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National Online Bank Day - Do We Still Need Bank Branches?


In addition to Columbus Day, today is National Online Bank Day. Ally Bank established National Online Bank Day in 2015 to “emphasize the value, ease and convenience of banking with online-only institutions on Columbus Day, a day when most traditional banks are closed.” Ally Bank’s press release that it issued today places extra emphasis on the higher interest rates at online-only banks and how a large percentage of Americans are losing out by keeping their savings in traditional banks. At DA we’ve been regularly reporting on these large differences in rates.

On Friday, I spoke with Diane Morais, president of Consumer and Commercial Banking Products at Ally Bank. In addition to discussing National Online Bank Day, Morais graciously took time to answer several of my questions. I asked about Ally Bank’s rate strategy, and Morais stressed that “Ally Bank aims to be consistently competitive.” They don’t intend to offer the highest rates, but their goal is to offer an “attractive trade-off” between rates and convenience.

I also asked about the trend that we’ve seen in the last year in which large banks are entering the online savings account market. Last week I wrote about PNC’s new online savings account. Last year Union Bank launched PurePoint Financial, and this year Citizens Bank launched Citizens Access. I asked if she sees a future in which all of the major banks will be offering online-only savings accounts. Morais was skeptical about those banks being able to sustain competitive savings account rates. She pointed out Ally Bank’s advantage of not having the expensive branch network. As Ally Bank likes to say, “no branches equals great rates.” Maintaining large branch networks is very costly, and those banks will find it difficult to also offer competitive deposit rates.

Is There a Future for Brick-and-Mortar Bank Branches?

I’ve asked this question many times since I’ve been blogging. Would you feel comfortable banking completely online without having accounts at any local bank or credit union?

In 2012, a DA reader had this to say about this question:

you always going to need a local bank, not only as a point of entry of checks and cash, but at times when your Internet or electric power or your computer is down or malfunctioning. Also, local banks can provide other valuable service like, notary, official checks, as guarantor for signature and many other services.

I think most DA readers probably use both brick-and-mortar banks/credit unions and online-only banks. You can maintain a free checking and/or savings account at a local bank or credit union where you make cash deposits and receive other services like notary and signature guarantees. To maximize the interest, you can keep most of your cash at online-only banks. Will banks and credit unions be able to keep their branch networks if most people start banking this way? Long-time DA reader Kaight had this to say in 2012 about this issue:

I have a local (small) bank and cannot imagine being without my accounts there. At the same time, I give my local bank virtually none of my profitable (for bank or CU) business. I worry that eventually, if others are operating as I do, the local bank will be unable to provide the service they offer me. Their costs are high, their profit, from my transactions with them at least, is quite small . . . if indeed they have any at all.

If you’re worried about your local bank branches, they are probably not going away anytime soon. In 2017, a DA study that analyzed branch data from the FDIC and NCUA found only a slow decline in the number of bank branches in the last ten years.

One thing that might speed up the transition to online-only banking is online banks expanding their product offering. Many online-only banks today still don’t offer checking accounts. The checking account is widely considered as an anchor for a banking relationship. Once a customer opens a checking account, it’s much easier for the bank to cross-sell the customer other products such as credit cards, loans and investments.

Ally Bank first launched its Interest Checking Account in 2010. Since that time Ally Bank has added new products including credit cards, investment services and home loans. With online-only banks like Ally, it is possible to bank completely online without visiting a physical branch.

Related Pages: nationwide deals, Internet banks
  |     |   Comment #1
Navy FCU adds 24 month 3% C/D
  |     |   Comment #2
I was just online with Ally......Have they done away with 1 days transfers?? i really see no point with this bank much longer. rates are not competitive.....features not that great.
  |     |   Comment #4
I believe they still have one day transfers. Just did one quite recently.
  |     |   Comment #16
On Friday at 4 PM I initiated transfer in from B of A, Ally said it will be there (available) on Wednesday, you make the call about the speed of transfer.
  |     |   Comment #23
They still have 1 day transfers but only for external accounts you have had for so long and made a pull out of to ally in the past of $200. Also, you don't get 1 day transfers from their checking account.
Ally Customer
  |     |   Comment #34
@RJM. One day transfers from their checking account is the norm for this poster.
  |     |   Comment #39
Not me, not ever. All 3 savings, not my checking.

