Online Banking

What is online banking?

 

Online banking is where any computing system allows individuals to perform their banking activities at home through the use of the internet. The majority of online banks are just traditional banks which also offer online banking, while others are online only and offer no physical presence.

 

On the internet online banking has many different names, it is also known as PC banking, home banking, electronic banking or Internet banking.

Today online banking allows you to perform various different routine transactions, these could be a range of things, you might shop online for a loan, life insurance or a home mortgage, but when it comes to that time to commit, most people generally feel more comfortable working with your banker or an agent you know and trust.

Although online banking is not in any way an excuse for people to change their money spending habits. Instead, it uses the computer technology available to us today to give you the option skipping the time-consuming and paper-based aspects of traditional banking. This is to allow you to manage your finances more quickly and efficiently but you can do so from home.

Origin of online banking

The popularity of the Internet has grown rapidly and this acts as an advert to banking agencies, therefore, popularity of personal computers presented both an opportunity and a challenge for the banking industry overall.

Over the years, financial institutions have used computer networks to automate millions of daily transactions. Usually today the only paper record is the customer's receipt at the point of sale. Now that the vast majority of customers are connected to the Internet, banks envision similar economic advantages by adapting those same internal electronic processes to use at home.

Automated Teller Machines

An automated teller machine is an electronic banking outlet, which allows customers to complete basic transactions without the assistance of a branch representative or teller. 

There are genuinely two primary types of automated teller machines, or most commonly known as ‘ATMs’. The basic units allow the customer to withdraw cash and receive a report of the account's balance. However, the more complex machines will accept deposits, facilitate credit card payments and report account information. Although to access the advanced features of the complex units, you will usually need to be a member of the bank that operates the machine which defeats the idea of getting things done quickly without any assistance.

Brick-to-click banks

Most large national banks, many regional banks and even smaller banks and credit unions around today offer some form of online banking. Those that do are sometimes referred to as "brick-to-click" banks, both to distinguish them from brick-and-mortar banks, that yet have to offer online banking, as well as from online or "virtual" banks that have no physical branches or tellers yet.

The main challenge for the banking industry has been to try to design this new service in such a way that a bank agencies customers will optionally learn to use and trust it, considering banks have spent generations trying to earn our trust; they are not going to risk that on a website that can be frustrating and confusing at times or less than secure.

A vast majority of the large banks now such as NatWest offer fully secure, fully functional online banking for free or for a small fee. However, smaller banks today now offer limited access to customers; for instance, you might be able to view your account balance and history but not any transactions made online.

As more and more banks succeed online, the amount of customers who use their sites will grow rapidly.

NatWest

Online banking allows credit card or debit card holders to access their payments online. NatWest is a prime example of a company that participate in online banking; it enables clients to use their personal, private and business banking at any time with internet access.

NatWest is readily available on mobile phones as it has an app, so that you can manage your money when on the move. The app enables you to check up on any transactions, transfer money, set updates and it is now even possible to find the closest cash machine from your mobile phone or another type of portable device.

Virtual banks

Virtual banks are banks without bricks; from the customer's perspective, they exist entirely on the Internet, where they offer pretty much the same range of services and regulations as your local bank. Virtual banks pass the money they save on overhead like buildings and tellers along to you.

The main disadvantage of using virtual banks revolves around ATMs. They have no ATM machines; virtual banks typically charge the same surcharge that any brick-and-mortar bank would if you used another bank's automated teller. Many virtual banks won't accept deposits via ATM; you have to either deposit the check by mail or transfer money from another account.

Security

Security of a customer's financial information is extremely important, without any form of security online banking could not possibly operate as too many unwanted situations would occur. Financial institutions, being all companies that handle money, have set up various security processes to reduce the risk of unauthorised online access to a customer's records.

Attacks

Most of the attacks to do with online banking that’s used today are based on deceiving the user to steal login data such as password and their username. Two well known examples for those attacks are phishing and pharming. 

Advantages of online banking

Online banking is very convenience unlike your local bank, online banking sites never close, they're available 24 hours a day; on a daily basis and they are only a few clicks of a mouse away.

If you're out of state or out of the country when a money problem arises, you can log on instantly to your online banking personal account and take care of the problem with no trouble.

Online bank sites generally have a much faster transaction speed rate, they execute and confirm transactions at or quicker than ATM processing speeds.

Efficiency is always important when dealing with your money and by having one secure account it is much simpler and safer for you to access and manage all of your bank accounts, including IRAs, CDs, and securities.

Many online banking sites now provide sophisticated tools, including account aggregation, stock quotes, rate alerts and portfolio managing programs to help you manage all of your assets more effectively. They tend to be compatible with money managing programs such as Quicken and Microsoft Money.

Online banking also eliminates paper waste, which is beneficial not only for those who have to handle all the paper work, but also for the environment.

Disadvantages of online banking

In order to register for your bank's online program, you will probably have to provide ID and sign a form at your bank branch. If you and your partner wish to view and manage your assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together, this is all a very time consuming process.

Online banking sites can be slightly difficult to navigate at first. It takes time to read the tutorials in order to become comfortable in your virtual account.

Even the largest banks alter their websites and periodically upgrade their online programs. Adding new features in unfamiliar places tends to occurs regularly. You may have to re-enter account information at some point.

Most people have trust issues when handling money through the internet. They panic whether they done transactions correctly and whether their transaction went through. But the best thing any customer can do is always print the transaction receipt and keep it with your bank records until it shows up on your personal site and your bank statement.

If someone needs to deposit cash or checks, they will probably still have to spend time at the ATM. Unless the payment is directly deposited, it usually has to be handled manually.