Online Banking

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What is Online Banking? 

Online banking is a process of undertaking banking transactions via the internet; hence it is also known as internet banking or net banking or web banking or digital banking.

Through the electronic payments system, users are enabled to access and perform a wide range of financial and non-financial transactions without the need to visit the financial institution's branch.

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What is the Significance of Online Banking Viz-a-Viz Traditional Banking?

Online banking offers most of the services which are traditionally offered at the local branch. Users can check account details, access fund transfer and undertake tax payments. Apart from the essential services, users can also avail PPF and other insurance-related facilities, credit card and other such payment services, government schemes, etc. 

All these services are available on internet banking outside the regular banking hours, which is why online banking seems to be most convenient for the users. Net banking is considered more comfortable and often less expensive as well. 

Most of the brick-and-mortar banks now offer online services. Besides, the online-only banks or Neobanks are also growing in number and popularity because of the increase in demand.

Moreover, for any user, it is essential to understand if the net banking experience is right for the needs and specifications.

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How Does Online Banking Work? 

Online banking can be undertaken via: 

  • Accessing the official website of the particular bank on desktop/ computer or smartphone/ tablet
  • Downloading the official mobile application of the bank like any other Android app or iOS app 

Unlike traditional banking, users can avail online banking services as per their convenience. There is no need to visit the bank's branch physically. With the fast-moving life, online banking has turned out to be time saving as it can be done from the home, office or on the go - anywhere and anytime. 

Below are some key steps involved in leveraging online banking benefits:

  • To begin the services, the bank user needs to go on the bank website or download the mobile app. 
  • Users need to register themselves on the website or the application using the unique id and password.
  • Once the account is created, users can start accessing all the services it offers. 

Banking services offered online may vary from bank to bank. Most banks provide the necessary services such as fund transfer, bill payments and viewing account details. Some banks also offer the customers to apply for credit card and avail insurance investment services which they have. Customers can also check the account balance without even logging in. Applying for a loan or making the loan payment can also be done through online banking. 

What are the Benefits of Online Banking? 

With the substantial growth of internet, everything has shifted to the electronic version. Just like one can shop online or trade online, users can bank online. People have access to various electronic gadgets such as laptops, phones, iPads, which make the banking experience one click away to conduct financial transactions. 

Below are some of the key advantages associated with digital banking:

  1. The most significant advantage of net banking is - convenience. A lot many services can be availed anywhere, anytime, instead of going to the bank physically. 
  2. Online banking can also be done on holidays, which is something impossible in case of traditional banking. 
  3. Users can make a transaction without going to the bank counter. No need to fill the forms to deposit and withdraw money. 
  4. No need to abide by the working hours of the bank or worry about the weekend. Through online banking, the bank account and relative services are accessible 24x7. 
  5. Users only need the electronic device, internet connectivity and account details to access the services. 
  6. Banks also share the transaction summary and spending overview onlind. Users can understand where and how much money they have spent. It's easier to track the money trail and summarise the funds that come to your account and funds you are spending category wise. 
  7. The transactions are immediately updated and reflected, therefore making the experience very fast. Through net banking, users can also add multiple accounts of the same bank and keep track of them all simultaneously. 
  8. Bill payments can also be made online, which saves a lot of time for the users to go to individual entities to make the payments. Users can save on heavy penalties for not paying bills on time. With net banking, credit card bills can be paid on just one click. 
  9. The user-friendly experience makes net banking very painless and un-challenging to use. 
  10. Most banks have advanced encryption systems and robust cybersecurity in place, which makes online banking very safe to use. 

What are the Risks Involved in Online Banking? 

  • Online banking is not full-fledged banking; hence there are limitations with the services it provides. Especially for the first-time online banking customers, the systems may present a few challenges, which is why some people prefer transactions with the help of branch officers. 
  • The baby boomer generation is not very technology friendly, hence they find net banking challenging. 
  • Although most of the banks have robust banking security in place, they still face cybercrimes such as hacking and ransomware.
  • Additionally, online banking is dependent on internet connectivity. Therefore, users who have the internet are only able to access the net banking. Low connectivity issues also make it challenging to conduct banking transactions successfully. 
  • Because of the less awareness, users also fall prey to the online financial fraud and identity theft

While accessing net banking, banks advise consumers to use their data plan instead of using public Wi-Fi networks to prevent unauthorized access and further damage. Besides, additional security measures are important to be considered while relying on digital banking.

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What are the Non-Traditional Neobanks? 

Neobanks are the financial institutions which operate purely online. Neobanks are also referred to as smart banks. The growing demand for digital banking has paved the way for neobanks. These banks are accessed through their applications on smartphones/computers. 

Traditional banks have branches, but neobanks do not have a physical infrastructure apart from their office. Neobanks also have a different technology from the conventional banks as they solely operate online such as they are based entirely on the cloud, and the technology is built from scratch. 

It is essential to understand that the traditional banks which offer online/ net banking services are not neobanks. Neobanks are entirely different entities and operate exclusively online. 

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