Online Banking

Online Banking

Definition:

Online banking is the practice of making bank transactions or paying bills via the Internet. Thanks to technology, and the Internet in particular, we no longer have to leave the house. We can shop online, communicate online, and now, we can even do our banking online. Online banking allows us to make deposits, withdrawals and pay bills all with the click of a mouse. It doesn't get much more convenient than that.

Advantages of online banking:

Convenience

Unlike your corner bank, online banking sites never close; they're available 24 hours a day, seven days a week, and they're only a mouse click away. Not only this but all services that are usually available from your local bank can be found on a single web site. Rather than having to ring a separate number to order a new chequebook or cancel a bankcard, or even go into the branch to do so, it is possible to do all this from your personal home page.

Portability

If you are out of the country and a money problem arises your account is mobile as you can access it 24 hours a day from anywhere as long as you have a PC and a phone line. This is possibly the main advantage of online banking as apposed to branch based banking. Your account is extremely accesses able with an online account and all the services which you would expect to be provided by a banking service, such as being able to access your balance or set up a standing order, are available to you any time anywhere so long as you have the correct hardware.

Transaction speed

Online bank sites generally execute and confirm transactions at the same rate or quicker than, ATM processing speeds. This means that if you withdraw or pay in money from/to your account then your balance will be updated at the same speed or often quicker than if you had done so at a branch bank ATM.

Effectiveness

Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes and rate alerts to help you manage all of your assets more effectively and most are also compatible with money managing programs such as Microsoft Money. This means that you can integrate your online account easily into any computerised accounting system that you may already have on your personal computer.

Disadvantages of Online Banking:

Lack of ATM's

One of the major disadvantages, which relates to virtual banks, revolves around the lack of ATM's. Due to this fact you can be charged to use other banks ATM's and likewise many virtual banks will not accept deposits via ATM. Therefore you either have to deposit money or checks via post which can be insecure, or transfer money from another account.

Start-up may take time

In order to register for your bank's online program, you will probably have to provide ID and sign a form at a bank branch or if it strictly a virtual bank you may be sent these forms through the post and have to send them back. If you and your spouse wish to view and manage your assets together online, one of you may have to sign other forms before the bank will display all of your holdings together. In comparison to opening a branch account this can be done pseudo real time whereby you go into the branch, give them your personal details, sign some forms and once the account is activated you can use it almost straight away as the account is activated within the branch while you are there. Online accounts undergo the same form filling process but can take up to a week to be processed and validated before your account can be opened and accessed.

Learning curve

Banking sites can be difficult to navigate at first. Particularly for people that are not proficient in using the Internet, opening an online account or taking out a loan online can be a daunting thought. Time needs to be taken to understand such things as how to check your balance online or how to set up a standing order. This alone can prevent some people considering opening an online bank account even if the rates are much better than brinks and mortar banks.

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