When You Know It’s Time to Switch to an Online Bank

4 signs that you no longer need a brick-and-mortar bank.

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Simon Zhen
We're entering the next evolutionary stage of bank branches.

Banks are introducing smaller branches, with bankers servicing customers through mobile devices instead of sitting at desks, and ATMs have been upgraded to mimic tablet-banking experiences. It's a response to the changing consumer banking behavior.

According to a Pew Research Center study published this month, 61 percent of Internet users do their banking online, and 35 percent of cellphone owners use mobile banking. And the percentages are on the rise.

So, if you're not relying much on branches, do you need to choose a bank that offers physical branches at all? Not burdened by the costs of operating physical locations, online banks can offer accounts with higher interest rates and lower fees – both of which are attractive to any consumer.

Here are four signs that you can drop your bank and go with an online-only bank:

1. You can't remember the last time you visited a bank branch.

Online, mobile and ATM banking have become such convenient methods of managing bank accounts that a trip to the bank is often unnecessary. Those who have adapted to digital banking hardly ever find the need to step into a branch.

Certain banks even encourage customers to avoid entering a branch. Bank of America, for example, offers a checking account in which customers may avoid a monthly account fee if they refrain from using a teller for deposits or withdrawals.

2. You never deposit cash.

With technological advances, it may seem like there's a shift to eliminate the need for paper currency, but a cashless society is not in the near future.

A notable shortcoming of online banks is the inability to deposit cash. With brick-and-mortar banks, you can just visit the ATM. Since online banks don't have their own ATM networks, they don't have the capability to accept cash deposits.

It's a different story with check deposits because more online banks are offering the ability to deposit checks remotely through a smartphone app. Some online banks also allow customers to take photos or scan paper checks to be deposited via online banking.

If you never deposit cash, you shouldn't be concerned that such a feature is absent with online banks.

3. You're tired of meeting requirements to avoid monthly fees.

As increasingly stringent financial regulation puts a dent on bank revenue, checking accounts have become subject to frequent and higher fees. At the biggest banks, free checking accounts are nowhere to be found. Their basic checking accounts have monthly fees that carry fee-waiver requirements, which may be difficult to meet.

Most online banks offer checking accounts that have no monthly fees, which means customers don't have to worry about direct deposits or minimum balances on their accounts.

4. You want your money to grow faster.

In addition to little to no fees, online banks boast highly competitive deposit rates, whether it's for interest checking, money market, savings or certificate of deposit accounts. Better rates yield higher interest earnings, which most savers wouldn't complain about.

Again, online banks can offer such attractive rates because of the lack of physical branches.

How to make the switch?

If you're considering an online bank, don't close your accounts at your regular bank immediately. Since there are such low costs involved with online banks, you can open an account first and try to make it the center of your financial life as a test run. When you find you can completely cut ties with your brick-and-mortar bank, you can make a complete transition.

In the event you find you still prefer a physical branch, you can stick with your regular bank.

Simon Zhen is a columnist and staff writer for MyBankTracker.com, where he covers banking, financial technology and savings rates.