Benefits and Risks of Online Banking

The Advantages and Disadvantages of Online Banking

     As financial technology advances, traditional banks have started looking for options to offer online services. There is no doubt that online banking can make you more comfortable, whenever you turn on your laptop or smartphone, your bank is always ready to help you. But there are other benefits and certain risks. Yes, American or worldwide online banking has many benefits but there are risks involved too.

History of the Online Banking

Internet banking began about 20 years ago, and today, millions of people access their bank accounts online every day, and this number is increasing every day.

Online banking was first adopted in New York in 1981, where major banks like Citibank, Chase, and others offered home banking services, using a system called videotext. Stanford Federal Credit Union was the first bank to offer internet banking services in October 1994.

You can access your account, make payments or transfer funds online, start paying bills, modify your personal data online, etc. Instead of the limitations of traditional operations, online banking financial institutions suddenly find themselves in a different environment, where they are competing in the area of liquidity and customer loyalty.

The start of this new era of online banking facilities has helped many people in many ways, but it also poses a number of risks, which have never been seen before in any other generation, for both customers and the bank itself. Although internet banking has attracted thousands of people around the world, the level of customer satisfaction, security concerns, and the future growth of the industry are still challenges.

Online banking has developed rapidly, and nowadays even banks/financial institutions are competing with each other in providing online services. But only the company that will offer more value-added services, will win customer loyalty.

Advantages of A Banking Online

What are the advantages of online banking?

Better Rates, Lower Costs

A significant lack of infrastructure and overhead costs allows direct banks to pay higher interest rates or annual percentage returns (APYs) on savings. The most generous of them, offering as much as 1% to 2%, more than you'd get in a traditional bank account. That gap can really add height balance. While some direct banks with APY very generously only offer savings accounts, most of them offer other options, including certificates of deposit (CDs), high-yield savings accounts, and CDs with no penalty for early withdrawals. (investopedia.com)

Efficiency and Speed

If you need to transfer your money, apply for a new loan, or do almost any banking transaction, you will usually have to queue, at a physical banking location. With an online banking application, you don't have to wait anymore. As long as you're logged in, you can access all of your accounts, request a new credit card, or do almost any banking transaction you need, without driving to the bank, or standing in line.

Control Your Finances

Having control over your finances, with the ability to serve yourself, is another significant advantage of digital banking, as is real-time access to control and move money at your convenience. Unlike live banking, mobile apps, and websites, there are generally no restrictions when you perform banking tasks, such as depositing checks or transferring cash from one account to another.

And it just got easier to navigate your day-to-day transactions. The world of technology provides an opportunity, for you to be able to receive money or spend money, in a much more comfortable way than in the past.

Banks are continuing with the features that are offered on their digital banking platforms. Automatic savings tools, and push notification alerts for something like a low balance, or an overdraft are normal.

In some cases, you might even be able to activate a new credit or debit card from your application.

Reduce your overhead costs

If banking for your business is online, your banking costs will be lower, because online banks don't have to pay for branch maintenance and fees, and savings can be transferred to you. Plus, they may have more free options to add to your savings.

Online bank are open 24/7

The online bank is almost always open. While most retail banks are closed on holidays, or weekends, online banks allow you to access your account 24/7 and have a customer service representative available around the clock. Online banks also provide many account protections, which are the same as traditional banks, including FDIC insurance and account alerts.

Banking Online Disadvantages

What are the disadvantages of using online banking?

Lack of Personal Connection

A personal connection to your physical bank may offer an advantage over online banking. If you need a new line of credit, a business loan, a fee waiver, or to make changes to your current banking needs, having those connections can help.

A face-to-face banking relationship can also help you create a business account, which is tailored to your specific needs.

They can also keep records on your archive of checks, cash deposits, and international payments, so you can avoid extended cash holdings.

The ideal relationship is a combination of online banking for your daily transactions, and a personal relationship with your banker, to help with larger needs. That way, you have a lot of options to support your business.

Identity theft

Banks may be able to use the latest security measures to protect your personal data, but once your account is available online, your personal data information is at risk from hackers, The article entitled "Online Banking--Advantages and Disadvantages" as published on Web Finance states that Cyber criminals are always trying to bypass the existing security systems, and if your financial accounts are stored on bank servers, then it can be a challenging thing to steal. All of your personal information, including your Social Security Number, that is associated with your account is also at risk.

Fake Website Substitute

Malware can generate fake web pages that replace the official website of your bank. Such "person-in-at-attack" websites allow attackers to intercept your user information. The attacker adds an additional field to the copy of the web page that is opened in your browser. When you submit your information, it's sent to the bank and malicious attackers without your knowledge. So, be careful.