I guess you are special.
  |     |   Comment #51
Hi, transfers eligible for expedited delivery between Ally Bank and non-Ally Bank accounts usually take 1 business day, while standard transfers usually take 3 business days. If you have any questions about your specific account or need any assistance, please give us a call at 1-877-247-2559 or chat with us online at ally.com 24/7! ^AM
  |     |   Comment #3
ALLY is terrific--phone service and great and on-line account access is good.
Getting money to them is a bit of work and loss of time--and requires monitoring until completed
--wire transfers to them is costly
--ach is time consuming and wastes earning time at both ends
I would recommend that ALLY (and similar on line banks) provide transfers of deposits and withdrawals via PAY PAL or perhaps other mobile apps--GOAL-TO ACHIEVE INSTANT TRANSFERS--press a button and they have the money--press a button and you have the money--press a button and money goes to someone else--with security in the system, then checks become obsolete--end of branches
By the way, the branch banks charge fees for everything--notary service, third party check handling, safe deposit box, wire fees, inactivity fees , dormancy, out of institute debit card use, ...If that's a branch banks business model, then they should join Matress Firm --they will be out of touch
  |     |   Comment #5
Yup, that's what I want.
Some third-party like Paypal having access to my funds.
What's the law with regards to Regulation E with regards to Paypal?.
If you look at their user agreement, there's no mention of that.
Sometimes, it's better if transfers aren't "instant".
  |     |   Comment #32
You are absolutely right.
I would not want instant transfers that are not secure
Your comment is highly appreciated.
I retract my comments related to using PAYPAL in concert with ALLY--that was careless.
Thank you for your insightful and direct retort.
  |     |   Comment #6
Here's something to think about (from the Duke Law and University Review).

The Electronic Fund Transfer Act, implemented by Regulation E, does not adequately protect consumers using these alternative payment services. Regulation E is insufficiently specific and provides circular language in its key definitions, including those for the terms “financial institution” and “account.” These deficiencies could leave consumers engaged with alternative payment services in the unique position of facing unlimited liability for losses resulting from unauthorized electronic fund transfers from their alternative payment service account.
John Edwards
  |     |   Comment #7
I have 9 online accounts, but also keep a local brick & mortar bank account, I like to keep $5s & $1s in my wallet and the ATM doesn’t dispense small bills.
  |     |   Comment #8
Are the $5s and $1s to pay for the impromptu haircuts on airplanes?
John Edwards
  |     |   Comment #31
No, just to tip my mistress, er I mean server at my local IHOP.
  |     |   Comment #35
I have not had a bill larger than a $5 in my wallet in at least 20 years.

I might have $3-12 total in there at any one time.

Once, I went to my nephews basketball game and did not think about having cash.

