Essay - Traditional Banking vs Digital Banking | SBI PO, BOB Manipal, NICL AO 2017 Descriptive


Hello and welcome to exampundit. Here is another Essay on Traditional Banking vs Digital Banking which have been aced by Pallavi and Tripti Srivastava.


Winner - Pallavi


Traditional Banking vs Digital Banking


TRADITIONAL BANKING:

Brick-and mortar banking is a traditional banking system that typically offers full service banking including safe deposit boxes , withdrawal of cash etc. Brick-and-mortar refers to an organization that possesses a building or store for business operations. Brick-and-mortar businesses are companies that have a physical presence, which is a physical store and offer face-to-face consumer experiences.

Advantages of Traditional banking :

People nowadays think of internet banking is better than brick-and-mortar banking. However, brick-and-mortar can also provides some of the benefits to customers. Some of the advantages of brick-and-mortar banking are stated as below:

Ø  Convenience: Some people prefer choosing traditional banking methods compared to internet banking, especially for those senior citizens. The convenience and time efficiency of brick-and-mortar banking are more suitable. They can ensure that they can get the transaction receipts provided when they see their money change to another hands after successful of a certain transaction.
Ø  Customer Service: Brick-and-mortar banks are best to provide the customer services. Most of the older generations prefer using brick-and-mortar banking services because they know the service well and can go to the branch to withdraw their money, bank in money or even deal with the staffs. Furthermore, they can ask from the bankers to get information that they want face to face with the staffs 
Ø  Security : Security is always the issue and so they are still many people prefer to use brick-and-mortar banking services. If the customers have problems, they can easily ask for assistance from a bank representative to sort out their problems. Some people also feel comfortable when they actually see the money change hands as compared to online banking wherein all the proof that they get about their transactions is the receipt provided to them by the site after completion of a certain transaction.

Disadvantages of Traditional Banking:

Ø  Slow Service: However, through this traditional banking service, the banks will require longer time period for making loans to customers. Sometimes, it involves more prerequisites, and also slows of shifting money compared with internet banking. This will make those customers feel troublesome and refuse to use brick-and-mortar banking service again
Ø  Location: Customers need to go back to the physical branch for some banks' services like taking loans from banks or withdrawing money from saving accounts. When they encounter problems related to their banks' accounts, they need to rush back to the physical branch and ask help from the representative to solve the problems. If the location of the bank is far, it is inconvenient for those customers who are old or are not able to drive,
Ø  High Cost: Brick-and-mortar banking need to pay high amount of expenses costs as they need to build the branches in everywhere to provide convenience to their customers.
DIGITAL BANKING :

Digital banking become a new age of banking program. Online banking payment is defined that through internet to transfer funds or money from one account to another account to develop banking activity such as paying loans or bills, shifting funds, inspecting account details and balances. Besides that, users also can pay mortgages and buying futures, warrants, options and others through online banking payments. So that, online banking payments can also be intituled internet banking payment.

Advantages of  Digital Banking :

Ø  Convenience : Internet banking allows users to pay all types of bills or make any transactions or investments through internet. If customers find that they have busy working schedules or they simply do not find it convenient to visit their banks, then they might want to consider using internet banking.  Internet banking is a fast and easy way of managing their bank accounts and it has the potential to save them a lot of time and money. This means that the users no longer need to go to banks, press button for a queue number, sit and wait for the their turns. The idea of online banking is just taking the advantage of the internet, which connects the users to their banks. The users are able to connect themselves with their banks and they may choose the number of transaction like balance inquiry, fund transfer, bill payments, loan applications and even stock or mutual fund trading with a proper secure authentication process. 
Ø  Flexibility: Moreover, internet banking also allows the users the ability to view their accounts at anytime. As soon as they log into their accounts, they will be able to see whether there is anything amiss when you check on your deposits and debits. 
Ø  Safety : when people do not have much time even for personal work, Internet banking solves their problems. Many people who use internet banking services believe that as their accounts can be accessed by user name and password that only they know, their money is in safe hands. Whatever information they need about their bank account is only a click away. 

Disadvantages of Internet Banking :

However, like all good things, even Internet banking has certain disadvantages.

Ø  Lack of trust : Lack of trust is one of the disadvantages of internet banking. Many people still do not trust the internet banking services through internet. This is because they prefer to deal with human beings as they trust others like them rather than to trust a machine especially letting the machine to manage their money. They will worry that whether their money will be safe if being processed through internet banking.
Ø  Security : security threat has been a big concern to the publics. There are some cases of forgery have been happened in internet banking. There are some websites which can hack the usernames and passwords of internet banking users and later misuse them. In such cases, many people lose their money without getting informed and they will only know huge loses have been incurred when they receive the bill
Ø  Accessibility: Another concern about internet banking is its accessibility. If the internet server in the area that the users stay goes down, the users will be unable to access their accounts to make any payments or transactions through internet banking.
Ø  Customer Service: Last but not least, customer service affects people to use internet banking too. One very common disadvantage of online banking is when a person has some problem or query. In a normal bank, if one faces some problem, one can go to some employee of the bank to solve it. However, in the case of Internet banking, one will find oneself making endless calls to the customer service department.


Both the traditional and digital banking have their advantages and disadvantages. However, the popularity is dependant on the accessibility and government's effort to make the product intelligible among the masses.



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Traditional Banking vs Digital Banking

Runner Up - Tripti Srivastava


Banking started from the ancient times when merchants made grain loans to farmers and traders who carried goods between cities .Later,  lenders based in temples made loans and added two important innovations : they accepted deposits and changed money . Since then in India and china money lending activity started . It plays a crucial role in every body’s day – to –day life. It works as an intermediary by pooling savings and channelizing them into investments through maturity and risk transformations. Thereby keeping the economy’s growth engine revving.

Traditionally, banks exist physically for serving the needs of the customers. It was consuming a lot of time of the customer as well as money for visiting the bank and get their transaction done such as-check bank balances ,transferring money from one account to another and also there were the time limitations  of the office hour after which  they could not do any transaction. A customer who was often travelling abroad  could not pay close attention to their finances The cost incurred by the traditional bank in operation of different activities of the bank was huge and employees of the bank could serve to few customers and rest were returning not served.

On the other hand digital banking is the digitization(or moving online) of all the traditional banking activities and the programs that historically were only available to customers when physically inside of a bank branch . It saves a great deal of time of the customer and money in visiting the bank for checking balances or to transfer money from one account to another as their account can be accessed readily from anywhere with a computer and internet access . It helps the customer who often visits abroad in maintaining their finances. It has no time limitations for the transaction or office hours of the banks.

There is some advantage of traditional banking over digital banking such as in digital banking cyber security threat has increased which was not there in case of traditional banking. For performing digital banking one should have electronic gadget and the knowledge to operate it and the most important thing is internet connectivity . But seeing the advancement of the people and their needs and their busy schedule the facilities provided by the digital banking overtakes its disadvantages and with the increase  in foreign exposure of the business, and smartphone penetration it has become easier for anybody to perform the banking activities online.







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