What is Online Banking?

  •  7 min read
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  • 27 Dec 2023
What is Online Banking?

Key Highlights

  • Online banking is simple to use from anywhere and everywhere by making it convenient for managing the money through just an app.
  • You don't have to physically go to a bank; you can handle your important transactions with just a few clicks without visiting the bank.
  • Signing up for online banking is easy and accessible. All you need is a device, an internet connection, and a bank card to get started.

Online banking is a service that provides the convenience of using financial transactions without physically visiting a bank branch. Online banking helps to access transactions from anywhere at any time, be it one’s home, or workplace, just through a web browser or application by an internet connection or through a debit card. There are different transactions that vary which are covering transfers, bill payments, account openings, and credit card applications. Additional functionalities may involve check orders, stop payments, and address changes. Mobile banking, executed on smartphones or tablets, involves checking deposits through a photo capture.

However, specific financial transactions, such as acquiring traveler's checks, bank drafts, or certain wire transfers, are typically restricted within the online banking framework. Similarly, credit applications, particularly those for significant financial products like mortgages, usually require visiting the bank in person.

There are various financial banking services that work online which removes the physical visiting of banks. Here's an outline below of some banking services which you can access online.

  • Opening an account Many banks provide the option to open various types of accounts online, such as saving or current accounts. This removes the need to rush to the bank during standard business hours.

  • Applying for a loan Applying for a loan is a time-consuming process, and bankers are now allowed to apply for a loan online by scanning the information and preparing copies of necessary documents. Some of them do the approval and disbursement within 24 hours.

  • Bill payments Online banking simplifies the task of bill payments, replacing the need for writing monthly cheques or demand drafts. Banks can ease this process by setting up standing instructions for online bill payments. Stopping a payment is also easily done with just a click.

  • Fund Transfers With online banking, transferring money between accounts within the same bank makes it convenient for the customers.

  • Viewing banking history Many banks are managing eco-friendly practices by offering e-statements delivered directly to the email. Additionally, you can view your transaction history online at the bank's portal, making searching for specific financial transactions easier and downloading old statements.

  • Better rates The cost savings for banks in utilizing online banking services, including reduced expenses for physical offices and staff salaries, translate into more competitive rates for users. This includes obtaining a personal loan online at a lower interest rate than traditional loans or opening a savings account online with a negligible minimum deposit amount.

  • Staying up-to-date Online banking keeps users informed about their accounts and provides the latest information on offers. Banks may send email notifications about special offers on loans, credit cards, and more. Regularly visiting the bank's online page helps users stay updated in this regard.

  • Making requests Many banks allow users to request a new checkbook, debit card, or credit card through their online banking portal. These requested items will be delivered to the registered address, eliminating the need for in-person visits to the bank.

Pros of Online banking have overshadowed the cons. Here are the pros and cons of online banking below.

Here are some pros of online banking:

  • Permanent Access to Services: You can have permanent access to online banking almost everywhere but with just internet connectivity in your mobile, laptop. No need of physically available at the bank with the restricted timings of the bank.

  • Multi-Device Accessibility: Unlike offline banking, You can have multi-device accessibility in your bank account through mobile, laptop, tablets, smartphones and more. Just by logging in through the bank apps and web portals.

  • Time Savings: Online banking is a time-consuming process. Online services eliminate the need to visit a bank and wait at the long queue to deposit or withdraw cheques and it also saves the time of interactions with the bankers.

  • Speed: Online banking does instant payments through various UPI apps and also carries the online record of the bank statements, unlike offline banking where an individual has to wait for the statements in a long queue.

  • Ease of Use: Unlike Offline banking, Online banking makes user-friendly financial platforms for customers to download and have easy withdrawals and funds transfers with just a few clicks

  • Control: Online banking helps manage financial transactions independently, monitor transactions, pay bills, and maintain control 24/7 through just an app.

Here are some cons of online banking:

  • Transaction Complexity: Offline banking involves complex transactions which requires in-person assistance from bank officials, especially with huge amounts of money cases.

  • Limited Services: Unlike online banking services, Offline banks offer limited services such as brokerage and insurance, but the same services can be available online.

  • In-Person Relationship: There are specialized services for the subscribers that may involve visiting the bank and in person interaction with the banking representatives.

  • Discomfort with Technology: Online banking can be used only by people who are aware about the technology. Older customers may not be comfortable with technological interfaces, like phone apps or online portals.

  • Technical Issues: Sometimes, online banking has problems because the internet gets too busy or stops working, making transactions tricky.

  • Security Risks: Using online banking on unsafe internet or public WiFi can be risky. It might make online banking open to hackers who try to take your money.

  • Scams Warning: Because many people use online banking a lot, there are more scams. Hackers make fake banking apps to get your secret information, so be careful.

1. Security Measures: Read the bank's security procedures, encryption, and their banking methods for verifying your identity.

2. Service Offerings: Do check the online banking services they provide which involves bill payments, funds transfers, interests on deposits and many more.

3. Mobile Accessibility: Ensure that the online banking works smoothly on mobile devices to have easy banking on the go.

4. Customer Support: Check the bank’s customer service which is available and how quickly they manage to respond to your banking queries.

5. Accessibility of Statements: Make sure that you can easily access online statements and your banking transaction history.

6. Technology Updates: Choose a bank that has the regular banking updates for security and can count on it.

7. Reviews and Reputation: Before opening an account, read reviews from other customers to understand how satisfied they are with the reliability.

8. Backup and Recovery Options: Check if the bank has plans in place for technical issues or data loss.

9. Terms and Conditions: Review the bank's policies regarding data privacy, account access, and how disputes are resolved.

10. Educational Resources: Look for resources provided by the bank to help you understand their online banking features and security for the banking process.

Conclusion

In today’s fast paced world Online banking has become a crucial tool which offers ease of access to the financial accounts. Financial institutions actively promote the use of Internet banking, emphasizing its variety of advantages, such as convenience and efficiency. As responsible customers, we must prioritize precautionary measures to ensure the security of our financial information in this digital age. By staying vigilant and implementing best practices, we can mitigate potential risks and enjoy the benefits of online banking.

FAQs on Online Banking

The internet enables online banking by providing a secure platform for users to access financial services, perform transactions with an internet connection.

Online banking employs strong security measures such as offering encryption and two-factor authentication to safeguard user information, ensuring a high level of security.

Online banking offers convenience with 24/7 access and the ability to manage finances remotely. Additionally, it provides features like automatic bill payments and quick fund transfers.

Many banks offer online banking services for free, but there might be fees which are associated with specific transactions or services. It's essential to review your bank's fee schedule.

Yes, many online banking platforms allow you to set up account alerts for activities such as low balances, large transactions, or when a bill is due.

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