Americans aren’t necessarily abandoning traditional banks altogether. Instead, more consumers are spreading their money across multiple institutions and moving some deposits to banks that offer better rates, lower fees, and more convenient digital tools.
A 2026 J.D. Power survey found that 20% of retail-bank customers had moved money away from their primary bank during the previous three months, up from 17% a year earlier. The average checking customer now maintains accounts at three different institutions. ABA Banking Journal
1. Online banks often pay higher interest
This is probably the biggest attraction.
Online banks don’t have to maintain large networks of physical branches, so they can potentially operate with lower overhead and compete more aggressively for deposits.
Research published in 2026 by the Bank for International Settlements found that digital banks generally pay higher deposit rates than traditional banks and adjust those rates more quickly when monetary policy changes. Bank for International Settlements+1
For someone keeping $20,000 in savings, even a 2-percentage-point difference can mean roughly $400 more in annual interest before taxes.
2. Americans increasingly prefer mobile banking
The traditional reason for choosing a local bank was the branch.
That matters less when customers can deposit checks, transfer money, pay bills, freeze cards, and manage savings entirely from a phone.
According to the American Bankers Association’s 2025 survey, 54% of Americans said mobile banking was their preferred way to manage their accounts, compared with just 9% who preferred visiting a branch. American Bankers Association+1
3. Lower fees can make a big difference
Online banks frequently compete by reducing or eliminating fees such as:
- Monthly maintenance fees
- Minimum-balance requirements
- Excessive ATM fees
- Certain overdraft fees
That can be especially attractive to consumers who don’t need regular access to a physical branch.
4. Customers are becoming more willing to “shop” for a bank
The idea of having one bank for everything is becoming less important.
Someone might keep a checking account at a traditional bank because they like its branches and then move their emergency fund to an online bank offering a higher savings rate.
The 2026 J.D. Power data illustrates this trend: customers increasingly maintain accounts at multiple institutions rather than relying on a single primary bank. ABA Banking Journal
5. Technology has made switching easier
Moving money between financial institutions is considerably easier than it once was.
Consumers can compare APYs online, open accounts remotely, connect external accounts and transfer money without visiting a branch.
And digital banking isn’t just a younger-generation phenomenon. The ABA found that 38% of Baby Boomers identified mobile apps as their most-used banking method, compared with 12% who preferred branches. American Bankers Association
6. Higher interest rates made the difference more noticeable
The shift became particularly important when interest rates rose.
When savings rates were extremely low, the difference between earning 0.05% and 0.50% might not have seemed worth switching banks.
But when consumers can earn several percentage points more elsewhere, the opportunity cost of leaving large amounts of cash in a low-yield account becomes much more obvious.
The FDIC has previously documented depositors shifting from lower-yielding accounts toward higher-yielding time deposits as rates increased. FDIC Archive
But online banks aren’t automatically better
There are still good reasons to keep a traditional bank.
Traditional banks can win on:
- Physical branches
- Cash deposits
- In-person customer service
- Access to specialized financial products
- Established relationships with local businesses and customers
And a higher APY shouldn’t be the only consideration. Consumers should check whether the institution is FDIC-insured, whether there are account requirements, how quickly transfers occur, ATM access, customer support, and whether the advertised rate is promotional.
The bigger trend: Americans are becoming “multi-bank” customers
The most important change may not be traditional banks → online banks.
It’s increasingly:
One bank → several financial institutions.
A customer might use:
Traditional bank → checking + ATM + branch access Online bank → high-yield emergency savings CD provider → money that won’t be needed for a specific period Brokerage → long-term investments
That gives consumers more control over where each dollar is kept.
Bottom line
Americans are moving money to online banks because the trade-off has changed. Consumers can increasingly get competitive interest rates, low fees and convenient mobile banking without needing a physical branch.
The smartest approach isn’t necessarily to abandon traditional banks. For many people, keeping a traditional checking account while moving excess savings to a competitive online bank can provide the best combination of convenience, access and yield.
