There is hardly a classic bank that does not offer online business or even massively expands it. Customers are well aware of the conversions, because they are offered online banking and account management is also taking place more and more online. Even bank transfers can often no longer be submitted on a form, because the terminal is available to customers. Likewise, the classic institutions are becoming modern in the area of loans. This article shows which special features the loans of the classic banks have and how they become even better through the use of modern elements.

Figure 1: Online loans are no longer a novelty. Traditional banks are also making more and more inroads in this area. But what are the actual advantages? Image source: @ Burst / Unsplash.com

Specifics of loans from classical banks

Classic banks almost always offer branches directly on site. This is particularly evident in the case of savings banks in larger cities, where account numbers vary from district to district - customers always find their own contact person where they are assigned. In the typical business process involving cash withdrawals from ATMs, transfers or other "simple" matters, the traditional banks have also long been online and advise their customers to use online banking directly. Nevertheless, there are special features:

• Contact persons - Customers of traditional banks can visit a contact person directly on site or make an appointment. Personal contact is important for many citizens, and sometimes even offers advantages, since problems can be explained and clarified much better in a personal conversation.
• Known customer - at traditional banks, the customer is usually still known. This can make it easier to take out a loan, because problems or hurdles can be discussed much better in person than online. An example would be a previous insolvency that has nevertheless been completed. The house bank can specifically view the account and determine that the customer is long out of insolvency and the balance is sufficient for a loan. While this does not guarantee a loan, a third-party bank would definitely issue a rejection.
• Special features - it is not uncommon for a house bank to create options away from the regulations. For example, an overdraft facility can be increased quickly if the reason is valid and the customer can demonstrate on site that the financial dilemma will be resolved within a short time. Other scenarios can also often be discussed and clarified in personal contact.

Ultimately, however, the advantages also depend on the bank itself. To this day, those whose family has always been with an institution and is therefore well-known have great advantages. Customers who have been with the bank for many years and are known to other generations often have a strong advantage, whereas at online-only banks they have to be regarded as one of many.

Examples of traditional banks going the online route

The German banking system is based on a three-pillar system. This structure includes cooperative banks, semi-publicly owned banks (savings banks) as well as credit banks and other banking institutions. All of these banks belong to the traditional structure and are at least partially supported by the state in the event of an emergency. Profit is not necessarily the focus of this model; in fact, it is considered below average for Germany.

Many of the banks have long been operating in the traditional business and also in the online sector. But where is the difference?

• Online classic - ultimately, this simply means online banking, including all the functions that are necessary for everyday use. Apps for banking, push TANs and other administrative functions are also included. Since pure online banking today includes many more facets than it did 15 years ago, it already seems enormous.
• Online route - these banks go one step further. Customers often experience it as restrictive in everyday life, because individual branches may be eliminated, plus almost everything is done at the terminal or online.

However, some of the providers go one step further. For example, Sparkasse:

• Online loans - Savings bank customers can effortlessly apply for a loan online. Third-party customers are also taken, although the application is naturally made easier for savings bank customers due to the savings bank's high level of knowledge. Ultimately, the bank can directly view the account history of the last few years, rather than relying on the last three months. If there has been a weakness within the last few months, but the general outlook is positive, lending is possible on good terms.
• Account management - via online banking, savings bank customers have long been able to create sub-accounts, name them, and also create and manage overnight and fixed deposit accounts.

Banks such as Commerzbank directly took a further step and split up the banking business. The founding of Comdirect created a separate Internet bank, but one that is firmly interwoven with Commerzbank. Comdirect customers have no or a subordinate claim to direct service in branches, but manage their banking affairs on their own or with the help of the service hotline.

Classic direct banks with an early online focus

The Internet quickly became the focus of attention for all direct banks. A direct bank classically has no or very few branches, but cooperates with classic banks for cash dispensing. Postbank users are also familiar with this principle: They can also withdraw money free of charge from Deutsche Bank ATMs.

Banks such as SWK Bank or CreditPlus extended the first principle even further. Right from the start, they relied on online business and practically encouraged customers to become their own bank advisor. What was once considered an absolute novelty is now commonplace for most bank customers. Today, transfers, direct debits, account statements or other small banking transactions are carried out almost exclusively online, but back then it was an exception. However, what started as an exception and is becoming the norm also requires further development. That is:

• Connectivity - a modern online bank today offers all kinds of connectivity. Mobile payment systems such as Google and Apple Pay must be supported, and at the same time it is important to create interfaces to accounting and tax programs, but also to other types of investments.
• Trading - more and more citizens are venturing into the stock business, at least through ETFs. A good online account at an online bank allows trading and helps even laymen to set it up correctly and safely.
• Investment - modern online banks no longer rely only on the normal account movements, they also offer customers that certain plus. Investment accounts must be able to be created and managed quickly and without detours. This applies to overnight and time deposit accounts as well as savings accounts or other investment options. The customer should be able to find out about the site for himself and thus make a decision that suits him.
• Loans - loans can also be applied for conveniently online. Potential borrowers receive an instant response based on their information and only need to submit a few documents. Identification takes place conveniently via Videoident procedure. The SWK experience at smava also shows how uncomplicated this is.
• Extended services - via online banking, tools for liquidity and cash flow planning can also be connected at a later stage.

Many of the direct banks have not only discovered the Internet for themselves on the customer side, but the also offer founders and those who earn money via online payment providers a safe haven. Especially the connection of payment providers is incredibly important for entrepreneurs of any size.

What distinguishes modern online loans?

An online loan is, soberly considered, also just a normal loan. Nevertheless, it has advantages that every citizen can quickly recognize. The biggest feature is probably that these loans can be found practically on every virtual corner. Some examples of the online variants:

• Comparability - in contrast to the products of traditional banks, a citizen can effortlessly compare the loans of countless providers online. They are not tied to a single provider, but can select the loan that suits them best from the masses. Through the comparison, customers quickly recognize which loans are actually favorable or which have weak points. Comparison portals help with this decision, as they already filter the results based on the customer's preselections.
• Flexible - the online variants usually come up trumps with a high degree of flexibility. Customers have the option of determining their term and thus their installments themselves. At the same time, they can independently agree on additional options such as the installment break. Short-term loans or mini-loans are also possible in this way. Traditional banks have adapted their loans, but often require a minimum amount.
• Fast - Online loans are sometimes very fast. Digital processing and application processes cut processing time to a minimum. Nevertheless, how quickly the payment is made depends on a number of factors.
• Unusually - drawdown loans, for example, are found almost exclusively online. These loans are practically an overdraft facility, but they are managed separately from the customer's own account, even though they are linked to it. Customers have to specifically request the money from the call credit, so they cannot simply overdraw their account. Many find this option to be an additional safeguard.

The ready-made "off-the-shelf" loans in particular come up trumps online with incredible speed and ease. However, more specific requests, such as a second borrower, also cost time on the Internet.

Figure 2: Traditional banks are offering more and more online services in the lending area. Potential borrowers can look forward to many benefits. Image source: @ Markus Spiske / Unsplash.com

Conclusion - the boundaries are blurring

Pure direct and online banks may be doing away with local branches or personal customer contact, but anyone who takes a closer look at the media will know that this is even happening at traditional banks. More and more branches are closing, and those that remain are resorting to stationary but online-based offerings. At the same time, online business is being expanded. Nevertheless, even at these banks it is still possible to get a personal appointment on site and thus make special arrangements. A number of direct banks in the traditional sense made the move, and the others are now following suit.