Knowing the advantages of online banking will definitely change the way you see it. It will open up your eyes to the benefits it gives you, and who knows, you might just end up giving up traditional banking to online banking.
In this day and age, thanks to technological advancements and the internet, a lot of banks out there offer online banking. Online banking, to say the least, is very helpful. In fact, it gives so much convenience — it makes paying bills, transferring money, and accessing a record of your accounts so much easier.
All these you can do with just a click of a finger.
The rise of online banking is eminent.
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In fact, according to a study conducted by Pew Research Center, they found that “fifty-one percent of U.S. adults, or 61% of internet users, bank online. Thirty-two percent of U.S. adults, or 35% of cell phone owners, bank using their mobile phones.” This was back in 2013. So, imagine the rise in numbers by now.
Meanwhile, in another data presented by Statista, it says that in their 2018 survey, they found that the use of online banking differs from one demographic group to another. They found that “69.3 percent of Millennials used mobile banking,” while “only 24 percent of Baby boomers used it.”
However, regardless of the numbers, one thing’s for sure, mobile banking rose and continues to rise for two evident reasons — convenience and flexibility to bank customers.
You see, the numbers do not lie. The data we presented from different organizations only show that indeed, online banking is beneficial among consumers.
To help you appreciate even more the advantages of online banking, we are going to share with you a few of the most common or popular benefits of using one.
But before that, let’s do a little online banking 101 first.
ONLINE BANKING: A QUICK BACKGROUNDER
The commercialization of the internet evolved way back early 1990s. The internet change the way businesses operate — including financial institutions.
When the internet boomed, traditional brick-and-mortar banks started looking for ways to deliver online services to their clients.
In the beginning, it was quite limited, but eventually, efforts succeeded. Many banks expanded their internet presence by getting into improvised websites that feature the ability to open new accounts, as well as download forms, and eventually, process loan applications.
All these led to the inception and the rise of internet-only banks.
Internet-only banks are banking institutions that offer online banking and other financial services without having a network of branch offices. Yes, they are just like any other brick-and-mortar banks sans the face-to-face transactions and branch visits.
Just a little walk down memory lane, the first-ever fully-functional direct bank insured by the FDIC was the Security First Network Bank. The bank started its operations back in October 1995. Security First along with other online banks that were launched after them were able to offer higher interest rates on deposit accounts, and eventually reduced services fees. All these were made possible because of the lower cost as they, after all, do not have overhead costs unlike traditional banks.
According to a report on banking behavior from the FDIC, they found more than 60% of account holders do online banking.
Online banking is becoming the new norm in the banking industry, especially among young consumers. Well, after all, we are in an era of everything digital so it’s not really surprising at all. Banks really need to keep up and innovate to keep going.
If you are interested to know more about what online banking is all about and how to use it, check out the below video by CK Studio. It basically says it all.
ADVANTAGES OF ONLINE BANKING
So, now that you already know the history and what online banking is all about, let’s move on to the real deal —
This time, we are going to share with you some of the benefits you will get from online banking:
1. Fast and Efficient
Let’s face it, digital banking or online banking really sets the bar in terms of speed and efficiency.
Unlike traditional banks, online banking allows you to transfer money, apply for a new loan or a new account, or perform nearly any banking transactions in just a click of a finger. You no longer have to travel to the branch and wait in line for a minute or even hours before your turn.
With online banking, waiting never exist — unless of course, you have a bad internet connection. But generally speaking, as long as you can log in, you can easily and abruptly access your accounts, even request a new credit card, or do any bank transactions you have in mind. You can also pay bills online, which really helps you save a lot of time.
2. Online Bills Payments
If you are a busy person, a mom, a dad, whoever you are with bills to pay, you will surely love the online bills payment feature of online banks.
Through your online bank, you can pay your bills, at the same time, protect yourself from having your check gets lost in the mail. You are also spared from going to establishments just to pay bills.
Most, if not all banks have a section wherein you can set up payees. All you need to do is fill out the information once, and then choose that same profile each time you pay a bill online.
In cases when your bank does not allow paying bills online, you may consider paying from the merchant’s website instead. However, be careful and make sure to check first before making transactions as some companies or merchants charge a convenience fee. Some would charge a fee for a debit card, but not if you set up a direct debit in your account.
Furthermore, when accessing your bank’s site on your mobile phone, most banks allow you to deposit checks by simply taking a snapshot of the document. Do you see how convenient is that? Online banking basically allows you to handle all your banking needs without having to go to the bank.
Then again, just make sure to always keep an eye on any fees and charges associated with online bill pay.
3. Money Transfer from One Account to Another
One of the advantages of online banking that we personally like is the fact that it allows you to transfer funds from one account to another.
Yes, online banking lets you do that — transferring money between accounts real quick. More so, you can check your available funds first before even spending or sending money to another account.
To be honest, online money transfer is very convenient as compared to automated phone service. Needless to say, it can save you a trip to the bank, which is kind of a hassle sometimes, right?
When setting up or applying for online banking, make sure to list all your accounts. That way, it would be easier for you to transfer funds, as well as pay loans online.
Can you transfer money from one bank to another?
The answer to that question is a resounding YES.
Online banks allow you to transfer money between different banks online. Although this will not happen as fast as transferring from one account to another from the same bank as the funds still needs to go between financial institutions, still, if you come to think of it, it is much more convenient than going and lining up in the bank.
As an online bank account user, it is important that you check if the bank has a limit on the number of online transfers. Usually, it depends on the type of account you have. Some banks would charge you with a fee when you go over the limit.
What’s nice about this feature is it makes sending funds easier, more convenient, and more accessible.