I only had $3. And he would not accept a credit card.
His dad came to the rescue a few minutes later.
I tip my Great Clips hair cutter with cash. Speaking of them, $6.99 haircuts this week. I am going in a few minutes.
Online Banks
  |     |   Comment #9
Online only banks have advantage over B&M banks, but they fail to be leaders, why, greed, bad management, not enough products or innovations, ACH transfers are about standard with B&M banks, fees are about the same and yet they fail to lead.
If the consumer can not see any benefits, Online banks are there by name only or just to be called Online only banks.
  |     |   Comment #52
We understand how frustrating banks can be - that’s why we built a team of 8,000 allies ready to help you with award-winning, 24/7 customer service, competitive rates, and no hidden fees! You can learn more about us here: ally.com. ^AM
  |     |   Comment #10
I use some local bank services. Like Notary. I always need rolls of quarters. I suppose ATMs could be used for that. But they would probably charge for ATM services if there were no brick and Mortar banks. Maybe Amazon will get into the banking business?
  |     |   Comment #11
I have been a happy Ally Bank customer for almost 10 yrs, (2009) starting back when they were GMAC Bank. The fact that I can deal with important items online without calling or filling out and mailing some paper form is important to me. I can log on and update POD beneficiaries and print this out for my records and also see this info online. I also like the ability to manage CD options online and open new accounts and close these online. Other online accounts I have don't allow these options and it's a big hassle with them. I keep a local bank (major company too!) but they are useless on so many things.....like when I called them and was told I had to go into the branch to add a POD, and the guy did the form wrong at first and almost changed the ownership of an account instead of showing a POD!.....absurd. As for rate chasing, I'm tired of that....sure it's important to get good rates, but I'm done with opening lots of new accounts all over the country....but the completion is always good to encourage Ally and others to up their rates.
  |     |   Comment #12
Oops.....I meant "Competition" is always good!
  |     |   Comment #53
Thanks for trusting us to be your financial ally! We’re focused on doing right by our customers and making sure that your money is working as hard as it can for you. ^AM
Ally Customer
  |     |   Comment #13
A few weeks ago, I signed a transfer request form to have some IRA funds transferred from Ally to another bank. Ally sat on the paperwork for too long. After a week, I called Ally three times about the delay. Each time they told me that a supervisor would call me back, but the supervisor never did! Then they finally debited my account and told me that the check was mailed out that same day. The other bank received the check 9 days after Ally told me it was mailed out. I had asked the receiving bank in advance to let me know when the check was issued and mailed by Ally. The check was dated the day after Ally debited my account and the envelope was meter postmarked 2 days later! So Ally was not truthful in saying that the check went out on the same day that my account was debited and I lost 10 days worth of interest. This transfer was for less than $50K and as such I thought it was not worthwhile to pay for Ally's expedited service ($15 for 2/3 day processing) plus a wire transfer fee ($20). Well, I was wrong! The aggravation of not being able to track a mailed check is not worth it. I will never have Ally process and mail a check using their "regular" service regardless of the amount. Ally is a good bank for self directed ACH transactions and online CD management but it disappoints whenever something needs to be processed by their staff.
  |     |   Comment #54
We’re committed to doing right by our customers, and don’t like hearing you didn’t have the right experience! If you need any additional assistance, please send an email to [email protected] with your full name and phone number so we can have a team member give you a call directly to discuss further with you. ^AM
  |     |   Comment #14
Well, whether we need more brick and mortar or not, Chase is (presumably) nearing the completion of its newest edifice on Mt. Diablo Blvd. in Lafayette, CA (just down from Diablo Foods). Within a stone's throw of the Wells brick and mortar up the street, and a couple of hundred yards from the Wells brick and mortar that closed (used to be a Home Savings), one wonders. The Chase construction on Mt. Diablo is a standing joke. Some contractor is getting wealthy on delays and cost over-runs, methinks. As an aside, the Mexican cantina restaurant across the street is worth a jaywalk.
Zillion% interest-rate
  |     |   Comment #19
Forget 3% CD, how about we invest $100 in Venezuela and in 6 months we walk away with a cool billion, that is the current going interest rate.
  |     |   Comment #21
For just $1, you can purchase enough gasoline for a lifetime as the Bolivar has devalued with the expected one million percent inflation rate this year. The President has reissued the currency to shift the decimal point to the right several times and given workers HUGE pay raises. And people there continue to sift through the trash looking for something to eat. Toilet paper is big premium there and the economy is going down the toilet, so you cannot wipe your own rear end.
  |     |   Comment #22
Rates were higher BEFORE the advent of online banking in the 1980s. So eliminating B&M branch banks is not going to happen. It has the same chance as completely not accepting paper tax returns for everyone in this country. So are you going to give every taxpayer internet access (have to include those just entering the work economy too for the indefinite future)?
  |     |   Comment #25
I have not had a brick and mortar bank account in probably close to 15 years.

