Last Updated on January 29, 2021 by Yetty Akindele
Would you rather go to a physical bank for all of your banking needs, or, would you prefer to bank on the go with just a few taps on your mobile device or pc, from wherever you are?
A decade ago, it would have stirred a keen debate about ditching a proven physical banking system, for a fairly novel digital one in the banking industry. While people may have welcomed the digital banking system, it is with caution. This is because it presented a myriad of opportunities and posed certain challenges in how we viewed banking. Plus, our tendency to stick to what’s familiar makes acceptance of this alternate way of banking seem a bit daunting.
Ditching queues and waiting long hours just to get a transaction through was a no-brainer for most, but it also meant almost walking away from the face to face interaction and certainty a physical bank affords, especially when it came to people’s hard-earned money. Was it a chance most were willing to take?
Now, to the present.
Even before the COVID-19 pandemic ravaged the world, people got busier, and life seemed demanding. A lot of people decided to make it easier by cutting out places they didn’t need to be at. The bank happened to be one of them. Today, with the need to maintain social distancing and staying safe as much as possible, what do we stand to miss, or gain from this new digital banking system?
Canada has held up a good reputation for its solid banking system. Needless to say, the traditional banking system has proved itself efficient. This means that people are fairly comfortable with old physical banking methods. However, the world is changing at a fast pace, and as we know, change is the only constant thing in life. Digital banking is here, and it has come to stay. The question is, should we trust this method of banking as well?
Let’s take a look at the concept of Physical versus Digital banking, shall we?
Physical Banking involves customers going to the bank to handle daily transactions. For every deposit, transfer, withdrawal, and loan, you will need to find the closest bank to you. Every issue will be handled physically. Sometimes requiring scheduled appointments.
With online banking, a lot of physical dependencies have been stripped off. There is practically zero physical interaction. Consequently, they have made everything needed for successful banking available to you online. These digital banks also make provisions for customer service via phone calls which are usually 24/7. The option to communicate via chats also exists. Some also provide physical cafes as is the case with Tangerine.
The best way to compare these two methods will be to look at each differently.
Pros of Physical Banking.
Physical Presence and Personalization
We all get some relief when we walk into the banking hall and head straight for the customer care desk. There is an actual building with people that could either give you money or tell you about your investments. They smile at you, listen, and tell you everything you need to know to make your issues go away. At the counter, you will be reassured and even educated on what to do if you get into a similar issue in the future. That reassuring feeling raises one’s trust for the bank. Just knowing there is somewhere you can go to for your banking solutions makes you rest easy.
Easy and Quick Access to Cash
Ever walked to the ABM/ATM and after waiting for so long, it does not dispense cash? That doesn’t happen at the bank. There’s almost never a time when your teller tells you, “we don’t have any more cash, please check with another bank, or come back later.”. There is always cash at the bank, and that’s good. At a physical bank, you can trust the availability of cash.
Downsides of Physical Banking
Long Waits and Processes
Long queues at banks are pretty usual. Human beings do most of the work, so proper care is to be taken. This will probably cost you time and energy. Lines and long procedures are no fun either.
At a time like this, we have to admit that physical contact is definitely not recommended. There is a need to stay away from crowded areas, and other people as much as possible. Physical banking relies on contact for almost everything. If you need to fill forms, collect or deposit cash, contact is necessary.
Too Many Mails
Those countless mails that drop in your mailbox are how the bank communicates with you. Your chequing account statements and bills. That’s how they tell you when and how things can be done. The method is very outdated, but it is a physical proof, and you’re sure it’s signed by the banks themselves.
Much like physical banking, digital banking has its pros and downsides
Pros of Digital Banking
No Fees/Lower fees
Everybody wants to save money, no matter how small it is. Digital banks like Tangerine pride themselves in offering no fee chequing and savings accounts. Along with Tangerine, Eq Bank, Simplii financials and a couple of others also offer no fees on daily and savings bank accounts. They are able to do this because of their lower overhead unlike brick and mortar banks that run a high overhead and operation cost in terms of having staff as well as several branches. Digital banks require less staff and no physical locations. This means you don’t have to pay outrageous amounts to bank with them.
Higher Interest on Savings
Digital banking offers higher interests on savings account, Isn’t that great? You earn more when you save more. This idea is appealing to a lot of avid savers and has been widely accepted across the nation.
Nothing beats the convenience you get from online banking. Not having to deal with going to an actual bank to process transactions is a big deal. You can move and transfer money around from the comfort of your bed. You can make payments from anywhere in the world at the click of a button. Your time can be channeled into doing other things.
Digital Banking Saves Time
If you’re one of those people that hates waiting in line at the bank, then online banking was created for you. From anywhere in the world, you can make those transactions happen with just the use of a mobile app. No hassle and surely no long wait in lines. If you need assistance on issues, you can easily reach the customer service via phone or email. It’ll take a shorter time to get through to them and conversations will be quicker which means a resolution of your issue will be faster, it all works out for you.
Downsides of Digital Banking
Less Personalized Customer Service
The huge turnoff about online banking customer services are the lack of personalization. There is no face to face conversations. You can’t read emotions or see the escalation processes. You just know that someone is on the other end of the phone call or email, and they might know what to do or not and you don’t get to choose.
More ABM/ATM Fees
To get cash, you’ll need to go to the ABM/ATM and to use the ABM/ATM, fees are attached. It’s even higher when the ABM/ATM is privately owned or belongs to another bank. Using ABM/ATMs can attract a little fee that when calculated over time, adds up to a ridiculously high amount of money.
Limitations on Transactions
Digital banking is great for customers that handle chequing account transactions. If you are someone who does international and complicated banking transactions, then it might not be as flexible for you. Some examples of transactions with restrictions are; wire transfers, sending money abroad or a deposit box.
Miss out on Professionals
One disadvantage of online banking is taking away financial professionals from offering services to the customers that walk into the bank. If you need to understand what to do or receive better offers on a product, you won’t be able to. With digital banking, you are solely tied to the information you are provided with on products and you’ll have to work with it.
So, which is better for you?
According to CBA, “More than half (76 per cent) of Canadians are using digital channels, both online and mobile, to conduct most of their banking transactions.” This shows you how people are catching on. It’s almost impossible not to need both systems right now. With time and innovations, it is certain that traditional banks will tilt more into the digital world and more challenges will be solved. There are different reasons to incorporate both systems. Except you don’t make major financial transactions, it will be advisable to shuffle between both systems.
Digital banking presents the future of banking in a fast, easy, and comfortable way. On the other hand, Physical banking may seem to most, like a more secure, and more assured way of banking, either point is valid. However, in a fast-changing world like ours, adaptability is a superpower!