simplest explanation of online banking is a banking transaction that occurs on a cell phone, another device or any way to access the internet.
Traditional Banks
The basic concept remains the same for both methods, so traditional and online banks each help depositors manage their money in a variety of ways.
As for traditional banks, most offer a physical building available to customers. They do, unfortunately, charge fees for many services. Often these fees are high. Their savings accounts offer lower and often negligible interest rates. Many offer an app that can be used by customers. They also offer both in-person and online services. Customer service is often available in-person, online or by telephone.
Online Banks
Banks that solely operate online do not have physical buildings. They usually have lower or no fees. The interest rates they give are often higher on savings accounts and occasionally also on checking accounts. Access to accounts is available to customers online 24 hours a day and the process is quite often easy and fast. Customer service and online chats are always available and a few banks even offer telephone services for customers.
Pros and Cons
As in most things in life in the United States, there are both positives and negatives to using an online bank. Americans love the convenience and that in itself is a huge advantage to online banking. Anytime day or night, a customer has access to their bank. In the world today, when people are looking to save time, money and even the planet (no paperwork!), online banking saves all three.
Surprisingly Forbes magazine says that over 14 million Americans consider their online bank to be their primary bank of record.
There are some disadvantages to online banking. They include the fact that there are no physical branches where a customer can go to get change like quarters and single dollar bills. There are no safe deposit boxes available for customer use. Some services may be limited, like loans, savings, life insurance and other services.
Are Online Banks Safe?
So, how safe is mobile banking? According to experts at SoFi, mobile banking is safe. Cybersecurity is an expensive service and online banks have spent many millions of dollars to ensure the safety of the online banking process. They use sophisticated encryption systems, automatic logout, anti-malware and anti-virus programs and biometric technology. Having customers check to be sure they are on the authentic bank site is very important as well.