When it comes to choosing a financial institution, the debate between traditional and online-only banks is more relevant than ever. Drawing from the experiences and insights of CEOs and Managers, we explore this topic through ten distinct perspectives. From the adaptability of online banking to the balance of service with digital tools, our experts weigh in on what factors are crucial in making this decision. Explore expert opinions on how to choose between traditional and online-only business banks for your small business.
- Adaptability of Online Banking
- Weekend Accessibility with Online Banks
- Ease and Cost of Online Banking
- Convenience Wins for Gen Z
- Assess Needs for Bank Choice
- Experience with Online Bank Closure
- In-Person Service vs. Online Convenience
- Personal Interaction or Tech Efficiency
- Balancing Service with Digital Tools
- Accessibility, Cost, and Service in Banking
Adaptability of Online Banking
In deciding between online and traditional banks, the key factors I consider are adaptability, accessibility, and security. I recall an instance where I was on a business trip and needed access to financial documents for a sudden virtual meeting.
With traditional banking, this would’ve meant huge delays, which is problematic in the dynamic tech industry I operate in. Thanks to online banking, I was able to retrieve the documents right from my mobile device. This experience highlighted the importance of an adaptable banking system that aligns with the digital world and can facilitate urgent needs, anytime, anywhere.
Abid Salahi
Co-Founder & CEO, FinlyWealth
Weekend Accessibility with Online Banks
For me, factors such as convenience, accessibility, fees, interest rates, and customer service are vital. For example, I needed to make a last-minute wire transfer on a weekend.
The traditional bank I was using at the time was closed, and their online platform didn’t allow for immediate transfers. In contrast, an online-only bank, “Wise,” facilitated an instant transfer. This experience showed me that having access to banking services at any time and from anywhere is key.
Tom Molnar
Operations Manager, Fit Design
Ease and Cost of Online Banking
Picking a bank, online or traditional, can be a tough decision. I consider two main factors: ease of use and cost. Online banks offer the convenience of managing your money from anywhere, anytime, using your phone. They often have lower fees than traditional banks, saving you money over time. No more waiting in lines is a significant benefit.
Traditional banks, however, might offer specific services, like safe-deposit boxes, that online banks can’t. However, online banking is a fantastic option for everyday banking. I switched to an online bank a while back. Initially, it felt risky, but the convenience and cost savings have been incredible. Now, I manage my finances on the go, and the extra savings allow me to invest more.
Shane McEvoy
MD, Flycast Media
Convenience Wins for Gen Z
My first credit card was from Venmo. This is because a lot of Gen-Zers do not care about traditional or online banks; the most important factor is convenience. And online-only companies like PayPal, Venmo, and Cash App are optimized for this type of convenience. We still expect the same, if not better, security and safety standards for our money in these online banks.
I’ve also seen a lot of my 25-year-old peers getting their first Amex. They are not so much concerned about a good credit score as they are about the perks and premium benefits of the card. As someone who works at one of the biggest fintech companies, I see the convenience and luxury of new online banks winning over Gen Z from traditional brick-and-mortar banks.
Dhanush Shetty
Product Manager
Assess Needs for Bank Choice
I consider convenience, fees, and customer service when choosing between traditional and online-only banks. Traditional banks offer face-to-face interactions and a wide range of services. Online banks often provide higher interest rates and lower fees due to reduced overhead costs. Assessing your banking needs is crucial.
In my experience, transitioning to an online-only bank was smooth and beneficial. Managing finances efficiently was essential during my time at Morgan Stanley. I needed a bank that offered easy access to accounts and low fees. An online-only bank provided these advantages and a user-friendly app that simplified transactions.
For anyone facing this decision, evaluate your lifestyle and banking habits. A traditional bank might be best if you value in-person service and a broad range of services. Consider an online-only bank if lower fees and higher interest rates appeal to you. My experience shows that online banks can provide excellent service and convenience.
Jared Stern
Managing Member, Uplift Legal Funding
Experience with Online Bank Closure
As an entrepreneur, I signed up for an online-only bank account a few years ago. I did my research and found them reputable. However, a few months later, they closed. Having already switched everything over, it was frustrating to start over. I ended up with a well-known, large bank and have been happy with my decision ever since.
