Online banking allows a user to conduct financial transactions via the Internet. Online banking is also known as internet banking or web banking.
Online banking offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments. Virtually every banking institution has some form of online banking, available both on desktop versions and through mobile apps.
With online banking, consumers aren't required to visit a bank branch to complete most of their basic banking transactions. They can do all of this at their own convenience, wherever they want—at home, at work, or on the go.
Online banking requires a computer or other device, an internet connection, and a bank or debit card. In order to access the service, clients need to register for their bank's online banking service. In order to register, they need to create a password. Once that's done, they can use the service to do all their banking.
Banking transactions offered online vary by the institution. Most banks generally offer basic services such as transfers and bill payments. Some banks also allow customers to open up new accounts and apply for credit through online banking portals. Other functions may include ordering checks, putting stop payments on checks, or reporting a change of address.
Checks can now be deposited online through a mobile app. The customer simply enters the amount before taking a photo of the front and back of the check to complete the deposit.
Online banking does not permit the purchase of traveler's checks, bank drafts, certain wire transfers, or the completion of certain credit applications like mortgages. These transactions still need to take place face-to-face with a bank representative.
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F.A.Q. about Online Banking
What are the advantages of online banking?
Convenience is a major advantage of online banking. Basic banking transactions such as paying bills and transferring funds between accounts can easily be done 24 hours a day, seven days a week, wherever a consumer wishes.
Online banking is fast and efficient. Funds can be transferred between accounts almost instantly, especially if the two accounts are held at the same institution. Consumers can open and close a number of different accounts online, from fixed deposits to recurring deposit accounts that typically offer higher rates of interest.
Consumers can also monitor their accounts regularly closely, allowing them to keep their accounts safe. Around-the-clock access to banking information provides early detection of fraudulent activity, thereby acting as a guardrail against financial damage or loss.
What are the disadvantages of Online Banking?
For a novice online banking customer, using systems for the first time may present challenges that prevent transactions from being processed, which is why some consumers prefer face-to-face transactions with a teller.
Online banking doesn't help if a customer needs access to large amounts of cash. While he may be able to take a certain amount at the ATM — most cards come with a limit—he will still have to visit a branch to get the rest.
Although online banking security is continually improving, such accounts are still vulnerable when it comes to hacking. Consumers are advised to use their own data plans, rather than public Wi-Fi networks when using online banking, to prevent unauthorized access.
Additionally, online banking is dependent on a reliable Internet connection. Connectivity issues from time to time may make it difficult to determine if banking transactions have been successfully processed.