I am a member of 2 local credit unions and I have used shared branches a number of times.

If I were recommending a single online bank to someone who has never used one, it would be Ally.
Despite not having top rates.

While they do not offer the top rate, their website is easy and they have 24 hour customer service by chat or phone. Probably the best combination of overall services. And their savings rates are reasonably competitive.
Ally Fees
  |     |   Comment #26
For online only bank, these fees are ripoff and are higher than Chase or WF or BofA:

Returned deposit item $7.50
Overdraft item paid or overdraft item returned (maximum 1 fee per day) $25.00
Excessive transaction(s) fee $10.00 per transaction
Expedited delivery $15.00
Outgoing wires (domestic only) $20.00
Account research fee $25.00 per hour

If you do not pay expedited delivery for check, it will be delayed in their office for 10 days or if they mess up your account they will charge you $25 to rectify their own created problem.
  |     |   Comment #33
I reiterate what I said above.. If I were recommending a single online bank to someone who has never used one, it would be Ally.

I have to assume that anyone opening an online bank account would be smart enough to avoid any of those fees. It's really not that hard.

And,I got one excessive transaction fee by mistake and they reversed it for me. I suspect they would waive a $7.50-10.00 fee for anyone. At least once.

What do Chase, WF or BOA pay in interest?

.01, .01 and .03% and they have monthly fees of $5 unless you keep $300-500 in the account.

Perhaps you could explain yourself. Or will you run & hide?
  |     |   Comment #36
RJM, be nice, the big four banks provide services that ALLY can only dream. How are you going to deposit the cash you received to Ally, how are you going to deposit the checks you received to Ally, how are you going to get a real estate loan from Ally without notary to verify the documents, how are you going to withdraw cash from Ally account without the B&M banks providing the ATMs, how are you going to get certified fund check from Ally without paying fee to Ally (free at the local banks), what about if you have small business, how are you going to deposit the credit card, cash, checks and other receipts to Ally?

I'm sure I missed few more B&M conveniences, but you get the picture, I lost my Ally credit card and had to wait 2 weeks for replacement, but I walked in TDbank and got new card in 2 minutes. Be careful what you propagate to others, online banks have advantages and big disadvantages too.
  |     |   Comment #38
Does Ally Bank have safety deposit boxes?
  |     |   Comment #41
I have not used a b&m bank in 15 years. I will likely never get a real estate loan in my life.

My CUs do free notary and free certified checks and free ATMs all over town.

Why would you have an ally credit card? It's a laggard. But when my fidelity visa was compromised, they send one by 2 day UPS without me asking.

2.2% on grocery stores and gas stations? I get 3% and about 4.5% elsewhere.

Maybe one of these years I will need a b&m bank, but I doubt it. Would they shun me because I was not a prior customer if I did walk in off the street for a loan? "Im sorry sir, your 828 credit score is just not enough for us." "But if you had an account here, a 700 would be fine."

I don't have a local business but I can deposit cash at any shared branch CU for free.

And if you read my posts above, I said " If I were recommending a single online bank to someone who has never used one, it would be Ally".

And one CAN have both if you insist.

By all means, if you want your b&m bank, keep it. If someone is at this site, you would think they are interested in more than .05%.
  |     |   Comment #40
#33 RJM, I was buying a car for my son and the dealer insisted on bank certified check to finalize the purchase. I called Ally and was told they do not issue certified checks but can send me Ally bank check if I pay them $25 for overnight delivery. The dealer said no deal if it is not certified (guaranteed by the bank). I had no choice but to drive to Chase, advance cash from my credit cards to get the certified check. It did cost me and arm an lag to make the check certified because I had no account at Chase. Since then, I learned my lesson and now I have 3 local B&M accounts. You can say anything you like, but B&M banks are irreplaceable from my view point.
  |     |   Comment #42
I was a dealer for a dozen years. Almost No dealer will not wait a day to sell a car. Especially with a small deposit. Allys 1 day transfers mean you could buy the certified check the next day.