4. 24/7 Account and Service Access
Unlike traditional banks, online banks are accessible 24 hours a day, seven days a week. For as long as you have an internet connection of course.
In some cases, some banks take a step further by providing their customers with 24/7 phone access to real-life customer service agents.
To be honest, this is very helpful especially if you do not have internet access or if you need assistance for banking-related concerns.
This online banking feature rather benefits really works especially during emergency situations or unlikely circumstances that may happen in an ungodly hour.
5. Low or No Overhead Cost
Unlike brick-and-mortar banks or traditional banks, online banks do not have to pay for overhead costs like rent, electricity, landscaping, janitorial services, and more.
Since they do not pay anything for that, the can pass those savings to customers. Usually, this means that online banks can charge lesser or no fees at all as compared to traditional banks.
For instance, a lot of online banks offer a free online checking account with no deposit, as well as other no-fee bank accounts like IRAs.
Furthermore, there are a number of online banks that have free checking, and/or no minimum balance required.
For those who have poor or bad credit, online banks also work for you as most online banks offer free opening of bank accounts, do not require a credit check, although chances are, there might be ongoing fees — but then again, still lower compared to traditional banks.
6. High Yield Rates
Apart from offering low fees, usually, online banks offer the best interest rates as well. Whether you are looking for a certificate deposit, a high yield checking account, or deposit accounts with high interest like money market account, expect better rates as compared to those offered by traditional banks.
While it is normal for rates to change or fluctuate, you will still find online banks offering or paying the best rates.
So, if you are looking at earning high yields annually, then consider setting up an online account instead of an opening an account on a brick-and-mortar bank.
7. View Transaction History
If you are the type of person who wants to audit your expenses, online banking is ideal for you.
With online banking, you can access your account history, as well as transactions from anywhere. Online banking gives you the fastest way to check and see if a transaction cleared your account.
More so, you can also look into the amount of a transaction in the case of losing receipts.
But the best thing, for us, is that it allows you to find out any unauthorized transactions made using your account, which makes it easier to resolve the matter right away.
Moreover, there are banks that show even pending transactions or the transactions you made that day that has not been cleared yet.
With this feature, you can easily spot if there are any unauthorized transactions. You see, the easier you find out of such, the better. That means the fastest resolution to the concern as well.
8. Syncing With Money Applications
A lot of money apps out there automatically syncs with your online banking information. That way you can stick to your budget, and not go overboard in spending.
Usually, apps work both on your home computer as well as your mobile device. This helps you keep stay updated while you are on the go.
By syncing with your money apps, you get to easily track your spending and see whether or not you are sticking with your budget.
You can sync spending real-time to avoid overspending without realizing it.
9. A Greener Option
By using online banking, you automatically use less paper. The same goes for the bank. If you notice, a lot of banks these days are trying to go paperless by offering e-statements, paper-free transfers, and other environmentally-responsible business services.
Definitely, with online banking, it’s greener. There’s less footprint because you can do banking even while at the comforts of your home, no need to take a trip to the branch, and with all the information already in there, there’s no need for a paper trail.
DISADVANTAGES OF ONLINE BANKING
So, we have already provided you the advantages of online banking. While there are so many things that you can benefit from it, there are of course corresponding cons.
With that said, here are some of the downsides of online banking:
1. No Face-to-Face Interaction
Unlike traditional banks, online banking does not have face-to-face interaction. You do not get to know the people behind.
More so, you cannot take advantage of additional financial services like when your applying for a loan, when doing it in a brick-and-mortar bank, some loan officers would offer you best possible deals, which is not the case in online banking.
There’s no bank officer or bank manager who has the discretion to change terms of your account, and all other perks of a traditional bank.
2. Lack of Banking Machines
Generally, online banks lack their own banking machines. They heavily rely on having customers use one or more ATM networks like those from Cirrus and AllPoint.
Although these systems offer access to thousands of machines all over the country, it’s best to check first a machine that is available near your place of work and your home.
Also, check for any fees you may be charged for using an ATM. Although most direct banks offer free access to ATM networks, or in some cases refund any monthly charges incurred, there are sometimes limits set on the number of free ATM transactions. So, to be sure, check this with the bank first.
3. Limited Services
Unlike traditional banks, some online banks may not offer comprehensive financial services. So, if you need products like insurance or brokerage accounts, these may not be available.
Also, while traditional banks sometimes offer special services to their loyal clients, online banks hardly do that or not do that at all.
Additionally, routine services like bank signature guarantee as well as notarization are not available in online banks. These services are required in a lot of financial and legal transactions.
4. Less Flexibility with Transactions
The thing about traditional banks is that it is not only about getting to know you and your transactions.
For some banking-related transactions and concerns, heading to a bank branch is inevitable.
Unfortunately, in online banking, you just got to make do of whatever is available. If the customer service representative for instance is only available through calls, then so be it. You just have to deal with it.
Furthermore, international transactions for instance may be more difficult or impossible even with some online banks. So, better to check first really.
FINAL THOUGHTS ON ADVANTAGES OF ONLINE BANKING
Let’s face it, in this day and age, people are after speed and convenience – yes, even when it comes to banking. No doubt why the online banking industry is rising and it will surely continue to rise in the years to come.
Innovation has indeed hit the banking industry as well – which is totally good.
We like the fact that through online banking, bank transactions are made easier and more accessible to all. Today, you can transfer money from one account to another, even deposit a check to your account without the need to take a trip to a bank branch.
Online banking has definitely set a bar in the banking industry – needless to say, it’s a very relevant response to the needs of their clients. Everything made accessible and quick. Oh, and greener, too.
So, how do you find online banking now? Do you see yourself opening one in the coming days or did this make you appreciate more what online banking offers?