Is Digital Banking the Same as Online Banking?

By Sam Slabyk
January 14, 2021
Chime is a financial technology company. Banking services provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC

Do you remember the last time you stopped at a bank for a transaction? The more that banking technology allows us to perform our financial operations online, the less likely it is that we’ll need to step foot into a brick and mortar bank. We’re living in an era of digital banking, which means that your banking behavior and modes of payments have probably changed significantly over the last decade. 

As cash and checks become old schools, terms like “digital banking” and “online banking” sneak into our lexicon. While online and digital banking both sound very similar, we’ll delve into the key differences between these terms to help you make more informed decisions about your finances and the technology that manages your money.

  1. Online Banking: a brief overview
  2. Digital Banking Explained
  3. 2020 – The year of digital banking
  4. Everyone is different

Online Banking: a brief overview

Online banking is the form of banking that many of us rely on these days as it gives us the ability to manage your bank accounts online using a mobile device or a computer. There’s no need to visit a bank branch, and the best part is that you can do all of your banking duties when it’s most convenient for you, including outside of typical banking hours. 

Online banking is meant to be convenient, saving you great amounts of time and letting you do banking on your own schedule rather than only during the time your local bank branch is open. Almost everything you’d normally do at a traditional bank or credit union location can be accomplished through online banking, starting with opening an account.

You can typically pay bills, apply for a loan, transfer funds, deposit checks, and verify transactions and account balance. The one advantage traditional banks and credit unions have over their online counterparts is the ability to withdraw cash using an ATM.

More and more online banks and credit unions are providing access to a network of ATMs that won’t charge you a fee. At the same time, it provides convenience since you no longer need to visit your local branch every time you need to manage your financial transactions – we can now process the following transactions faster and more safely by either logging on to a mobile app or increasingly with just a few swipes on our phones:

  • Paying bills
  • Transferring money to family/ friends
  • Setting up and cancelling Direct Debits
  • Checking the balance and correcting any accidental slips into the red
  • Moving money between accounts
  • Some banks even allow us to pay cheques in
  • Sending money internationally

Going cashless

More and more of us no longer carry cash at all. The comfort with which we can now access our bank accounts 24/7, 365 days of the year, means that cash is rapidly becoming obsolete in many places.

Digital Banking Explained

So what exactly is digital banking and how does it differ from online banking? While online banking deals with the day-to-day transactions — the nuts and bolts that most people will need to manage their finances effortlessly — digital banking refers to the comprehensive re-engineering of a bank’s internal systems. Digital banking is the machinery that covers both online and mobile banking and manages every transaction and digital program undertaken by either a financial institution or the customer that they provide.   

2020 – The year of digital banking

Changes in consumer needs brought by the COVID-19 pandemic and other factors are increasingly changing the banking industry from conventional teller-based branch banking toward a digital banking model.

Banks worldwide are pushing forward to build advanced digital banking infrastructure and adapt their business model to accommodate client desire for all-digital banking and deliver enhanced hybrid service.

The pandemic phase played a role in embracing a digital lifestyle. Yet, the virus is only a part of the reason why 2020 is the year of digital banks – the change has been on the horizon for several years because of big data, blockchain, AI, and peer-to-peer lending, and rising confidence in these industries has further propelled their adoption.

Everyone is different

The traditional banking models may have a loyal customer base. Nevertheless, with technologies moving at such an incredible pace, we can only be excited to think about how this will influence our lives in the future year.

This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.

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Sam Slabyk is a Digital Content Specialist. Sam loves to write about banking, budgeting, and tips on how to save money.

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