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New-age banking vs online banking: What are the differences?

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Created on
March 6, 2023


What’s Inside

The main difference between digital banking vs online banking is that digital banking is a broad term, referring to the new, digital advances we are moving towards in the space of banking. Online banking is more specific to using a bank’s web-based services.

Digital banking vs online banking

Online banking

Like I said earlier, online banking is a term that generally refers to using a website of a bank or a financial service provider like an NBFC. This could be to make any specific action like a transaction or viewing balances, or repayments due and such. You could do this either through your laptop or mobile web.

Digital banking

Digital banking covers every activity which is performed electronically, involved in the area of banking. This may not be restricted to a bank’s website. Therefore, online banking is a part of digital banking. These include mobile banking, digital wallets and banking via SMS. Another digital banking feature which makes it different from online banking could be the use of virtual assistants and chatbots, biometrics, and various other tech, all aimed at enhancing customer experience.

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Online banking solution providers vs digital banks

It’s interesting to note that according to the RBI, digital-only banks don’t legally exist. It’s simply a service or a feature offered by existing banks to help consumers access services digitally. You might have heard of branchless banks or ‘neo-banks’. Technically, in India, neo-banks are not banks at all. They’re simply interfaces to an existing bank. You can read more about digital-only banks here.

Difference between digital banking and online banking

Comparison Basis

Digital Banking

Online Banking


A term defining banking processes to conduct a variety of banking activities electronically. 

A term which is used to describe specific banking activities which can be conducted electronically. 


A wide range of transactions can be performed, from making payments using the UPI system to paying bills.

Transactions are restricted to IMPS, RTGS, NEFT etc. 

To make UPI-based transactions, you’ll have to use a UPI app. 


Involves the use of personal assistants, chatbots and other resources to advise and conduct activities. 

Involves basic banking services pertaining to particular areas of banking. 


Security is enhanced with the use of encryption, firewalls, biometrics, device ID, location-based authentication etc.

Measures of security include the protection of passwords, encryption through SSL encryption, two-factor authentication, etc. 



At the end of it, it’s important to remember that these are technical terms that are gradually going obsolete, as banks and fintechs are working towards bringing all of these experiences together for customers. For example, a lot of online banking today can be carried out through UPI apps or authorised third party apps like Fi Money, through which you can use a bank account, make payments, investments, buy digital products and so on.

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Frequently asked questions

1. What is meant by digital banking?

Digital banking is a broad concept which incorporates all banking and financial services which can be undertaken digitally, or electronically.

2. What are examples of some digital banks?

Monzo and N26 are two examples of digital banks which operate from the UK and Germany, respectively. In India, the RBI does not officially recognise digital-only entities as banks. These are loosely termed ‘fintechs’ or financial technology companies, that offer an enhanced customer experience through apps, but are dependent on RBI-licensed banks for the actual service being provided. For example, Fi Money is among India’s top fintechs that provides a savings account for customers that’s actually created in partnership with Federal Bank


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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