What Is a Brick and Mortar Bank & How Do They Work?

For many years, financial transactions primarily occurred within physical bank branches. These traditional institutions, commonly referred to as “brick and mortar” banks, formed the foundation of the banking system. They provided a tangible presence where individuals could manage their finances and interact directly with banking professionals. This article clarifies what brick and mortar banks are and examines their continuing role in the evolving financial landscape.

Defining Brick and Mortar Banking

A brick and mortar bank is a traditional financial institution that maintains physical branches or offices where customers can conduct banking activities. These banks often have a network of multiple locations, which facilitates direct customer interaction.

This model allows for face-to-face assistance and the development of personal relationships with bank employees. While their distinguishing feature is their physical presence, most traditional banks also offer online and mobile banking services as supplementary tools. This blend of physical and digital access allows customers flexibility in how they manage their accounts.

Services and Transactions at a Physical Branch

Physical bank branches offer a broad range of services that cater to various financial needs. Customers can easily perform routine deposit and withdrawal services, handling cash and checks directly with tellers or through branch ATMs.

Branches also facilitate the process of opening new accounts, such as checking, savings, or certificates of deposit, where customers can receive personalized guidance on terms and conditions. Loan applications for mortgages, auto loans, or personal loans are commonly handled at branches, allowing for direct consultation with loan officers. This direct interaction can be beneficial for discussing complex financial products.

Beyond routine transactions, physical branches provide specialized services that are often difficult or impossible to obtain digitally. These include notary services for authenticating documents, safe deposit boxes for secure storage of valuables, and the issuance of cashier’s checks and money orders. The ability to resolve complex issues or engage in financial planning discussions directly with bank representatives also remains a significant advantage of a physical branch.

How They Differ from Online-Only Banks

The primary distinction between brick and mortar banks and online-only banks lies in their operational structure. Brick and mortar banks maintain physical locations, offering in-person service and access to tellers and branch staff. In contrast, online-only banks operate exclusively through digital channels, such as websites and mobile applications, without any physical branch presence.

Customer interaction also varies significantly between the two models. Traditional banks emphasize personalized, face-to-face interactions, which can be important for complex transactions or building long-term relationships. Online-only banks, however, provide customer support primarily through digital means like phone, chat, or email, prioritizing convenience and 24/7 accessibility.

Cash handling represents another notable difference. Brick and mortar banks offer straightforward cash deposits and withdrawals at branches or their extensive ATM networks. Online-only banks often present challenges for cash transactions, typically requiring customers to use third-party ATMs, money orders, or other indirect methods, which can sometimes incur fees or take longer to process.

Operational costs also contribute to differing service models and fee structures. The overhead associated with maintaining physical branches, including property, utilities, and staffing, can influence the fees charged by traditional banks and the interest rates offered on deposit accounts. Online-only banks, with their lower overheads, frequently offer more competitive interest rates on savings products and fewer fees. Despite these differences, many traditional banks have invested in technology, providing robust online and mobile banking capabilities that bridge the gap with their digital-only counterparts.