In the world of finance, traditional banking has been the dominant way of managing our accounts and conducting transactions for decades. But what exactly is traditional banking and how does it differ from more modern methods? In this guide, we’ll explore what traditional banking is and how it has evolved over time.
Definition of traditional banking
Traditional banking, also known as physical banking or in-person banking, refers to the banking system in which transactions and services are carried out in physical branches. This model has been around for centuries and has been the standard method for financial activities.
In traditional banking, customers visit their local bank branches to open accounts, make deposits and withdrawals, obtain loans, make money transfers, and access other banking services. Traditional banks typically have a range of employees, such as tellers, account executives and branch managers, who provide personalized advice and services.
Characteristics of traditional banking
Traditional banking is characterized by several distinctive features:
- Physical branches: Traditional banking has a physical presence through bank branches. Customers must visit these branches to carry out transactions and access services.
- personal interaction: Customers can interact directly with banking staff at branches to get advice, ask questions and receive personalized assistance. This makes it easier to resolve issues and provides a more individualized level of customer service.
- Paper processes: In traditional banking, many processes are still carried out on paper. Customers must complete paper forms and maintain physical records of their transactions.
- Attention schedule: Traditional banks have established opening hours and customers must adhere to them. This can make it difficult to carry out transactions at unconventional times.
- Lower agility: Traditional banking tends to be less agile compared to other more modern methods. Approval and issue resolution processes may take longer due to the need for paperwork and reliance on physical branches.
How traditional banking has changed
As technology advances, traditional banking has undergone significant changes to adapt to a constantly evolving world. These are some of the most important changes:
- On line bank: Traditional banks have adopted online services to offer their customers access to their accounts and services through digital platforms. This has allowed customers to transact and manage their accounts without having to visit a physical branch.
- Mobile banking: With the increase in smartphone usage, traditional banks have developed mobile applications that allow customers to access their accounts and carry out transactions anytime, anywhere.
- Automated services: Traditional banks are increasingly implementing automated services such as ATMs and self-service kiosks in their branches to streamline transactions and reduce dependence on bank staff.
- Virtual customer service: Many traditional banks now offer customer assistance and support via online chat, email and phone calls, eliminating the need to visit a physical branch to resolve issues or make queries.
- Focus on customer experience: To compete with online banks and fintechs, traditional banks have placed greater emphasis on improving customer experience. They have invested in technologies and services to offer a more personalized and convenient service.
Finally, traditional banks and digital banking have become increasingly relevant in the financial system, although the former continue to be a preferred option for many clients who value personal interaction. To stay relevant in an increasingly digital world, traditional banks have had to adapt to new technologies, offering online services, mobile applications and process automation. In the end, the choice between both methods depends on the individual needs and preferences of each person, evaluating which one best suits their financial needs.
