Short answer: It depends on what you need. Digital banks offer big advantages for convenience, cost and speed, but traditional banks still beat them on cash services, in-person advice, and some business/credit needs — and in Sri Lanka those practical differences matter more because the economy remains quite cash- and branch-oriented.

Key differences (Sri Lanka–relevant):

• Convenience and speed

  • Digital banks: 24/7 account opening, real-time transfers, mobile apps, instant bill-pay and e-statements. Great if you live in a city, travel a lot, or want fast online payments.
  • Traditional banks: slower in some digital functions, but provide in-branch services when you need them.

• Fees and interest

  • Digital banks often have lower fees (no branch overhead) and may offer more competitive deposit interest or lower transaction fees.
  • Traditional banks sometimes bundle services (e.g., cheque facilities, cash management) that matter for businesses and may offer relationship pricing for long-term customers.

• Cash and physical access

  • Sri Lanka still uses a lot of cash: deposits, withdrawals, and cash-based merchants are common. Traditional banks (branches and wide ATM networks) make cash handling straightforward.
  • Purely digital banks can be limited for cash deposits/over-the-counter services — they often rely on partner networks or agent cash-in/cash-out points, which may not be convenient everywhere.

• Payments and local integrations

  • Digital banks typically integrate well with e-wallets, QR payments and online merchants.
  • Traditional banks often have established corporate ties (salary payments, merchant services, government payments) that can be important for businesses and payroll.

• Credit, loans and relationship banking

  • Traditional banks generally have more mature lending operations, relationship managers, and products for SMEs, mortgages and trade finance.
  • Digital banks may offer fast, smaller loans or digital lending products but might be limited for large or complex credit needs.

• Security and regulation

  • Regulated banks in Sri Lanka are overseen by the Central Bank of Sri Lanka (CBSL). Licensed digital banks are subject to the same prudential rules; however, new digital-only entrants may have different protections or partner arrangements — always confirm licensing and deposit protections.
  • Both types can be secure if they follow strong authentication and encryption — but watch for phishing and social-engineering scams that target mobile customers.

• Customer support and dispute resolution

  • Traditional banks offer in-person help, notarization, cheque signing, and dispute handling via branch staff.
  • Digital banks rely on chat, phone or email support; response quality varies and some users find complex issues easier to resolve face-to-face.

• Accessibility and inclusion

  • Digital banks can extend formal banking to underbanked people with smartphones, but they depend on smartphone penetration, reliable internet and digital literacy — which vary by region in Sri Lanka.
  • Branches and community banking still matter for older customers and rural areas.

Who should choose which:

• Prefer digital bank if: you’re tech-savvy, live/work in urban areas, value lower fees and instant digital services, and don’t depend on frequent cash deposits/branch services.
• Prefer traditional bank if: you need branch access or large, complex loans; you handle cash frequently; you want in-person advisory or long-standing relationship services.
• Hybrid approach: Many people keep a primary traditional bank account for cash/loans and a digital account for low-cost online payments and budgeting — this often gives the best of both worlds.

Practical checklist before switching or opening an account:

• Confirm the bank’s licence/registration with the Central Bank of Sri Lanka.
• Check how to deposit and withdraw cash and the locations/costs of partner agent networks or ATMs.
• Compare fees, transfer limits, FX rates and interest rates.
• Review loan products, eligibility and turnaround times if you’ll need credit.
• Read user reviews about app reliability and customer support.
• Ensure strong security (2FA, biometrics) and understand dispute/chargeback processes.

Bottom line: Digital banks are often “better” for convenience, cost and everyday digital payments — but in Sri Lanka they don’t fully replace traditional banks for cash services, larger credit needs and in-person support. Choose based on your personal needs (or use both).