What is an Online Banking? Benefits and Features

What is Online Banking

Online banking allows banking transactions to be carried out through the Internet. Customers who use online banking can access nearly all the services typically provided by a local branch, such as online bill payment, transfers, and deposits.

Online banking is available through almost all financial institutions, and it can be accessed via a computer or an app. Internet banking and web banking are other names for online banking.

Table of Content 

• How to Do Online Banking Work
• Features of Online Banking
• Online Banking vs traditional banking
• Benefits of Using an Online Banking
• Services Provided by  Online Banking
• Types of Online Banking
• What Are Necessary for Online Banking
• How Can Online Banking Be Performed Safely?

How Does Online Banking Work?

Online banking is one of the most common ways to conduct business with a bank is online. Most of your routine banking tasks may be done online, eliminating the need to visit a bank location physically. Anywhere you choose, whether at home, at work, or while on the go, you can do all of this. An app or a browser can be used for online banking. Mobile banking refers to online banking conducted on a tablet or phone.

Features of Online Banking

Bank at Any Time: You don't have to go to a physical bank branch to do Internet banking, and you can do it from anywhere at home, at work, or while on the go. Additionally, online banking is usually available around the clock. Customer service, however, might not be accessible 24/7.
Use Browsers and Apps to Access Accounts: You can use a mobile app or a web browser (like Chrome or Safari) to access a financial institution's online banking platform. Thanks to this, you can now access services from a variety of locations.
One
Checks for deposits: Using remote deposit capture, you can typically deposit a check via a mobile app. After entering the check amount, take a picture of the front and back of the bank at Any Time
Control Your Money: You may evaluate and balance your budget with the help of tools that many banks and credit unions have integrated into their apps or websites. Additionally, you might be able to monitor spending patterns or track savings as you work toward a goal.

Online Banking vs traditional banking

Benefits of Using an Online Banking

Convenience: You can perform simple banking operations day or night, seven days a week. Additionally, you can open and close a variety of accounts online, including savings and checking accounts.
Quick and effective: Almost instantaneous money transfers between accounts are possible, particularly if the two accounts are maintained at the same organization. Additionally, it only takes a few minutes to deposit checks using a mobile device.
Account monitoring is simple: You may keep a careful eye on your accounts to identify any unusual activity. Having 24/7 access to banking data helps prevent financial losses by detecting fraud early.

Services Provided by  Online Banking

1. Account Management 

• Verify the amount and history of transactions. 
• Check and save bank statements. 

• Update your address, phone number, and email address.

   

2. Money Transfers

• International transfers (for banks providing worldwide services)

• Money transfers between accounts via NEFT, RTGS, IMPS, and UPI.

   

3. Recharges & Bill Payments

• Recharge your phone, DTH, and internet. 

• Pay your gas, water, electricity, and credit card bills. Put recurring payments on auto-pay.

   

4. Credit & Loan Services

• Apply for credit cards, personal loans, and house loans. 
• Verify loan eligibility and monitor EMI payments. 
• Offers for pre-approved, immediate loans.

5. Recurring Deposits (RD) & Fixed Deposits (FD) 

• FDs & RDs can be opened, managed, and closed online. 
• Compute returns and look up interest rates.

Types of Online Banking

Internet Banking: An essential component of online banking is Internet banking, which enables users to access their accounts, check their balances, send money, pay their bills, and more via a secure web interface.

Mobile Banking: Customers can use their cell phones to conduct financial transactions thanks to mobile banking apps and services offered by various institutions. This covers services including fund transfers, account management, and mobile payments.

UPI: Through UPI, users can immediately move money between bank accounts using UPI, a real-time payment system.

ATM: An automated teller machine (ATM) is a type of electronic banking facility that enables users to do simple transactions without the assistance of a teller or branch personnel. Most ATMs in the United States and other countries allow anyone with a credit or debit card to obtain cash.

Phone: Use automatic voice response (IVR) or speak with a bank agent to complete banking transactions.

Services: Loan requests, financial transfers, and account inquiries. Helpful in situations where an internet connection is not available.

