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Traditional Banking
Introduction
Every bank has a separate headquarters, a physical setup to run its business operations, and individual branches disseminated at distinct locations across the world. Initially, the banking system started offline until fintech models swept off our feet with its quirky traits. Though new banking systems like digital banking and mobile banking garnered enough attention in the financial space, traditional banking is still considered a safe line for many.
What is traditional banking?
Traditional banking refers to the process of carrying financial transactions at offline bank branches, either depositing or withdrawing funds from your respective accounts. This system allows the customers to meet the bankers personally, communicate and discuss their financial issues with them, and get effective solutions to boost their income levels. Also, unlike digital banking, there’s a personalization involved in traditional banking. This kind of banking model aids in building healthy relationships with the banks as opposed to other banking approaches.
How does traditional banking work?
The functionality of traditional banking is pretty straightforward. In this model, banks have a physical presence at multiple places, running regular business operations at full throttle. Traditional banking offers diverse personalized financial services like collecting checks, paying utility bills upon standing instructions from customers, issuing short-term and long-term loans, providing bank lockers, and much more.
Apart from all these, there’s security and transparency involved in traditional banking. There are banking professionals to guide you through every process and be on your guard for all your banking needs. Though digital banking eliminated bank visits by traveling long distances, there are some financial services that one can avail only via offline.
Characteristics of traditional banking
Safe and Secured − Traditional banking is considered as the safest and secured line for conducting financial transactions. Unlike internet or digital banking, there’s no fear of facing imposters or hackers in this model, putting your money at risk. So, the scope of losing money in traditional banking is minimal or null.
Offers in person service − Some customers like face to face communication, as they feel it’s more convenient and trustworthy. For such people, traditional banking is an ideal model to deal with day-to-day financial transactions. Traditional banking adds the layer of confidence, taking full responsibility for your money. This is not the case of online banking, as they are ingrained with frauds and thefts and hacks.
Deals with considerable amounts − This is a basic feature of any bank, as they deal with chunks and loads of money received from several customers. They act as a bridge between people who have money and the ones who are in need of it.
Improves bank relationships − The more the customer visits a bank, the better the relationship he or she’ll be able to make with a bank. Traditional banks offer the personal touch which you won’t feel in the case of digital banking.
Pros of traditional banking
Since people have different banking needs, you might not be able to find everything online. So, here are some pros of why you should prefer traditional banking over digital mode.
Offers swift solutions − Though online banking has reduced the uncertainty of how one carries out their financial transactions, it might not be able to address all your problems in one go. In traditional banking, there are banking professionals who are always available to discuss and solve your financial issues. These bankers will levy a small fee for offering their professional services.
Multiple financial products available − Banks don’t put all their financial products on their online portal. Some financial products are tailored to only a set group of customers. In traditional banking, the customer gets to access every product that’s present in the financial and banking space. Whether it’s Roth IRA or business loan or certificate of deposit or checking account, this model has it all at one place.
Enjoy a wide range of services − Traditional banking offers an array of financial services to its customers such as overdraft, make payments, provides loans, bank alerts, advisory services, and etc. Unlike online banking, you don’t need the internet or a smart device to deal with the financial aspects.
Secured mode for higher amounts − If you are sending huge cash to another person via an online route, there’s a chance that you might lose all the money during the transit process itself. This is due to the ubiquitous hackers and fraudsters floating on the internet. This is not the case with traditional banking, as the person directly gets to meet the banker to conduct their transactions. There’s transparency and security involved in traditional banking as it’s not the case with digital approach.
Cons of traditional banking
As they say, the grass is not always greener on the other side, this goes the same for traditional banking as well. Here are some of the cons of this approach drafted below.
Outdated approach − Banks require huge investment to upgrade their physical setup and infrastructure. Some banks don’t go with any changes because of this very reason. They stick to the paperwork approach instead of tap-away solutions.
Tedious and time taking process − Traditional banking approach can be a sound one for customers who don't believe in online banking systems. But this approach takes a lot of time to process one single task. Say, you want to open a checking account at an offline bank branch. The bank will put you through paperwork, documentation, verification, etc. With online banking, you can accomplish this task in minutes.
No 24-hour service − Online banking model is integrated with programmed tools that guides you through the whole process. Humans are replaced with chat bots and query search boxes in online banking. The bots respond to all your requests in a flash. However, traditional banking is limited to a certain time frame. You can visit the bank and resolve your queries only during that slot.
Conclusion
Traditional banking offers a wide array of services that are not easily present in other modes of banking. Some people still follow the old banking styles because of the safety and security it brings to the table. Customers will get in-person banking and financial services, which is not available in the case of digital banking or internet banking.
FAQs
Q1)Why traditional banking is better than internet banking?
Ans)Some of the reasons why traditional banking has a upper hand over internet banking includes convenience, safety, multiple financial products, in-person financial services, etc.
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