Kelli Anderson
Career Coach, California Commercial Insurance
In-Person Service vs. Online Convenience
Traditional banks often have a long history and established security measures. They provide physical locations for in-person services, which can be reassuring for customers who value face-to-face interactions. On the other hand, online-only banks offer convenience and often lower fees due to reduced overhead costs. They provide easy access to accounts via apps and websites, which can be particularly beneficial for tech-savvy individuals and businesses.
At Tech Advisors, we prioritize security and reliable customer service. There was a time when we needed a quick resolution to a financial issue. A traditional bank with a local branch provided the immediate support we required. This experience reinforced the value of having a physical presence. It offered peace of mind and a quick solution, which was crucial for our operations.
A traditional bank may be the best choice if you value in-person service and have complex banking needs. An online-only bank might be more suitable if you prioritize convenience and lower fees. Evaluate the security measures each option offers, look at customer reviews, and consider your comfort with technology. Balancing these factors can help you make an informed decision that aligns with your personal or business requirements.
Konrad Martin
CEO, Tech Advisors
Personal Interaction or Tech Efficiency
Choosing between traditional and online-only banks depends on several factors, such as convenience, fees, technology, and customer service. From my experience as the CEO of BlueSky Wealth Advisors, I’ve observed that both have distinct advantages and potential drawbacks.
For traditional banks, personal experience and relationship-building are key. I’ve seen clients benefit from longstanding relationships with local bank managers, which can prove advantageous when negotiating loan terms or obtaining preferential rates. For example, after a strong financial year, I’ve advised clients to leverage their improved creditworthiness to negotiate better terms with their brick-and-mortar bank, often resulting in lower interest rates or waived fees.
On the other hand, online-only banks usually offer lower fees due to reduced overhead costs. They are often more tech-savvy, offering superior online platforms for real-time portfolio views and seamless transaction capabilities. However, I caution clients about potential disruptions; most traditional banks require maintaining an operating account, and frequent switching might disrupt operations, particularly for medical practices with high fixed costs and complex payer mix management.
The choice hinges on your need for personal interaction versus tech convenience. For businesses, maintaining low overhead and establishing diversified revenue streams are crucial. Negotiating terms early when anticipating financial difficulties can be easier with a traditional bank relationship. Balancing robust digital tools and reliable, personal customer service can fortify your financial strategy against unpredictable changes.
David Blain, CFA
Chief Executive Officer, BlueSky Wealth Advisors
Balancing Service with Digital Tools
When deciding between traditional and online-only banks, I consider factors like security, customer service, ease of access, and associated costs. For example, traditional banks often offer more comprehensive customer service and personalized financial advice. At Reliant Insurance Group, we’ve seen how face-to-face interactions help build trust, particularly with complex products like life insurance and annuities. In one instance, a local community bank provided tailored support to one of our clients, enabling them to set up a robust retirement plan.
Online-only banks generally offer lower fees due to reduced overheads and superior tech platforms. This can be a huge advantage for managing finances efficiently. From my experience in implementing various financial solutions, institutions with advanced digital tools provide seamless transaction capabilities and real-time views of investments. However, a downside is the lack of personalized service; for example, during a cyberattack, a client at an online-only bank faced delays in customer response, highlighting the potential drawbacks of not having a physical branch to visit.
A critical consideration is your specific needs. If you require frequent in-person consultations, traditional banks may be more suitable. Conversely, if you prioritize lower fees and advanced digital tools, online-only banks could serve you better. Balancing these options based on your operational requirements and risk management strategies, like we do at Reliant Insurance Group, can ensure your financial decisions align well with your goals.
Ben Klesinger
Co-Founder & CEO, Reliant Insurance Group
Accessibility, Cost, and Service in Banking
When deciding between traditional and online-only banks, three key factors come to mind: accessibility, cost, and customer service.
Accessibility is paramount, as traditional banks offer physical branches for in-person service, which can be a significant advantage for those who appreciate face-to-face interactions. Conversely, online-only banks provide digital convenience but lack a physical presence. Cost is another consideration; online banks often boast lower fees and better interest rates owing to reduced operational costs. The quality of customer service can vary between the two, but traditional banks usually excel in personalized service.
An experience that shaped my choice involved a mortgage application. The process was unexpectedly smooth and efficient with an online-only bank, which provided 24/7 support and a user-friendly platform. This convinced me of the viability and advantages of online banking for certain financial needs. However, I still prefer the reliability and personalized touch of traditional banks for other services.
Dana Ronald
President of Tax Crisis Institute, Tax Crisis Institute
