E-banking/Online Banking

What is online banking?

If you're like most people, you've heard a lot about online banking but probably haven't tried it yourself. You still pay your bills by mail and deposit checks at your bank branch, much the way your parents did. You might shop online for a loan, life insurance or a home mortgage, but when it comes time to commit, you feel more comfortable working with your banker or an agent you know and trust.

Online banking isn't out to change your money habits. Instead, it uses today's computer technology to give you the option of bypassing the time-consuming, paper-based aspects of traditional banking in order to manage your finances more quickly and efficiently.

Origin of online banking
The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry.

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

Banks view online banking as a powerful "value added" tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment.

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Brick-to-click banks
Today, most large national banks, many regional banks and even smaller banks and credit unions offer some form of online banking, variously known as PC banking, home banking, electronic banking or Internet banking. Those that do are sometimes referred to as "brick-to-click" banks, both to distinguish them from brick-and-mortar banks that have yet to offer online banking, as well as from online or "virtual" banks that have no physical branches or tellers whatsoever.

The challenge for the banking industry has been to design this new service channel in such a way that its customers will readily learn to use and trust it. After all, banks have spent generations earning our trust; they aren't about to risk that on a Web site that is frustrating, confusing or less than secure.

Most of the large banks now offer fully secure, fully functional online banking for free or for a small fee. Some smaller banks offer limited access or functionality; for instance, you may be able to view your account balance and history but not initiate transactions online. As more banks succeed online and more customers use their sites, fully functional online banking likely will become as commonplace as automated teller machines.

Virtual banks
If you don't mind foregoing the teller window, lobby cookie and kindly bank president, a "virtual" or e-bank, such as Virtual Bank or Giant Bank, may save you very real money. 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 adhere to the same federal regulations as your corner bank.

Virtual banks pass the money they save on overhead like buildings and tellers along to you in the form of higher yields, lower fees and more generous account thresholds.

The major disadvantage of virtual banks revolves around ATMs. Because they have no ATM machines, virtual banks typically charge the same surcharge that your brick-and-mortar bank would if you used another bank's automated teller. Likewise, many virtual banks won't accept deposits via ATM; you'll have to either deposit the check by mail or transfer money from another account.

Advantages and Disadvantages of Online Banking Services

With the popularity of the Internet increasing steadily, most of the industries are finding new and interesting ways to make use of this new and equally interesting medium so as to keep up with the constantly changing preferences of clients all over. Nowadays, you can do almost anything over the Internet – from shopping for groceries to making a free call to a friend in New Zealand through your computer! Yes, the Internet has seemingly endless possibilities and the banking industry in turn has decided that it won’t be left behind the rest of the pack.

While most of us have heard about online banking services, more than a majority of us have probably not even tried it out yet. It could possibly be because we are more comfortable working with real people; paper and money instead of its virtual counterpart, as performing transactions over the Internet can be very impersonal. Whatever may be the reason; there are a number of advantages and disadvantages to online banking services. This article will outline the good side as well as the bad side to online banking so that you can either feel that online banking is a safe way to manage your finances, or you could possibly be justified in your fears.

The Advantages of Online Banking

First lets start off with the advantages of online banking. First and foremost, online banking is very, very, very convenient. It will allow you to pay your bills and make transactions anytime during the day and the week. The bank will never close because you can access it through your laptop or computer. So, no matter in which country you are anywhere in the world, you can go online and handle your finances.

Secondly, online banking is very fast, effective and efficient. Over the Internet, you can make transactions that are typically executed and performed at a much faster pace than at ATM’s. Online banking services also give you the option of handling several different bank accounts from one site itself.

Most online banking sites are compatible with programs like Microsoft Money and Quicken, which makes management of assets more effective.

The Disadvantages of Online Banking

Just like with anything else, there are disadvantages to online banking services too! The biggest problem is that most people lack trust. How many times have you performed transactions online and wondered whether you did the right thing? Of course, you can overcome any uneasiness by printing the transaction receipt. This receipt will conform whether or not your transaction has gone through successfully.

Online banking can be difficult to learn for a beginner and a site could take time to start up. Some sites ask for photo identification, which can be very inconvenient.

However, most online banking sites provide tutorials for online banking. Some sites provide live online customer support to provide solutions for any problems. The number of cases of banking frauds is considerably low so you don’t have to worry about the safety of your money.

Clearly, the whole concept of online banking has its fair share of advantages as well as disadvantages. For some people, online banking simplifies life, while for the others it is intimidating and complex. Taking into consideration these perceptions, most banks have now started offering online banking services and a viable option to their clients.

Some people prefer talking personally to a person in case of a problem. They prefer the ‘personal touch’ aspect of customer service. If you are this kind of a person, then you’ll probably never feel comfortable with Internet banking. On the other hand, if unlimited access to your bank accounts and convenience is highest on your list of banking priorities, then nothing can beat online banking. What with the security of the FDIC standing like a fortress behind them, it is very clear that online banking is here to stay.

Top 10 e-banks
Rank/site	Score	Transfer funds to other banks	Receive bills online	Low-balance e-mail alert	Receive Web-only statements	Stop payment on a check
1. Wellsfargo.com	80		x	x	x	x
2. Citibank.com	79	x		x	x	x
3. Bankofamerica.com	77	x	x	x	x	x
4. Bankus.etrade.com	74	x		x	x
5. Huntington.com	69				x	x
6. Firstnational.com*	68			x	x
6. Hsbc.com	68	x			x	x
6. Usbank.com	68		x		x
9. Chase.com	67			x		x
9. Wachovia.com	67			x		x