High Street vs. Digital Banking

Highstreet vs digital banking

Over the past decade, the financial industry has witnessed a revolution. The rise of digital-first banking companies, commonly referred to as digital banks, has disrupted the traditional banking landscape. These digital banks, often referred to as “challenger banks,” such as Monzo and Starling, have transformed the way we manage our money. Even established financial giants like Chase have joined the digital race, reflecting the growing popularity of digital banking among consumers.

With the proliferation of digital banks and the steady decline in the number of physical bank branches, making the right choice for your banking needs has become more critical than ever. A bank account is not just a financial tool; it’s a long-term commitment that can span decades. In this article, we’ll delve deeper into the pros and cons of both digital and high street banks to help you make an informed decision.

Pros and Cons of High-Street Banks

Now, let’s examine the pros and cons of traditional high street banks:

In-Person Customer Service: Traditional high street banks offer the invaluable benefit of face-to-face customer service. Whether you have complex financial queries or need assistance with specific transactions, having a local branch to visit can be reassuring.

Cash Deposits: High street banks excel in handling cash deposits, making them indispensable for businesses or individuals dealing with cash-based transactions. The ability to deposit cash easily can be a game-changer.

Bureaucracy: It’s worth noting that legacy banks often come with legacy processes. This can sometimes result in bureaucratic hurdles for certain services or transactions. The speed of service may not always match the digital age’s pace.

Established and Regulated: Traditional banks have built a long-standing reputation over the years. They are well-regulated, providing a sense of security for depositors. Additionally, the Financial Services Compensation Scheme (FSCS) ensures your deposits are protected up to a certain limit.

Tailored Business Packages: High street banks can offer tailored packages for businesses, including payment terminals and merchant accounts. These comprehensive solutions cater to the unique needs of business owners.

Fees: To cover their higher operating costs, traditional banks often charge more in terms of fees. This can be especially noticeable for businesses, where bank fees can add up significantly over time.

Physical Branch Network: High street banks maintain a physical presence in many communities, allowing easy access to their services for those who prefer in-person interactions. The convenience of having a local branch cannot be underestimated.

Pros and Cons of Digital Banks

Now, let’s explore the pros and cons of digital banks:

Simplicity in Opening: Digital banks streamline the account opening process, often taking as little as ten minutes. Verification can be completed effortlessly using your smartphone, where you can simply take pictures of required documents and provide a selfie for ID purposes. The convenience of opening an account from your own home is a significant advantage.

Digital Experience: Digital banks are renowned for delivering a user-friendly digital experience. They have pioneered user interface (UI) improvements and innovative tools, such as bill-splitting features, setting a new standard for traditional banks to follow. Managing your finances has never been easier.

Safety: Most digital banks benefit from the protection of the FSCS, ensuring that your deposits are covered up to £85,000 in the event of bankruptcy. However, it’s crucial to be aware that some digital banks, like Revolut, operate as e-money institutions without a full banking licence. This means they are not protected by the FSCS. Instead, they must safeguard your funds by holding them with established banks, which could potentially delay the return of your funds in case of bankruptcy. While the risk is relatively low, it’s essential to understand the level of protection your bank offers.

Simplified Accounts: Digital banks often provide easy categorisation of spending, making financial management more accessible. For business accounts, they offer tools to help you export expenditure in a tax-friendly format, like Starling’s Solde Trader Tax Tool. This simplification can save you time and effort, especially during tax season.

Lower Debt Risk: Digital banks typically do not offer extensive overdrafts or loans, reducing the risk of accumulating debt. While this may limit certain financial options, it can also promote responsible financial habits.

Customer Service: While some digital banks offer customer service hotlines, there is no face-to-face interaction available. Instead, communication typically occurs through chat or email. While this may suit tech-savvy individuals, those who prefer personal interaction may find it less appealing.

Cash Deposits: Although some digital banks offer cash deposit options, they are often associated with fees and limited to specific locations, such as Post Offices. This limitation can be a drawback for businesses or individuals who deal with cash frequently.

Rewards: Digital banks, like Chase, may offer attractive rewards, such as 1% cashback on most purchases. Their lower operational costs enable them to pass on more benefits to customers. Additionally, some digital banks provide enticing sign-up bonuses and referral incentives, making them an appealing choice for those seeking financial perks.

Innovation: Digital banks have been at the forefront of financial innovation. They have introduced features like spending analysis, budgeting tools, and even cryptocurrency support. They have forced traditional banks to catch up with their digital offerings. If you’re interested in staying ahead of the curve and exploring the latest financial technologies, digital banks are likely the better choice.

Accessibility: Digital banks are accessible 24/7 from anywhere in the world, making them convenient for international travellers or individuals with busy schedules. With the ability to manage your finances on your smartphone, you’re not tied to traditional banking hours or locations.


In conclusion, the banking landscape has evolved significantly in recent years, with digital banks offering a compelling alternative to traditional high street banks. Today, digital banks are no longer considered a risky proposition, as they have gained widespread acceptance and offer a simpler, more user-friendly experience.

Whether you prioritise personal interaction, value a bank’s established reputation, or run a cash-intensive business, high street banks may still be the right choice for you, at least for the time being. However, for most consumers, digital banks provide a modern, convenient, and cost-effective solution for managing their finances in the digital age.

Whether you opt for the traditional stability of high street banks or the digital convenience of modern banking, the key is to ensure that your choice aligns with your financial goals and lifestyle. Carefully consider your needs and preferences before making your decision, as your choice of bank can have a significant impact on your financial future. Ultimately, the decision is yours, but it’s crucial to make it an informed one.