Ask an Expert: Online-Only Banking

Expert Q&A
on May 19, 2014

Dear Kirk: What is the point of online-only banks? I’ve been hearing a lot about people making the switch, but what exactly is the benefit?

Ask an Expert: Online Only Banks

Kirk Says: For those of us old enough to remember, there was an age when you would (regularly) walk into a brick and mortar bank, stand in a long line to make a deposit, cash a check or withdraw cash for spending money. Then along came the ATM machine, that glorious automated teller, allowing us to make deposits and withdraw money 24 hours a day—but we still had to go to the bank to access the ATM. Then came the proliferation of machines—think Terminator, the movie—and as machines became more accessible, they began to feel like a necessity. And then came the ATM fees.

Now, after our stroll down memory lane, let’s move into the 21st century. Have you waited in line at the bank lately? Have you spent time in the drive-through banking lane in your car? For that matter, when was the last time you actually made an ATM withdrawal?

In today’s banking climate, we have direct deposit for our checks; we use debit and credit cards virtually everywhere we go, and when we need cash, we can go to the ATM at any gas station, grocery store or entertainment venue. And with our online banks, even those $3 ATM fees get waived each month.

Online banks offer convenience that we could not have imagined 10 years ago—the benefits of accessing your online account 24 hours a day to make payments, check balances and transfer money. Not only can you do this from your computer, but you can even do it from your phone. Most online banks even give you the ability to take a picture of a check and deposit it into your checking or savings account. With all of the convenience of digital banking, it’s no wonder the long lines at the neighborhood bank are a thing of the past.

Many insurance companies like State Farm even have online banks now and allow you to see all of your insurance and financial products in one convenient page on your phone or online account.

If you haven’t explored the realm of online banking, now is the time to make a few calls or visit with a representative to get your questions answered. However, your current brick and mortar bank may already offer many of the conveniences that we’ve mentioned, and beyond that, they also afford the benefit of having a local representative to call on when you need them. So while you may rarely visit your local bank location, you’ll want to consider how much you value the access to personal interaction. If the answer is “very little” or “not at all”—an online-only bank may be a good fit for you.

As always, I would compare at least three different banking institutions to ensure that you are not missing out on any new technology, service or rewards programs. Traditional banks have been forced to get pretty creative in order to maintain a competitive edge. Good luck, and Happy Banking!

Kirk Gwaltney is a Chartered Financial Consultant and a Chartered Life Underwriter in Brentwood, Tenn. Learn more about him at

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