Difference Between Internet and Traditional Banking

Internet Banking and Traditional Banking are the are the two different forms of Banking.


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These both are the platforms for the costumers of the bank to withdraw money or to perform their banking transactions.

The important thing about internet banking is that it is always accessible, which means you can operate your accounts anywhere, at any time. You can make your bill payment or you can check your bank balance by just using mobile apps.

Some of the online banks even allow the customer to track their payments by conveying the mobile text alerts.

Traditional banking is concerned with a physical location that you visit to get access to your account. Some traditional banks will allow you to access accounts online, but you still may need to visit the bank to confirm your identity or submit documents.

Internet vs Traditional Banking

The main difference between Internet Banking and Traditional Banking is that Internet Banking enables a person to transfer money anytime and anywhere in the world by just using mobile phones or computers with an internet connection. While Traditional Banking is concerned with transferring money physically from the banks.

Internet vs Traditional Banking


Comparison Table Between Internet and Traditional Banking (in Tabular Form)

Parameter of ComparisonInternet BankingTraditional Banking
ContactCustomers can have only electronic or online contacts.Customers can have a direct face to face communication from their bankers.
Customer serviceIn online banking, the customers of the bank don’t have to stand in lines to perform their banking transactions.In traditional banks, the employees and staff members of the bank can attend only a limited number of the customers. And customers have to stand in line to perform their banking transactions.
CostsNo costs are incurred in Internet banking as they do not have a physical appearance.There are many operating and fixed costs that are incurred by traditional banks.
AccessibilityCustomers can operate their accounts anytime, anywhere using their mobile phones.Customers have to visit the bank for their work only in working hours.
TimeInternet banking is not a time taking process as customers do not have to visit their branches to operate their accountsTraditional banking drains a lot of time from the customers as they have to visit their branch to obtain access to their accounts.


What is Internet Banking?

Internet banking allows customers to retain their precious time and to have control over their financial transactions and undertakings. According to research, 6,10,00,000 households use the Internet for daily Banking needs.

For the users of internet banking, the services of online banking are the most important driver of the financial institution selection.

Internet banking is the most superior technology for educated and busy people who didn’t have much time to go to banks for their banking undertakings. Internet banking is useful for customers to meet their daily requirements for banking transactions.

Eighty-six percent of individuals with incomes over Rs57,03,191.25 have used Internet banking.

Essential motivators of Internet Banking-

  1. Convenience
  2. Control
  3. Cost Savings

These motivators are the primary cause that directs the consumer to the adoption of Internet Banking. According to research, In 2007, 30% of the online bankers have stated that they have joined internet banking to save their time.

These internet bankers want to easily obtain immediate access to their accounts to conduct activity from any part of the world at any time. Customers want to avoid their cost and time in making trips to the bank to withdraw money, or to perform their other banking transactions.

internet banking

What is Traditional Banking?

Traditional banking is a financial institution that is committed to the management of the money that their client’s deposit in the bank custody and on the other hand the bank utilizes that money to grant it as a loan to individuals or companies (charging them interest).

Traditional banking resists e-security threats. Nowadays many cases came forward associated with e-banking.

Traditional banking is secured banking these days as e-banking is the tempting target for hackers.

Traditional Banking consists of 3 components:

  1. Capital
  2. Deposits
  3. Loans

Capital is the main support of traditional banking. All banks are laid upon the foundation of capital.

This capital money is then prudently converted into loans that give rise to employment and economic development.

Deposits, once the capital is invested, it is supported through the accumulation of deposits that constitutes the savings and liquid cash reserves of individual persons and business communities. Deposits are insured up to 250,000 by the US government Federal Deposit Insurance Corporation (FDIC).

Loans are the union of capital and FDIC secured deposits that account a basis for the amount of money that can be disbursed into loans.

traditional banking

Main Differences Between Internet and Traditional Banking

  1. The primary difference is that you are accessing your account, making payments, and reconciling statements using your computer in internet banking while in traditional banking you have to go to your respective branch or office to operate your account.
  2. Traditional banks exist physically for serving the customers while Internet banks do not have a physical appearance as services are provided online.
  3. Customers who travel in foreign countries cannot pay close attention to their financial transactions in traditional banking while in internet banking customers can control their financial transactions from anywhere in the world.
  4. In traditional bankings, customers have to spend money on visiting their respective branches while in internet banking they can avoid these charges.
  5. In traditional banking, the customers do not encounter e-security threats while traditional banking security is one of the problems faced by customers in accessing accounts through the internet as online banking is a tempting target for hackers.
Difference Between Internet and Traditional Banking



Both Internet Banking and Traditional Banking have their special features and play an important role in accessing or operating accounts of respective users.

Traditional banking serves the customers physically so it consumes a lot of time in carrying out bank transactions like – checking bank balances, transferring money from one account to another while Internet banking does not serve physically as services are provided online, so it is more efficient.

Key Differences Between Internet and Traditional Banking (PDF Format)

Download the key differences in .PDF format, to read or print them later:

Difference Between Internet and Traditional Banking



  1. https://jfin-swufe.springeropen.com/articles/10.1186/s40854-017-0062-0
  2. https://www.emerald.com/insight/content/doi/10.1108/14635770110396647/full/html
  3. https://arxiv.org/abs/1209.2368
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