What Is Online Banking?

 

What is online banking?

Online banking allows users to conduct financial transactions over 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 in desktop versions and through mobile apps.

Understanding Online Banking

With online banking, customers do not need to visit a bank branch to complete most of their basic banking transactions. They can do all this at their convenience, wherever they want – at home, at work, on a bus or on a plane. Online banking requires a computer or other device, an internet connection and a bank card or debit card. To access the service, customers need to register for their bank’s online banking service.

To register, they need to create a password. After that, they can use all their banking services. Banking transactions offered online vary from institution to institution. Most banks usually offer basic services such as transfers and bill payments. Some banks allow customers to open new accounts and apply for credit cards through online banking portals. Other tasks may include ordering checks, stopping payments on checks, or reporting a change of address. Checks can now be deposited through a mobile app. Customers simply enter the amount before taking a photo of the front and back of the check to complete the deposit.

Advantages of online banking

Convenience is the main advantage of online banking. Basic banking transactions such as paying bills and transferring funds between accounts can be easily done 24 hours a day, seven days a week if the customer wants. Online banking system is fast and efficient. If two accounts are held at the same institution, funds can be transferred between the accounts almost instantly. Customers can open and close many different accounts online, from fixed deposits to recurring deposit accounts that usually offer higher interest rates.

Customers can closely monitor their accounts on a regular basis, enabling them to keep their accounts safe. 24 hours a day access to banking information provides early detection of fraudulent activity. thereby acting as a hedge against financial damage or loss.

Disadvantages of Online Banking

For new online banking customers, using the systems for the first time can pose challenges that prevent them from processing transactions, which is why some customers prefer face-to-face transactions with a teller. Online banking does not help if customers need access to large amounts of cash. Although they can withdraw a certain amount at an ATM- most cards come with a limit. Still they have to visit the branch to get the rest. Although online banking security is constantly improving, such accounts are still vulnerable when it comes to security.

Customers 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. From time to time connectivity issues can make it difficult to determine whether banking transactions have been processed successfully. Online Banks Some banks operate exclusively online with no physical branch. These banks provide customer service through phone, email or online chat. With the widespread availability of Wi-Fi and 4G networks, online banking is now often done on mobile devices. This can also be done on a desktop computer.

These banks may not provide direct Automated Teller Machine (ATM) access. But customers make provisions to use ATMs at other banks and retail outlets. They may reimburse customers for certain ATM fees charged by other financial institutions. The lower overhead costs associated with not having physical branches often allow online banks to offer customers significant savings on banking fees. They also offer higher interest rates on accounts.

Key take aways

# Online banking allows users to conduct financial transactions over the Internet.

# Customers no longer need to visit a bank branch to complete most of their basic banking transactions.

# A customer needs a device, internet connection and a bank card to register. Once registered, the customer sets a password to start using the service.