Online Banks versus Traditional Banks: Which Is Best for Your Clients?

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Finding a good deal on a checking or savings account is becoming more difficult with banks charging higher fees. Over the last few years, online banking has become a popular alternative to brick-and-mortar banks, but it’s not right for everyone. If you’re thinking about moving your accounts, there are a few things you need to keep in mind. Here’s a breakdown of the pros and cons of trading in your traditional bank for a virtual banking experience.

What is a bank?

A bank is a financial institution licensed to accept deposits, lend money and offer various related services, including savings and checking accounts, currency exchanging, wire transfers, money orders and cashier’s checks. The loans made can be for the purchase of a home or vehicle or for a business-related matter such as buying or growing a company. Some banks also offer credit and debit cards, financial advice, wealth management and trust services.

One way to categorize banks is by whether or not they have a physical presence for customers. Those that do are known as traditional banks. Other banks have no physical presence for customers and are called online or virtual banks. A number of banks, especially large financial institutions like Chase Bank and Bank of America, offer both an online and a brick-and-mortar presence for customers.