Online Banking otherwise known as internet banking was introduced in India in the late1990s.
We used to rely on bank visits for every small thing such as getting account statements, fetching personal account details and other banking details.
But today we can transact online, and fetch all account details, investment options and other financial operations at our fingertips.
What is Online Banking?
It’s 10 a.m. and you have to make a transfer urgently to your vendor. You visit the bank?
No.
You have a stable internet connection, you open the bank website, enter the account details and transact online seamlessly.
This is online banking.
Every kind of traditional banking service like deposits, transfers, and online bill payments is easily accessible today via the internet while you are at your home, on your sofa, or sipping tea.
Easy, no?
Understanding Online Banking
Online banking is a banking service that allows customers to conduct financial transactions on a website operated by their bank, or on a mobile banking app.
➡️ This can include transferring money between accounts, paying bills, viewing account balances, and more.
➡️ Many banks also offer additional services such as budgeting tools, credit score monitoring, and other financial services.
➡️ Online banking is convenient and can save customers time, as they can access their accounts from anywhere with an internet connection.
➡️ Additionally, online banking is generally more secure than traditional banking methods due to the use of encryption technology to protect customer information.
Advantages and Disadvantages of Online Banking
Let’s have a look at the advantages and disadvantages of online banking.
| Advantages | Disadvantages |
| Convenience: Online banking makes it easier for customers to access their accounts from anywhere at any time. People no longer have to wait in line at the bank or worry about business hours. | Technology Issues: Online banking can be unreliable if there are technical issues. Customers may have difficulty logging in or accessing their accounts if the website is slow or down. |
| Security: Online banking is more secure than traditional banking methods. Banks use encryption technology and other security measures to protect customers’ information and money. | Limited Services: Online banking offers fewer services than traditional banks. Customers may not be able to get advice or help with financial planning and other services. |
| Low Fees: Online banking usually has lower fees than traditional banks. Customers can save money on things like overdraft fees, ATM fees, and monthly maintenance fees | Fraud: Even though online banking is secure, there is still a risk of fraud. Customers should be aware of phishing scams and other online threats. |
| Easy Transfers: Online banking makes it easy to transfer money between accounts and make payments. Customers can set up automatic payments and transfer funds to other people quickly and easily. | Lack of Human Interaction: Online banking does not provide the same level of customer service as traditional banks. Customers may not be able to talk to someone in person if they have a problem or concern. |
| Savings: Online banks often offer higher interest rates on savings accounts than traditional banks, so customers can earn more money on their deposits. | Inefficient Customer Service: Customer service for online banking can be inefficient. It can take a long time to get help with an issue if it is not easily resolved online. |
Features of Online Banking
We have listed all the features of Internet Banking:
- Any kind of non-transactional actions like fetching account balances, recent transactions, ordering checkbooks, downloading account statements and more is accessible online with internet banking.
- Any kind of monetary transaction like transfer of funds, bill payment, loan applications, and investment options are available at your fingertips due to online banking.
- Internet banking charges are usually lesser in comparison to traditional banking. Even the monthly maintenance charges can be avoided in online banking.
- Despite the convenience provided, there are no hidden fees applicable to transactions that take place via online banking.
How to set up Online Banking?
Here are the simple steps to register for Online banking:
1. Choose a Bank: Select a bank that offers online banking services.
2. Open an Account: Open an account with the bank you have chosen.
3. Register for Online Banking: You will need to register for online banking with the bank. You can do this either online or by visiting the bank.
4. Activate Your Online Banking: Once you have registered, you will need to activate your online banking account. You will need to provide some personal information such as your name, address, and phone number.
5. Set Up Security Measures: The bank will provide you with a username and password. You will also need to set up a security question and answer to protect your online banking account.
6. Link Your Accounts: Once you have set up your online banking, you can link your existing accounts with the bank. This will allow you to easily transfer funds between your accounts.
7. Log In and Use Online Banking: Log in to your online banking and start using the services of your bank. You will be able to transfer funds, pay bills, and check your account balance.
Read More: Safe digital banking practices
How is Online Banking different from Mobile Banking?
| Online Banking | Mobile Banking |
| All transactions are conducted via the bank’s website with the help of the internet | All transactions are conducted via the bank’s mobile application(or from mobile devices) with the help of the internet |
| The usual modes of payment are NEFT, RTGS or IMPS | The usual modes of payment are NEFT or RTGS or UPI |
| Online banking is accessed on laptops or desktops. | Mobile banking,, is accessed via mobile devices |
| There’s no requirement of downloading any application | For mobile banking, you have to download the mobile application of the bank |
| Banking services offered by online banking are much more in comparison to mobile banking. | Banking services offered by mobile banking are limited in comparison to online banking |
How Secure is Online Banking?
The security of online banking depends on the security measures taken by the bank. These can include using encryption technology, using two–factor authentication, and using secure server technology. Banks should also make sure their online banking systems are regularly updated with the latest security measures.
Banks should also provide customers with clear information about how to protect their online banking accounts by using strong passwords, not sharing personal information, and monitoring activity for any suspicious activity.
Online Banking has significantly changed our lives.
Similarly, banking has faced prominent evolution. From traditional banking to neo-banking the evolution of the fintech space has had a significant impact on businesses today.
Neobanking: Neobanks are new-age banks without any physical location, present entirely online. They provide digital, mobile-first financial solutions for payments, money transfers, lending, and more.
Neobanks have taken business banking by storm since they make their daily financial operations seamless and automated.
Read more: What is Fintech?
- One-stop banking solutions platforms like RazorpayX allows business owners to open current accounts, pay taxes, schedule payments, pay vendors seamlessly and check invoices from a single dashboard. This saves valuable time and effort.
- It is an accounting and banking platform that fills the gap between advanced banking solutions and finance professionals. It allows easy accounting software integration.
- With RazorpayX Payroll, businesses can automate salary payments and provide insurance policies to their employees.
Frequently Asked Questions
What is Online banking?
Transactions that are conducted via banking websites with the help of the internet is known as online banking.
What are the most popular services provided by online banking?
Online fund transfers, bill payments, investments, loan applications, chequebook orders, changing personal account details etc are the most essential online banking services.
What is a Neobank?
Neobanks are new-age banks without any physical location, present entirely online. They provide digital, mobile-first financial solutions for payments, money transfers, lending, and more.
What are some of the best neobanks in India?
With the rising popularity of neo-banking, there are more and more such new-age banks every day.
