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A Beginner’s Guide to Online Banking.

Mohammad Khan Yusufzai is Masters in Management, specializing in Economics, Finance and Marketing, with corporate & lectureship exp.

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Online banking is a platform that allows you to conduct banking and financial transactions through the internet. It is also known as internet banking, web banking, or e-banking.

What is Online Banking?

a-beginners-guide-to-online-banking

Online banking is an electronic form of banking that allows you to carry out transactions with your bank through the internet. It gives you convenience and greater flexibility. So, You do not need to physically visit the branch.

It offers you all the facilities of a physical bank. Be it deposits, bill payments, transfer of funds, or issuance of checks.

Online banking also offers a wide range of specialized services, to both individuals and businesses. These include portfolio management, investments, automatic collection and payments, centralized accounting for banking transactions, and much more.

Who is it for?

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Anybody with an internet connection can use Online Banking. All the banks provide online banking facilities to their consumers and businesses.

Even if a person does not have an account with any of the traditional banks they can get their account through online banks. Online banks are based entirely on the internet.

Though online-banking is beneficial for everyone it may be especially useful for people who find it difficult to visit their branch because of illness, disability, or other reasons.

How to set up your Online Bank Account?

  • Choose A Bank: Different banks offer different features and benefits. So it is important to research and compare the different banks and find one that best suits your needs. Then get your account opened with that bank.
  • Create a user ID and password for your Online Banking: This user ID should be something you can remember easily, like your name or birthday. It is also important to write down this information in case you forget it so you can recover it later on.
  • Select the type of account you want: What type of account would you like to have? For instance, Checking accounts are good for people who need quick access or who are not saving up any money right now.
  • Whereas, savings accounts are good for people who want a safe place for their money. Saving accounts have low-interest rates and offer a limited number of transactions. If you're looking to invest in something that will help grow your money and provide a higher return, then you might want to consider a retirement plan such as a 401k, which offers tax-deferred savings and custom withdrawal options.

Advantages of Online Banking

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Online banking has now become the norm. It offers several advantages, such as:

Security: online banking systems are more secure than traditional methods. They use sophisticated encryption and data protection techniques to make sure that sensitive financial data is never compromised.

Convenience: Online banks offer 24/7 access. It means you need not take time off during your business/working day to visit a brick-and-mortar branch.

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Flexibility: You can use your mobile to perform most of the banking functions. It offers greater flexibility.

Quick Transactions: It will take a lot of time if you get hard cash out from your bank account. And then proceed to complete the transaction by paying someone through cash. Instead, you can complete a transaction in seconds through online banking.

Lower Processing fees and higher interest rates: Completely Online banks do not have to pay for overhead costs such as rent, maintenance, electricity, and furniture. Thus they can greatly increase their savings. These savings ultimately benefits customers in the form of reduced processing fees and higher interest rates.

Disadvantages of Online Banking

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It depends entirely on the technology: Online banking is as good as the technology of the area that they are serving. Regions with poor connectivity or obsolete technologies might not be able to use online banking efficiently. Moreover, if there’s a power outage or network blackout, entire banking services will come to a standstill.

Security issues: The convenience of online banking comes at a price. A variety of security risks come with it. Hackers are always trying new ways to steal your bank account information through phishing emails, viruses, etc. They also use techniques like social engineering. They try to trick you into giving up important information about yourself including your passwords or credit card numbers.

Unable to handle multiple complex transactions: For routine banking transactions online banks offer unparalleled efficiency. But it will get overwhelmed if you try to do several very complicated transactions.

For instance: Managing and paying the employees of 24 different countries, in different currencies. Moreover, it’s cumbersome to integrate online banking with different accounting and management software of different counties.

Lack of Interpersonal Relationships: There’s no scope for personal relationships in online banking. The kind one would build over time with their banker in a bricks-and-mortar outlet. It might be an issue for some people who need personal assurance about their finances. And don’t like different anonymous customer service representatives every time they contact.

What are the Security Concerns?

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Security concerns are often cited as one of the biggest challenges for online banking. Banks do measures to safeguard digital transactions. Yet there’s still a chance of cyberattacks.

Online banking is not without risks; you must take precautions such as using different passwords for different sites and never clicking on suspicious links or opening attachments from an unknown sender.

The security concerns associated are similar to those associated with any other type of internet connection - hackers may try to break into systems to steal information or to commit fraud/scams.

The Takeaway

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It’s a great way to save time and money while still having access to your accounts. You can go online at any time and check your balances, pay bills, transfer funds between accounts, and find other ways to make banking easier.

Online banks charge lower fees than traditional banks. They provide a convenience that you don’t get with the need to visit the bank in person or wait on long hold times when you call in.

If you use online banking responsibly, you can minimize security concerns while enjoying all the benefits it offers.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Mohammad Khan Yusufzai

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