I can't think of a single real world situation for me that my combination of local CUs and online banks cannot handle. Yeah, maybe if someone offered me a $50k car for $30k. I can only get my hands on $25k the same day locally. (excluding sunday)
The chances of that happening are zero anyway.
  |     |   Comment #55
Thanks for the love, RJM! We’re relentless about being your ally and providing you with all the necessary tools to be financially successful!
  |     |   Comment #27
Bank branches are primarily loan centers. That's how the branches are paid for. Depositors who walk into the bank are viewed as potential loan customers. Also, if you operate a real business, you need to have a nearby bank branch.

I make it a point to walk into the branch, and not use the drive through, so my face is known to the bank employees. I barely need to show ID, if at all, when making large withdrawals or sign paperwork, making transactions fast and smooth. Can't do that online. But personal accounts are all online. BTW, Chase just closed my local branch.where I had an account.
  |     |   Comment #30
I totally agree.

Plus people advocating there is no need for brick and mortar banks and too narrowly focused. There is a huge population of elderly people here in the U.S. who are not internet savvy. Also there is less chance of being scammed when doing business face to face with the same people you deal with on a regular basis.
ONLINE banks only
  |     |   Comment #37
#30, you are correct, if there are not B&M banks, the online banks only will cease to exist for lack of interfaces for the customers.
  |     |   Comment #43
These elderly can use credit unions if face to face is that important to them.

I think banks are going to continue to close branches, not as fast as retail, but they are nearly all downsizing. There was one not 3 miles from my house that shuttered up & closed one weekend.BB&T. They were taking the signs down on a friday afternoon.
Another one about 3 miles in another direction closed a few years ago. Wells Fargo. A Regions closed over there about 5 years ago.

I am surprised they are not closing more.
  |     |   Comment #44
To take a wider view, many local community banks were bought out and taken over by larger national banks. During the process they ended up with too many brick and mortar branch banks than necessary.

Why limit the elderly and people who prefer not to do their financial business over the internet to CUs only and not banks? The more options the better, just as "rate chasers" here prefer?
  |     |   Comment #45
My point is simply that over time, more & more money will flow out of b&m banks and into online banks and local credit unions. It's not happening as fast as b&m retail is dying but it IS happening.

Heard a radio ad today about capital one cafe. Closest location is 350 miles away.

Must have been a syndicated radio program I guess?
  |     |   Comment #46
Speaking of Ally, I recently linked Andrews and for the first time EVER for me, they did not need to do the test transactions. I was able to login to Andrews within Ally and authenticate it that way.

I don't think that has happened with any other bank or CU for me.
  |     |   Comment #56

Purepoint will link immediately to some institutions if you log in through their portal
  |     |   Comment #57
If Ally had cash deposit ATMs that would make them better. Unfortunately I can deposit to Alliant in thousands of credit union ATMs, many located in convenient places like supermarkets and airports, whereas Ally does not have that network.
  |     |   Comment #58
cash deposits at ATMs are not a great idea anyway.

About 33 years ago, I ran a restaurant and we made large cash deposits every night. We had locked bags and they always had TWO employees open the bags & count the money.

We kept coming up $100 short on several deposits. You think its your error because the bank has 2 people counting it. Except it was not our fault and the bank had 2 people in on it.

And when they figured it out, they refunded the $400.

I know of another instance where a guy made a cash deposit at a night drop and they insisted they never got it.

Because of those, I never deposit cash in ATMs or night drops. Its rare but it happens.

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