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<p>There is a large group of people who feel banking must be done in person, at a brick-and-mortar branch staffed by competent, friendly employees. However, over the last decade the reputations of many traditional banks have come into question. The financial crisis alongside account scandals have caused consumers to rethink their banking relationship. According to a recent <a href="https://lendedu.com/blog/best-banks" target="_blank">study of best banks</a>, large banks, on average, receive more complaints than smaller regional banks.</p><p>Many folks, <a href="https://www.salesforce.com/blog/2016/03/stats-about-millennials-mobile-banking.html" target="_blank">especially Millennials</a>, have grown accustomed to transacting online and via smartphones. For them, online banks offer the feature they want without having to spend precious time in bank lobbies.</p><p>Have you been considering making the switch to an online bank? Here are the pros and cons of online vs branch banking, and why you might want, or not want, to switch to an online bank.</p><p><strong>Online Banking</strong></p><p>An online bank is really a computer center and a website. You perform all your banking through an online interface on your computer and/or an app on your smartphone.</p><p><em>Pros</em></p><p>Convenience: Online banks never close. As long as your computer or smartphone can connect to the Internet, the online bank stands ready to handle your transactions and inquiries. You can pay bills, transfer money, and keep an eye on account activity without waiting for a teller or driving in your car.</p><p>Costs: Online banks have lower costs because they don&#8217;t have to pay for the acquisition, staffing and maintenance of brick-and-mortar branches. Invariably, online banks share their lower cost structures with their customers by offering no-fee checking and saving as well as higher interest rates on deposits.</p><p>Goodies: Many online banks offer enticing reward programs and excellent customer service, using some of the money they save by avoiding physical branches. For example, you might get a special savings or loan rate if you have a high volume of transactions. The credit cards offered by online banks may offer especially generous points, miles or cash back.</p><p>Environment: You don&#8217;t have to be a tree-hugger to appreciate the smaller carbon footprint of online banks. First, you don&#8217;t have to drive to a branch, which reduces fuel consumption and pollution. Furthermore, you waste a lot less paper, since you don&#8217;t need deposit slips, paper statements and so forth.</p><p>Physical safety: You&#8217;ll never get caught in a bank heist if you never go to a bank branch. Also, not having to drive to a branch means less opportunity to get into a car accident. Some thieves stalk bank customers as they leave the bank. Of course, there are threats uniquely associated with online banking, which we&#8217;ll cover below.</p><p><em>Cons</em></p><p>The personal touch: Some customers prefer talking with a human being instead of interacting with a computer screen or app. Customers often develop friendly relationships with bank staff, and appreciate asking questions of and getting answers from humans. With today&#8217;s aging population, the social interaction provided by a visit to a bank branch might be an important part of an elderly person&#8217;s day, especially if it helps prevent them from becoming recluses.</p><p>Cyberthreats: Online banking, like any online activity, can be vulnerable to spamming, hacking, identity theft and other cyberthreats. Online banks respond with a variety of safety protocols, including encryption, password protection, and special anti-malware software. It&#8217;s up to customers to make sure they practice safe online behavior, such as not sending out your credit card numbers, not opening email links and so forth.</p><p>ATM transaction fees: Brick-and-mortar banks don&#8217;t charge for their customers&#8217; use of their ATMs. Online banks don&#8217;t have ATMs, so they make arrangements to appear on other ATM networks where transactions may be charged a fee.</p><p><strong>Branch Banking</strong></p><p>It&#8217;s easy to know the pros and cons of branch banking &#8211; simply flip the pros and cons of online banking.</p><p><strong>Before You Switch</strong></p><p>Before you switch to an online bank, be sure to compare the services and costs of your physical bank or credit union first. You&#8217;ll want to check the fees associated with bill-payment service, transfers, and minimum balance requirements. Also, you should verify that the online bank is a member of the Federal Deposit Insurance Corporation, which insures each account up to a quarter million dollars.</p><style>
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<div class="metaInfo"><bylineMeta><p>By Jessie Cole</p><p>LendEDU</p></bylineMeta></div>

The pros and cons of switching to an online bank