SMS: Digital Wallet and Virtual Bank: Transactions without a traditional bank are made possible by e-wallets such as PayPal, Paytm, Amazon Pay, and Apple Pay.  A few fintech firms provide virtual bank accounts and cards.

What Are Necessary for Online Banking

You will need the following to access and utilize online banking:

A bank account: You need to have a current or savings account with a bank that provides internet banking. 

Internet Connection: To safely access net banking or mobile banking, a steady internet connection is necessary.

A gadget (tablet, smartphone, or laptop): Both a PC (web browser) and a smartphone (bank mobile app) can be used for online banking.

Login Credentials (User ID & Password): To access online banking, the bank gives you a user ID and password.  Some banks let you create your password when you sign up.

Registered Mobile Number: To get alerts, OTP verification, and other notifications, your mobile number needs to be connected to your bank account.

Credit/Debit Card (For Transactions & Registration): When registering, some banks ask for your credit or debit card information. 
used for verification and online payments.

Secure Authentication (biometric login, PIN, or OTP): For safe transactions, banks employ One-Time Passwords (OTPs) sent by email or SMS. Additionally, fingerprint or face ID login may be supported by mobile banking apps.

Registering for Online Banking: You have to sign up for online banking on the bank's website or mobile app.  Typically, the process entails inputting account information and confirming with an OTP.

Safety Procedures: Use two-factor authentication (2FA) and choose a strong password. For security reasons, don't log in on shared devices or public Wi-Fi.

Banking App for Users of Mobile Banking: Get the official mobile app for your bank from the Apple Store or Google Play Store.

How Can Online Banking Be Performed Safely?

You should take the following safety measures to protect your funds and private data from online fraudsters:

1. Create a secure, unique password and update it frequently. A password consisting of at least 16 characters is advised by the federal Cybersecurity & Infrastructure Security Agency. A random combination of capital and lowercase characters, numbers, and symbols should be included in the password.

2. Use a password manager to help you create and remember passwords discretely.

3. If multi-factor authentication or two-factor authentication is available, turn it on. This entails accessing an online account with a minimum of two means of authentication, like a fingerprint and a password.

4. Never give out your online financial information to strangers.

5. When utilizing public Wi-Fi, such as at a restaurant or coffee shop, stay away from online banking.

6. Regularly check your accounts for unusual activity, and report any suspected fraud right away.
 

Conclusion - Online Banking 

Online banking enables consumers to handle their funds at any time and from any location by providing convenience, speed, and security. It makes transactions easier with features like mobile banking, bill payment, and financial transfers. But making sure security measures are in place is essential for safe use. Financial services will continue to be improved via internet banking as technology develops.

FAQs- Online Banking 

What is an online bank?
A financial organization that does not have any physical branches is known as an online bank. 

What is an online bank example?
Examples of online banking are internet banking where one must have access to the internet connection to access the website or install an app, mobile banking where the customer accesses services through a USSD code provided by the bank, telebanking, and debit and credit cards.

What is the difference between a traditional bank and an online bank?
Digital banks only conduct business online, whereas traditional banks have physical branches.

What are the two types of online banking?
Online-only banks or challenger banks that offer conventional banking products and financial services but in an online-only format.
Traditional banks offer online banking services via an app or online portal.

How do online banks make money?
Neobanks also generate revenue through: Transaction fees: Although the majority of neobanks don't impose fees on accounts, many do impose a nominal fee for money transfers, bank transfers, and ATM withdrawals. Premium services are provided by certain neobanks, such as Chime and Revolut, in return for a monthly subscription charge.

What is the biggest online bank?
Brazil is the largest digital bank by valuation

What is RTGS?
RTGS stands for Real Time Gross Settlement, which is a system that allows for the transfer of money between banks in real-time. It is a fast and secure way to transfer funds between banks in India.

What is KYC?
KYC stands for Know Your Customer or Know Your Client. It's a process used to verify a customer's identity and financial profile.

What are the Advantages of online banking?
Online banking makes transactions possible at any time and from any location by providing convenience, speed, and security.

What are the Disadvantages of online banking?
Online banking is susceptible to technological problems, internet dependence, and cybersecurity threats. It can be susceptible to unwanted access and does not offer direct monetary services.