Online Banking

Online Banking

Online Banking is a system allowing individuals to perform banking activities at home, through the internet or Web banking. Online banking is also known as Internet banking’ or ‘Web banking’.

 

A few online banks are conventional banks which also offer online banking, where as others are online only and have no physical presence. Online banking through conventional banks allow customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests, and some even offer online loan and credit card applications. Account information can be accessed anytime, day or night, and can be done from anywhere, any time as the wishes of the cutomers. A small number of online banks update information in real-time, where as others do it daily. Once information has been entered, it doesn’t need to be re-entered for similar subsequent checks, and future payments can be scheduled to occur automatically. Most of them are allow for file transfer between their program and popular accounting software packages, to simplify record keeping. In spite of the advantages, there are a few drawbacks. It does take some time to set up and get used to online accounts. As well, a few banks only offer online banking in a limited area. In addition, when an account holder pays online, he/she may have to put in a check request as much as two weeks before the payment is due, but the bank may withdraw the money from the account the day that request is received, meaning the person has lost up to two weeks of interest on that payment.

Investopedia says

Online banks cannot provide direct ATM access, but they make provisions for consumers to use ATM at other banks and retail stores, and they may reimburse consumers for any connected fees. Because of the reduced overhead costs connected with not having physical branches, online banks tend to offer consumers significant savings and pay higher interest rates. Online banks handle customer service tasks by phone, email or online chat.

Investorglossary.com  explains

online banking is a service offered by banks that allows account holders to access their account data via the Internet. In order to take advantage of online banking, an account holder would need to meet several technological requirements, such as having a personal computer with Internet access and web browser. If those conditions are satisfied, online banking can be performed from anywhere in the world. To minimize the risk of fraud, online banking is enabled through a secure server, which grants the individual a private access to his or her bank account. Online banking is designed to streamline banking chores that otherwise require considerable time and effort. Thus, online banking facilitates direct access to account details, enables transfer of funds, allows for multiple bills payments, and performs an array other transactions. Online banking is available twenty four hours, seven days a week, regardless of the bank’s working hours. Today, most banks offer online banking services.

Common features online Banking

1. A bank customer can perform some non-transactional tasks through online banking, including –

  •  viewing account balances
  •  viewing recent transactions
  •  viewing images of paid cheques
  • downloading bank statements, for example in PDF format
  • ordering cheque books
  • Downloading applications for M-banking, E-banking etc.

2. Bank customers can transact banking tasks through online banking, including :

– Funds transfers between the customer’s linked accounts

– Paying third parties, including bill payments (see, e.g., BPAY) and telegraphic/wire transfers

– Investment purchase or sale

– Loan applications and transactions, such as repayments of enrollments

3. Financial institution administration

4. Management of multiple users having varying levels of authority

5. Transaction approval process

6. Transfer funds from one account to another or make deposits

How It Works

The majority banks propose customers the option of online banking.  Customers are able to access to all of their accounts through an internet connection using the banks own website or a commercial software package such as Quicken or Money.

Online banking allows customers to monitor account, download transaction, transfer funds between accounts, including checking, saving, and money market/CD accounts, management investments, and handle loan activity, including applications and repayments services.  The clients can transfer funds to their bank accounts, and pay bills either electronically (with an account transfer) or by having the bank issue paper checks directly to the payee.

Banks use security systems to ensure that transactions conducted online are protected from internet security threats.  Most banks use an industry-standard Secure Transaction software and protocol to deal with the security on their systems.

Benefits of online banking

Here are some of the advantages of mobile banking:

  • Consumers can get alerted about various situations, such as if their account is low.
  •  Consumers have a greater handle on their money since they only need a mobile connection to access their accounts. No

Internet service is required.

  •  Despite its perception, mobile banking is secure, perhaps even more so than online banking. Malware is less likely to threaten mobile bank customers due to the sheer abundance of platforms.
  • Consumers have an added layer of protection against identity fraud: The more you monitor your account, the safer you are and mobile banking lets you do just that.
  • Mobile banking is free. Banks currently aren’t charging fees for mobile services.
  •  Through certain banks and applications, you can monitor your spending through a virtual wallet and make payments.
  • There are fewer surprises, as customers can check their balances and transactions anytime.
  • You’re protected even if you lose your mobile device. Personal information is password-protected and secured by other identity confirmations. Additionally, you can disable your phone remotely.

Benefits of Online Banking

by Debbie Dragon

1.        Convenience – By banking online, you can carry out your banking activities whenever you want. Online banking is a 24 hour service, so you are no longer tied to the branch’s hours. On top of that, you don’t have to take the time to travel to the branch and wait in the inevitable lines, thus giving you more time to do what you want.

2.        Mobility – Online banking can be done from anywhere, as long as you have an Internet connection. Even if you are away for business or a vacation, you can still take care of your banking needs. Some banks, such as Bank of America, have even created mobile applications that make banking easier for those with a Smartphone like the Apple iPhone or iTouch or a Blackberry. With this added mobility, you’ll no longer have to worry about missing a payment or any other time sensitive banking activity.

3.        No Fees – Because an online bank doesn’t have to worry about funding an actual bank location with all of those additional costs, fees can be reduced and are often non-existent. Those checking and savings accounts that are offered by completely online banks usually have no fees at all. Depending on the type of account you currently have, you could be saving anything from $60 a year and up.

4.        Higher Interest Rates – Again, due to a lack of costs associated with running an online bank, higher interest rates are often offered for their accounts. For higher interest rates, you would usually need to bank with a completely online account.

5.        Online Statements – Most online banks try to be as paper-free as possible. Most statements and correspondence is done online, reducing the amount of paper used and sent out to you. This again will help reduce the costs of the online bank. As an added bonus, this makes online banking a great environmental choice. Be warned, some banks do charge if you do want a paper copy of something.

6.        Direct Deposit – With any incoming money, such as your salary, you can arrange for it to be directly deposited into your bank account by the company sending the money. This is actually a double benefit, as you don’t have to take the time to deposit the check, plus the money goes into your account faster allowing you to earn interest that much quicker.

7.        Automatic Bill Paying – With automatic bill paying, you can automate paying your monthly bills. Of course, you need to set this up, but it will be worth it in the long run. First, with your bills being paid automatically, you shouldn’t ever miss a payment. Plus, by not having to worry about the time taken to mail in your payment, you can keep your money in your account for a bit longer, earning you a little bit more interest – and you save on postage too. Finally, you can actually do away with using checks and you also save on paper used, making this a much greener way of banking also.

8.        Real Time Account Information – Because you can access your accounts anytime, you can get up to date, real time information on the money in your accounts. This will allow you to better manage your money and gain the most from different accounts, interest rates and services provided by the bank.

9.        Transfers – Transfers between accounts with the same financial institution online can be done almost instantaneously. Not only is there no hold on the money being moved around, you can do it whenever you like and from wherever. You also save time on travelling to the local branch. Even transferring to other financial institutions is easier, and safer as you don’t have to carry the money around with you. You can even now e-mail money to and from other people with INTERAC e-mail money transfers.