The year is 2040. Needing a snack one night, you use the internet device implanted in your head to order from your favorite restaurant. Within seconds, you've transferred units of Dogecoin to pay and are notified that food arrives in 30 minutes. It's amazing how much easier life has become since lines of computer code adorned with the face of a befuddled yet adorable Shiba Inu replaced the dollar in 2033. Don't forget to tip; thanks to general AI, drones have feelings too, you know. This scenario is, of course, the most ridiculous type of financial science fiction. While not as bizarre, there's plenty of misinformation about the future of the financial world is misinformed. Cryptocurrency is the future of payment processing, stock fundamentals now matter less than market sentiment, and online banking is rapidly eliminating the need for local bank branches. Of these claims, you might think that the last one is the least unusual. In truth, though, it's one of the most pervasive myths in the financial world today.
Despite the belief that banking is purely digital, local banks and credit unions are alive and well. In fact, they are often still the better choice for a wide range of consumers. Here are some of the disadvantages of online banking compared to doing business with your local bank.
Online Banking Doesn't Meet the Needs of Modern Freelance Workers
The futuristic view of a shift to purely digital banking seems to be geared toward the labor force of the 1950s. As of 2020, about 28 percent of American workers earned at least some of their income from self-employment. Many of the participants in this burgeoning freelance economy receive large, one-time payments for their work once a project is completed. While mobile apps do make it easy to deposit a check by taking a picture, larger checks usually run afoul of mobile deposit limits. By contrast, local banks make it incredibly simple for a freelancer to deposit a check. If you currently freelance or want to, making the jump to purely online banking puts you at a disadvantage.
Online Banks Can't Accept Cash
As with freelancers, business owners are poorly served by national banks using digital platforms. 88 percent of consumers still use cash for at least some of their transactions. As a result, business owners take in large amounts of physical cash that must be deposited regularly. For obvious reasons, an online bank can't meet the needs of business owners who need to make daily or weekly cash deposits. Online banks also can't provide businesses with the rolls of coins they need to make proper change for customers. For these reasons, a physical bank is a crucial part of any local economy.
The issues with cash, however, don't end at the needs of businesses. Despite the direct deposit's popularity for payrolls, workers in some industries remain paid in cash. Bartenders, servers, delivery drivers, and other tipped workers often make more from their cash tips than from their hourly wages. For these workers to participate in the modern economy, they need the ability to deposit cash into their accounts conveniently.
Local Credit Unions Are Often the Better Choice for Consumer Credit
In addition to offering basic bank accounts, local credit unions are often a much better option than large, online lenders. Big banks, credit card companies, national mortgage lenders, and large auto loan makers reduce borrowers to a set of metrics and make credit decisions with no personal consideration. At your local bank or credit union, you sit with a loan officer who will make a credit decision based on your personal circumstances. This more personal approach to customer service can help people qualify for loans at better interest rates than they would get at a large, impersonal financial institution.
You Can Get the Best of Both Worlds From a Local Bank Anyway
Even with the downsides that come with online banking, there are obviously situations where it can be helpful. The good news is that almost all local banks and credit unions today also offer online service options. With a local bank or credit union, you get the benefits of online banking without the downsides. From convenient checking to identify theft protections, features available at a national bank are also accessible at smaller institutions. As long as you have an email address, you can easily access your accounts online with your local bank. In short, local banking remains the financial solution you never knew you needed until now.
We Can Help
Despite the prevailing fiction that we're all rapidly moving to purely online banking, local banks are still necessary for dealing with the many parts of financial life that exist offline. By offering personal service, physical access for cash transactions, and all the same online access as big banks, local banks can provide for all of your financial service needs. Check out PrimeWay's eChecking solutions to see how local banking can help you get the best of the online and offline financial worlds.
