Online banking allows individuals to perform banking transactions over the Internet. This can be done through a bank, a credit union, or an online-only bank. Typically, online banking is accessed through a website or a dedicated app. It is also referred to as mobile banking, as it can be conveniently accessed through smartphones or tablets. If you have been contemplating whether online banking is suitable for you, continue reading to gain more insight into the types and features of online banking.
What Is Online Banking?
Online banking enables individuals to conveniently and securely perform various financial transactions using the Internet. It is also referred to as web banking and is a popular method of conducting financial transactions and managing accounts through the Internet. In addition, this service provides customers with a wide range of services that were traditionally only available at local branches. These services include making deposits, transferring funds, and paying bills online. Almost every banking institution offers online banking services that can be accessed through a computer or mobile application.
How Does Online Banking Work?
Instead of having to adhere to the hours of your neighborhood bank, this banking allows you to save time and conduct your banking whenever you want. Aside from starting an account, you can do almost everything online that you would normally do at a bank or credit union branch.
When it comes to being able to use an ATM, traditional banks and credit unions have an advantage over their online peers. These days, more and more online banks and credit unions give their customers access to a network of ATMs that don’t charge any fees. There are some banks that will refund you for ATM fees up to a certain amount each month.
Types of Online Banking
The different types of services that banks offer are what lead to the many types of online banking services. Thus, the three primary types of online banking services are as follows:
#1. Informational Online Banking
This type of online banking represents the bare minimum of the industry. This allows customers to gain online access to the bank’s comprehensive database of data. Information on the accounts, deposits, and loans that the bank offers to its various clientele is included here. Features, benefits, qualifications, and application procedures are all spelled out. Locations of both bank branches and automated teller machines are included. You can send an email to the bank for more details if you need them.
#2. Communicative Online Banking
You can apply for banking services like loans and inquire about your account balances with this type of online banking service. Bank customers can interact with service representatives via text-based chatbots. These chatbots can provide you with basic information and send you to customer service if you need more help. You can get answers to broad questions concerning required minimum balances, making transfers, the available bank accounts and cards, and more. Chatbots can provide basic information on loan options, interest rates, repayment terms, and other topics.
#3. Transactional Online Banking
Online banking services that deal with monetary or payment transactions are known as “transactional online banking.” To make monetary transactions such as wire transfers, credit card payments, energy payments, term deposits, and market securities investments, you will normally require an active online banking account and password. Also, by offering services like National Electronic Fund Transfer (NEFT), Immediate Payment Service (IMPS), and Real Time Gross Settlement (RTGS), transactional online banking has simplified money transfers in India. These methods of transferring money allow for instantaneous transactions with a range of possible minimum and maximum amounts.
What Is Online Banking ID?
The Online Banking CID (Customer ID) is a unique number assigned to you during the registration process for online banking. You will be required to enter this number each time you log in to access your account. Your CID (customer identification number) is distinct from your account number.
Features of Online Banking
While the features of Internet banking vary per bank, the following are some of the most significant features of online banking that most users can enjoy:
#1. Check Statements and Balances
You can access your online banking account whenever you choose to see how much money is in it. You can view and download statements from multiple years’ worth of activity.
#2. Transfer between Accounts
It is crucial to be able to effortlessly move money between your different accounts at the same financial institution, whether you’re trying to save more or pay for unexpected expenses. With a few clicks of the screen, customers who bank online or via a mobile banking app can instantaneously transfer funds across internal accounts, eliminating the need to physically visit the bank and fill out a slip. Those who want greater financial freedom in their spending, saving, and budgeting habits will appreciate this feature.
#3. Bill Payment
Online banking allows customers to make bill payments remotely. Things like loan payments, credit card payments, and utility expenses fall into this category. They can also buy gift cards and top-up mobile phones while shopping online.
#4. Security
You may be concerned about the security of banking online. The quick response is “yes.” Many safeguards are in place with online banks to keep your money secure. Investigate the bank’s security features before committing to an online-only bank. Multiple-factor authentication, encoding, and firewalls are only some of the security measures used by many online banks. They may also insist that you use encrypted browsers to keep your personal information safe from prying eyes.
#5. Online Bank Statements and Alerts
Account statements can be viewed online using online banking. There will be no more paper statements or need to re-enter information into passbooks. Alerts and notifications can be put up by users to keep them abreast of account activity. One of the most significant advantages of online banking is the elimination of needless lines for obtaining bank statements.
#6. Direct Interpersonal Communication
Sending money to loved ones has never been more convenient than with P2P (person-to-person) transfers, which may be initiated right from your mobile device. Both PayPal and Venmo are widely used as mobile payment apps. Zelle® is another popular choice because it integrates seamlessly into the internet banking and smartphone apps of many financial institutions.
