What is Online Banking and What are its Advantages & Disadvantages?

After “Notebandi” in 2016, every bank has launched its Online Banking Services. It is also recognized as e-banking or internet banking services. Nowadays, it has become a common mode to provide convenient and secure bank services.

Let’s read all about Online Banking.

What is online banking?

Online banking is a system that allows bank customers or financial groups to make payments in an electronic way. The registered person can easily access these services on the bank’s website or app.

The customer doesn’t have to move to the bank physically every time after taking these services. They can simply operate their account at home.

In addition to the conventional methods, online banking is also described as a secure mode. The customer can secure his account with a unique ID/ Password.

What are the attributes of Online Banking?

• More Safe and secure banking
• Check your account balance
• Access to non-financial as well as financial bank services
• View details of the loan, saving a/c, mortgages linked to the bank account
• Transfer the finance to other bank accounts
• Account protection with unique ID & password
• Buy general insurance
• Make bill payments
• Cancel or set up standing orders and automatic recurring payments
• View investments details linked with bank account

What are the types of online financial transactions?

There are four types of online financial transactions. They are:

NEFT- National Electronic Fund Transfer

NEFT is a national system for payments that is accessible for all 365/366 days. It enables the fund transfer in a one-to-one method.
NEFT can be done by any person, firm or company to other people, firms or companies. The funds can be digitally transferred from one bank branch to the same or different bank branch.

ECS- Electronic Clearing System

It is an electronic process used to transfer funds from one bank to another bank. Generally, it is used by financial institutions to transfer bulk payments. These payments are like salary, pension, interest, etc.

RTGs- Real Time Gross Settlement

The RTGs is a system that includes the transfer of specialist funds. In this system, on a real-time basis, the transfer of funds goes from one bank to different banks.

On a real-time basis, one can transfer funds from one bank to the other using this system.
It is a process of payment settlement that goes frequently on a single order basis. When the procedure is completed, the payment is fixed and final.

IMPS-Immediate Payment Service

In India, IMPS is an instant payment inter-bank fund transfer system done in an electronic way. This service let you transfer the fund through mobile phones. It is available 24×7 and even on holidays.

What are the advantages of online banking?

1. Start convenient financial transaction

Online banking is preferred largely by customers due to its convenience feature. The users can avail all the financial facilities such as bill payment, fund transfer, etc, of the bank without standing in the queue.

2. 24*7 available

Unlike bank hours, online banking is available 24×7 a whole year without any time limitation. There are some services like checking account balance, fund transfer details, etc, which the user can avail of at any time.

3. Quick and Secure

On an instant basis, the customer of online banking can transfer the funds to another account. It can be transferred through RTGS, NFT, etc, by the user.

The person can make EMI payments, loan and tax payments, bill payments, etc.
Besides this, the account and its transactions are secured through unique IDs and passwords.

4. Accurately track transactions

After successful transactions, the bank provides confirmation slips to the customers. Usually, these slips do get misplaced by the customers. So online banking helps you to track all your transaction history. On the website or app, you can check all transactions and other details in the “Transaction History” section.

5. Non-financial transactions

Online banking allows the customers to take all non-financial services besides fund transfer. These services are account statement check, application for new cheque book, etc.

6. Low fees

In an online bank, the customers can pay for the electricity bills, caretaker services, rent, etc. as banks don’t pay for these things. Basically, it means that you should opt for online banking as traditional bank charges more.

What are the disadvantages of Online banking?

There is no bank that provides the best online facilities. Besides many advantages, there are some tips to follow by the person. They are:

• Never provide your personal information to an unknown person.
• You should subscribe SMS and e-mail alerts for online bank transactions.
• Before you proceed with online transactions you should be cautious.
• You can directly give a message to the bank about unauthorized transactions from your bank account.