Earn $20 when you view your rate on a personal loan *
Bonus deposited into a SoFi Money® account. See terms.

Pros & Cons of Online and Mobile Banking

January 24, 2019 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Pros & Cons of Online and Mobile Banking

These days, it seems like you can do just about anything online. From scheduling a workout class to arranging for a ride at your doorstep to ordering toothpaste instead of grabbing it from a store, our smartphones and computers make it easy.

Still, there are some folks who don’t feel comfortable conducting their banking online. Having a physical bank makes them feel more at ease, is more familiar to them, and they feel like their money is safer.

Those who prefer to do online banking may like the convenience of 24/7 access to their info. Generally speaking, they are not people who tend toward physical banking services, like depositing checks with a bank teller. For those that would like to take a more balanced look at the question of where to bank, let’s examine some pros and cons of online banking.

Once we’ve examined these pros and cons to online banking, you can make an informed decision about whether online banking is right for you. Then, we’ll talk about how to move your banking to an online-only platform.

What is Online Banking?

Consumers have a few different options when it comes to where they park their money. The traditional options are to use a commercial bank, or a credit union. A credit union is a financial co-op that is generally owned and operated by its members (as opposed to being a publicly-traded company).

Most traditional, retail banks offer mobile banking. Mobile or online banking in this sense allows you to look up your accounts and transactions online, transfer funds, and even mobile deposit checks. But that is not what we are talking about today; here, we are discussing the use of an online-only or an internet-based bank.

Online-only banks are a newer alternative to traditional banks, where consumers conduct all banking operations online. Online banks generally have no physical locations, which can help them to keep overhead costs low. In turn, they typically offer some perks over traditional banks, such as a higher interest rate on savings accounts.

Often, an online savings account that offers a more competitive rate of interest than traditional banks will limit the amount of times that a customer can move money out of an account. Restricting the number of transactions or services is another way for online banks to minimize costs. These types of restrictions typically vary by online bank.

Because not all online banks are the same, the following list of pros and cons won’t capture every nuance, but hopefully you’ll get an idea of what services are offered, and the benefits of both mobile banking and traditional banking.

Pros of Online Banking

Higher Interest Rates

As mentioned, banks without brick and mortar locations tend to offer a higher rate of interest on cash savings accounts. Currently, the national interest rate on savings accounts is 0.08% .

This is a mere $.80 per $1,000. On the other hand, an online bank is likely to pay 1% annual percentage yield (APY) or more , which amounts to $10 for every $1,000. This is a significant improvement.

No Minimum Balance

Many traditional banks still require that you maintain a minimum balance or have an established automatic deposit or they will charge you a monthly fee.

Some online financial institutions do not require a minimum amount of cash. SoFi Money®, a cash management account, is one of them; new customers can get started with no minimum balance.


Online banks are open 24 hours a day, which some customers find useful for maintaining their finances and making transactions after normal bank hours. All you need is access to the internet. When you’re working an 8-to-6 job where you can’t sneak out to chat with a teller for an hour, the convenience of banking outside working hours is a gamechanger.

ATM Access

Most online banks will be part of an online network of ATMs, such as MoneyPass or Allpoint. There is generally no fee to use the ATMs, and customers can locate them online. If they do not use an ATM network, they will typically offer to refund ATM fees up to a certain number of withdrawals.

SoFi Money: No account fees
and fee-free access to 55,000+ ATMs worldwide.

Cons of Online Banking

No Live Assistance

While most online banks provide a customer service line, they generally do not offer personal bankers. This means that there is no “live” person to help you with your banking needs, such as setting up accounts, applying for loans, getting a notary, or even just someone with whom you can discuss a simple issue or complaint.

A personal relationship with a banker could come in especially handy in the event that you are trying to secure a loan at the best rate, or have a business that you are looking to expand via borrowed funds. This is a person who knows and trusts you and could potentially make a difference in whether or not a bank will issue a loan.

Limited Access

Online banks typically keep their fees low and interest rates higher by offering limited services. They may or may not offer debit or credit cards, or the ability to deposit physical cash. Every online bank is different, so do your research on the services they offer.

Limited ATM Access

Although many online banks will have a network of ATMs that customers can access, they may not be as easy to track down as ATMs for the major retail banks.


There is somewhat of a misunderstanding about security at banks. Traditional banks are no more or less secure than online-only banks. Any bank that is insured by the FDIC guarantees the same amount of insurance in the event that the bank goes under, $250,0000, regardless of whether the bank is online or not. Online banks generally tend to offer similar fraud protection programs to the retail banks.

Security typically has more to do with whether the consumer uses their debit card only on protected sites, does not access their banking information on a public computer, and avoids accessing private information while on public Wi-Fi networks. Unfortunately, even people who do everything right and take all of the proper precautions still find themselves the victims of fraud. Sometimes, it can only be attributed to bad luck.

How Do I Open An Online Account?

It all depends on the bank, but these banks generally have made it easier than ever to open up accounts and transfer money over. Typically, the process can all be done online, so you don’t have to sign and return physical paperwork.

The process usually happens in two steps: First, a new account at the new bank needs to be opened. To do this, you will have to answer a series of questions, and you will likely need to provide personally-identifying information like your Social Security number, date of birth, and more.

Next is funding the account, which can be done with a check or via a funds transfer. Usually, you are able to “pull” the assets into the new bank account, sometimes by simply providing the log-in information of your “old” account. They may require some extra verification (like making and confirming small deposits) before money can be moved. Most of the time, the process can be done in the matter of just a few days.

Interested in learning more about money management account offerings? SoFi Money is an online cash management account where you can spend, save, and earn, all in one product.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender