What is online banking system?
What is the importance of online banking?
What are the benefits of online banking?
Risks of E-Banking
What are the Principles of Banking?
- Collection of Savings.
- Loans and Investment Policy.
- Providing services.
What are the characteristics of a bank?
Characteristics of a Bank / Features of Banking
- It may be an Individual/Firm/Company.
- It is a profit and service oriented institution.
- It acts as a connecting link between borrowers and lenders.
- It deals with money.
- It accepts deposits from public.
- It provides Advances/Loans/Credit to customers.
What is a Bank Balance Sheet?
How secure is online banking?
Keeping your online account safe
Banks take many precautions to ensure that your online account is secure. This includes encrypted websites, timed log out and multiple authentication processes. You can ask your bank for more details.
Accessing your bank account online is generally safe. This is as long as you ensure that you enter all the correct details while transacting and follow a few rules:
- Check your statement frequently and report any unusual activity to your bank.
- Do not respond to emails claiming to be from your bank asking for personal details or passwords.
- Always remember to log out of your online banking system session.
- Only use a secure Wi-Fi connection to access your bank account.
- Public Wi-Fi connections are often not secure, so it’s important not to use them for banking system or shopping. If you’re out and about with a mobile or tablet, it’s safer to use your 3G or 4G connection.
- Keep your operating system and anti-virus software up to date.
- Choose your password carefully – combine three random words and don’t reuse the same password for different accounts.
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 it all at their 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. To avail the service, customers need to register for their bank’s online banking system service. To register, they need to create a password. Once that is done, they can use the service to do all their banking.
Banking transactions offered online vary by institution. Most banks usually offer basic services such as transfers and bill payments. Some banks also allow customers to open new accounts and apply for credit cards through online banking system portals. Other functions may include ordering a check, stopping payment on a check, or reporting a change of address.
Checks can now be deposited online through the 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 system does not allow completing certain credit applications such as travelers checks, bank drafts, certain wire transfers, or mortgages. These transactions still need to be done face-to-face with a bank representative.
Advantages of Online Banking
Convenience is the main advantage of online banking. Basic banking system transactions, such as paying bills and transferring funds between accounts, can be easily done 24 hours a day, seven days a week, wherever the consumer wants.
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. Customers can open and close a number of different accounts online, from fixed deposits to recurring deposit accounts that typically offer higher interest rates.
Consumers can also monitor their accounts regularly, so that they can keep their accounts safe. Round-the-clock access to banking system information provides early detection of fraudulent activity, thereby protecting against financial loss or damage.
Disadvantages of Online Banking
For a novice online banking customer, using the system for the first time can present challenges that prevent transactions from being processed, which is why some customers prefer to deal with a teller face-to-face.
Online banking does not help if the customer needs to access large amounts of cash. While he can withdraw a certain amount at an ATM — most cards come with a limit — he still has to visit a branch to get the balance.
Although online banking security is constantly improving, such accounts are still vulnerable when it comes to hacking. Customers are advised to use their own data plan instead of public Wi-Fi networks when using online banking system, to prevent unauthorized access.
Additionally, online banking system is dependent on a reliable internet connection. Connectivity issues from time to time can make it difficult to determine whether banking transactions have been successfully processed or not.
Some banks operate only online, with no physical branches. These banks operate customer service through phone, email or online chat. Now that Wi-Fi and 5G networks are widely available, online banking is often done on mobile devices. It can also be done on a desktop computer.
These banks may not provide direct Automatic Teller Machine (ATM) access but will make provisions for customers to use ATMs at other banks and retail stores. They may reimburse customers for some of the ATM fees charged by other financial institutions. The reduction in overhead costs associated with not having physical branches typically allows online banks to offer customers significant savings on banking system fees. They also offer higher interest rates on accounts.
Leading online banks in the United States include Ally Bank,
1 Bank5 Connect,
2 Find a bank,
3 and Synchrony Bank.
Traditional Bank vs. Online Bank: What’s the Difference?
Both traditional and online banks—also known as direct banks—offer you online access to your account and the ability to transfer money or perform other tasks with a few clicks of your cursor or a tap on your phone screen. They’re both subject to the same laws and regulations—online-only accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC), just like accounts at traditional banks. Security is generally the same, with both types using measures like encryption to protect your funds and identity.
But even if the two types are in some ways close cousins, important differences remain. Direct banks take advantage of their low cost to offer better interest rates and often lower fees. Brick-and-mortar institutions offer a convenient range of options for deposits and other transactions, including the option of face-to-face service at a bank branch when you need it. If you are on the fence about internet banks, this article may help you. It outlines the main pros and cons of this segment of the banking system industry.