Internet vs Traditional Banking: Difference and Comparison

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


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Monetary policy of a country is managed by

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These both are the platforms for the bank’s customers to withdraw money or 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 check your bank balance by using mobile apps.

Some online banks even allow customers to track their payments via 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.

Key Takeaways

  1. Internet banking allows customers to manage their bank accounts online, while traditional banking requires customers to visit a physical branch to perform banking transactions.
  2. Internet banking provides customers with 24/7 access to their accounts and the ability to perform transactions from anywhere with an internet connection. In contrast, traditional banking may have limited hours and require customers to travel to a branch.
  3. Both internet banking and traditional banking offer similar services, such as checking and savings accounts, loans, and credit cards, but internet banking may have lower fees and higher interest rates.

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 using mobile phones or computers with an internet connection. At the same time, Traditional Banking is concerned with transferring money physically from the banks.

Internet vs Traditional Banking


Comparison Table

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


What is Internet Banking?

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

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

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

Eighty-six per cent 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 consumers to adopt Internet Banking. According to research, In 2007, 30% of online bankers stated that they had joined internet banking to save time.

These internet bankers want to quickly obtain immediate access to their accounts to conduct activity from any part of the world at any time. Customers want to avoid the cost and time of 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 committed to managing the money its client’s deposit in bank custody. 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 come forward associated with e-banking.

Traditional banking is secured banking, as e-banking is a tempting target for hackers.

Traditional Banking consists of 3 components:

  1. Capital
  2. Deposits
  3. Loans

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