The banking industry has become increasingly digitised in recent years. There are now online-only banks, modern banking and traditional banking options. The industry is currently balancing both the traditional and modern banking approaches. While some people prefer the accessibility of modern banking, others feel more comfortable with the traditional method. The banking industry seems to be at a crossroads – will we stay with traditional banking or continue with digitisation?
Let’s take a closer look at the different banking options available.
A traditional bank has a physical headquarters and branches across the country. People can visit the store and carry out their banking with branded ATM’s and bankers. Most people like speaking with a person face-to-face in the store and asking them for advice. They can get one-to-one treatment instead of navigating a phone call system or app.
Many traditional banks now have mobile banking options for customers. You can use their app to monitor your bank balance, transfer funds and much more. Traditional banks are becoming much more accessible with this digital approach. You can also use an open banking approach to monitor your money through a third party provider.
On the other hand, modern banks are only online and do not have any physical branches. They are available 24/7 on the internet and accessible through an app or website. It’s often a much easier application process, and there are more options for borrowing. With their customer-centric approach, many modern banks are able to offer much more personalised loans and can therefore be a better option for customers who may otherwise be declined credit at a traditional bank.
Some of these modern banks are aimed at the younger generation. For example, the modern bank, Monzo, allows customers to separate their funds into different ‘pots’. They can divide their budget, limit spending and even access their salary a few days early. Modern banking focuses on their target customer and makes finance easier.
Both forms of banking have disadvantages. Traditional banks are only open for limited hours, and the application process is much longer. It’s harder to apply for loans, and there are fewer borrowing options due to their rigid processes.
Modern banks do not have stores for customers to visit. It can be difficult to solve problems and seek financial advice when you can’t speak to someone directly. You also need an internet connection to use the app, and fees can be much higher.
What Does the Future Look Like?
Online banking flourished in the pandemic as banks closed their stores. However, many people still prefer the traditional way of banking, and that doesn’t seem to be going anywhere.
Your preference of banking all depends on your personal circumstances and lifestyle.