Discover the advantages and disadvantages between traditional and digital banks

Currently, there are many banks available to Brazilians, and while the positive side is having more variety, it can also represent a problem for a large portion of the population, who are unsure about which financial institution to choose to open an account, considering factors like security and evaluating whether the bank is traditional or digital.

According to financial educator João Victorino, traditional banks operate under a much more robust and demanding regulatory umbrella, with higher regulatory, fiscal, and personnel costs, while neobanks have fewer legal requirements in comparison. For example, it is required by law that traditional institutions must provide rooms for use by regulatory agents.

“Basel requirements, which are security standards that set limits for loans based on the financial institution’s capital, as well as supervision rules and transparency in information disclosure, provide more security for traditional banks compared to new banks, as regulators adapt the rules for smaller institutions by slightly relaxing some requirements,” he explains.

João believes that people need to carefully analyze the characteristics of each bank before deciding to open an account with a financial organization. With this in mind, the financial educator decided to list the main advantages and disadvantages of traditional banks and digital banks.

Traditional Banks – Advantages:

1. Offer a wide range of financial products and services;
2. In-person service available, which can be useful in more complex situations;
3. Greater tradition and recognition in the market.

Traditional Banks – Disadvantages:

1. Bank fees may be higher;
2. More bureaucratic processes for some operations;
3. Slower adoption of technological updates.

Digital Banks – Advantages:

1. Exemption from fees for many services, account maintenance, and credit cards;
2. Account opening and operations entirely online.

Digital Banks – Disadvantages:

1. Remote-only service, which may be insufficient in more delicate cases;
2. Product portfolio still limited in some cases;
3. Limited presence for people who prefer physical contact.