#7. You can make Investments
Through online banking, you can purchase stocks, bonds, shares, and other market items. Your investing accounts can be directly linked to your bank account for instantaneous deposits and withdrawals.
#8. Use of Automated Teller Machines
Although online banking has its advantages, there are times when you require access to cash. Fortunately, you can still use your existing ATM and debit card after transferring to an online-only bank. The banking apps of many online banks and financial institutions have an easy way to rapidly locate ATMs in the network.
Some online banks even refund you for ATM fees you incur outside of their network. It’s important to remember, too, that not all online banks have a method for receiving cash refunds.
#9. Demand for Loans
Through the online banking platform, borrowers can apply for unsecured loans such as those used to purchase a car or a house. You can get all the details you need regarding the loan before applying for it.
#10. Self-service Choices
Pay attention to whether or not your online banking experience at your financial institution offers features that add extra ease. You may now reorder checks, halt payments, purchase a custom debit card, and change your contact information (phone number, email address, etc.) all from the convenience of your phone or computer, eliminating the need to make an in-person trip to the bank.
Advantages of Online Banking
Online banking provides numerous advantages that make it a preferred method of transaction for both individuals and businesses. There are several significant advantages to using online banking, including:
#1. Availability
Banking services are available 24/7, 365 days a year. You can access your account balance at any time and make a transfer of funds regardless of the bank’s opening hours.
#2. Transferring Income
Online banking facilitates instantaneous money transfers. With only a few clicks, you can transfer money to another account of yours or to an account at another bank. This makes banking more convenient and efficient because it eliminates the need for customers to physically visit the bank.
#3. Enhanced Convenience
Whether you’re at home, in the workplace, on the road, or even overseas, a simple swipe of your phone can take care of your banking needs. Also, with a spend control solution like Spendesk, your company may issue virtual debit cards to its employees so they can make safe, paperless transactions online. As long as you have a functional account and an internet connection on your cellphone or computer, you can use online banking services anytime, anywhere.
#4. Simple in Use
One more perk of online banking is the intuitive layout of online banking sites. Users may quickly learn their way around the site and complete their desired transactions thanks to the streamlined interfaces. Most sites also have guides and support staff to help people learn how to use the platform to its full potential.
#5. Evaluating Activities
You will be issued an acknowledgment receipt at the time of your transaction at the bank. It’s possible you could lose it. On the other hand, everything you do through an online banking interface will be logged. If necessary, this can be used to verify the transaction. Payment information including payee name, bank account number, amount paid, date paid, time paid, and any notes will also be recorded.
#6. Simple and Swift Account Management
The convenience of having all of one’s financial affairs in one place is a major selling point of Internet banking. You can do everything from applying for a new credit card to transferring funds between your own accounts, all from the convenience of your own device. Most financial institutions now provide customers with electronic bank statements, doing away with the need to manually sort through and file piles of papers.
Why Would a Person Use Online Banking?
Customers who use online banking get fast access to a wide range of services from their computer or mobile device, including the ability to check account balances and view transaction histories. Auto payment is a simple way to pay your bills automatically each month. Transfer money from one account to another.
What Is the Difference Between a Bank and an Online Bank?
Most financial institutions provide digital banking services, but online banks operate exclusively online and typically have more advanced and easy-to-use websites and mobile apps compared to traditional banks.
Are There Risks to Online Banking?
The main risk associated with online banking is the potential for unauthorized access to your account through the acquisition of your username and password. This could occur through hacking, which may result in the exposure of your account to viruses or the unauthorized use of your debit or credit card for purchases.
What Is a Disadvantage of Online Banking?
If the online bank does not have an ATM network or is part of a small network, you are more likely to be charged ATM fees. Cash deposits can only be made at banks that have ATMs capable of accepting cash. Deposits made through online or mobile app platforms may require additional processing time.
Can You Withdraw Money From Online Banking?
Online bank users do not have the option to visit physical branches in order to withdraw cash, unlike customers of traditional banks. However, customers have the potential to receive additional cash back when using online bank debit cards for purchases at various merchants. Meanwhile, certain online banks offer their customers the convenience of withdrawing cash through participating ATM networks.
Is Online Banking Better Than Regular Banking?
When it comes to reducing fees and obtaining the most affordable rates, online banks outperform traditional banks. In addition, these banks often provide websites and mobile apps that are of higher quality and offer a greater range of features.
References
- investopedia.com
- experian.com
- dbs.com
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