Pros & Cons of Online and Mobile Banking

By Janet Siroto · June 07, 2022 · 9 minute read

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Pros & Cons of Online and Mobile Banking

These days, most of us do all kinds of tasks online. From scheduling a yoga class to booking a dinner reservation to ordering more 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. They worry perhaps that they’ll hit the wrong button and send thousands of dollars speeding off into unknown parts of the ether. Or maybe 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 money. They may not have the time or inclination to wait in line or chat with bank tellers.

But is one style of banking better than another? To answer that question, let’s examine some pros and cons of digital banking.

Once we’ve examined these benefits and downsides of online banking, you can make an informed decision about what kind of banking is right for you. Maybe it’s even a combo of the two styles. Then, we’ll talk about how to move your banking to an online-only platform if that’s what suits you.

What Is Online Banking?

Consumers have a few different options when it comes to where they park their money and use it to complete transactions. The traditional options are to use a commercial bank with bricks-and-mortar branches 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 as well as the ability to conduct business at a branch. Mobile or online banking in this sense allows you to look up your accounts and complete transactions online (more on the difference between the two terms in a minute). Typically, this means you can transfer funds and even mobile deposit checks.

But these added services are not what we are talking about today; here, we are discussing the use of an online-only or an internet-based bank versus a traditional bank. Online-only banks are a newer alternative to traditional banks. Sign up for a digital bank, and you will do all of your banking operations online. Online banks generally have no physical locations, which can help them to keep overhead costs low. In turn, they typically pass those savings on to you and offer some perks over traditional banks, such as a higher interest rate on savings accounts.

Because not all digital 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. Knowing these details should help you evaluate the benefits of both mobile banking and traditional banking and which one suits you best.

Recommended: Is Mobile Banking Safe?

Pros and Cons of Online Banking Services

If you’re used to turning up at your local bank branch and chatting with the tellers, digital banking may seem like a big shift. Or perhaps you’re a person who is already using mobile banking but you wonder if you’re missing out on any perks. In either case, take a look at what digital banking can offer. Here’s an assessment of the pros and cons of online banking.

Pros of Online Banking

Technology can offer some tremendous conveniences and perks to banking. Consider these pros of online banking:

Higher Interest Rates

As mentioned, banks without bricks-and-mortar locations tend to offer a higher rate of interest on cash savings accounts. Currently, the national interest rate on savings accounts is 0.06%.

This is a mere $.60 per $1,000 over the course of a year. 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 obviously a significant improvement.

Recommended: APY vs. Interest Rate: What’s the Difference?

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. You may wonder how much money you need to open an account online. Some digital financial institutions do not require a minimum amount of cash be kept in your checking and savings accounts. Your balance in a digital bank account can be just a few dollars, and you still won’t be hit with charges on your statement.


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 secure access to the internet. If you’re working an 8-to-6 job where you can’t sneak out to meet with a teller, the convenience of banking outside working hours is a gamechanger. Also, as we lead more fluid existences (say, working from home), there’s simply the time savings of being able to bank where you are versus walking or driving to a branch.

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.

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Cons of Online Banking

Of course, digital banking isn’t perfect. What is? There are some potential downsides to managing money this way, though many of them depend on your particular personal finance style. Here, some cons of online banking to keep in mind:

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. If you are a person who wants this kind of personal connection, you may not be well-suited to digital banking.

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; you may or may not be able to deposit physical cash, and if you can, there may be limits on how much or how often. 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. It’s worth spending time to see exactly where a digital bank has allied ATMs near your usual haunts, like your home and office, before signing up.

What Is the Difference Between Mobile Banking and Online Banking?

It’s not uncommon for people to use the terms mobile banking and online banking interchangeably, but there is a difference.

•   Mobile banking refers to the kind of banking you can conduct when you download an app and use it on a cellphone or a tablet.

•   Online banking is the sort of banking you do when you connect via a secure WiFi connection, meaning you might be using a laptop to check your balance or transfer funds.

Both of these are ways that you can manage your money without turning up at a physical bank. Wherever you are, as long as you have a secure internet connection, you can pay bills, move money between your checking and savings accounts, and see how much interest you’ve earned, among other things.

Security of Traditional and Online Banks

There is often a misunderstanding about security at banks. People worry, Will my online account be hacked? Are online savings accounts safe? The truth is, 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 $250,000, regardless of whether the bank is online or not. Digital banks generally tend to offer similar fraud protection programs as bricks-and-mortar banks.

Security typically has more to do with whether you use your debit card only on protected sites, do not access your banking information on a public computer, and avoid 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 some kind of bank 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. The process can likely all be done online, so you don’t have to sign and return physical paperwork.

Usually, opening a digital bank account requires two steps: First, you open an account at the new bank. To do this, you will have to answer a series of questions, and you will likely need to provide personal identification information like your Social Security number, date of birth, and more.

Next comes funding the online bank 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 by linking to an existing account you own. Most of the time, the sign-up process can be done in a matter of minutes, and you’ll be ready to start using your digital bank account.

💡 Recommended: What Do You Need to Open a Bank Account Online?

The Takeaway

Whether you call it online banking, mobile banking, or digital banking, the concept of doing all of your keeping your accounts at an online-only bank offers many rewards. You’re likely to earn higher interest and pay fewer fees, for instance. But for those who like banking in person at a branch and having a relationship with the team there, then it may not suit you. Think carefully about what suits your personal financial style best and will keep you on top of your money matters.

If you do think an online bank might be for you, come see what SoFi offers. When you open a new bank account with direct deposit, you’ll enjoy a terrific APY, none of the usual monthly, minimum-balance, and overdraft fees, plus you’ll be able to access your paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


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