Your Ultimate Guide to Online Banking

April 24, 2023
6 min read
Your Ultimate Guide to Online Banking

In the past couple of years, online banking has become increasingly popular. More and more people are conducting their banking transactions from the comfort of their own homes. Online banking has advantages over traditional banking, including convenience, speed, and security.

But what exactly is online banking? How does it work? And what are the benefits? Keep reading to find out everything you need to know about online banking.

Online Banking: What Is It?

Online banking allows users to conduct financial transactions through the internet. It is also known as internet banking or web banking.

Almost every banking institution has an online presence where customers can do everything from depositing checks and transferring money to paying bills. Online banking is available through a desktop website or mobile app.

Online banking offers to take care of most of their banking needs anytime, anywhere. They can make transactions whenever it’s convenient for them. Maybe at home, work, or while they're out and about.

Online Banking: How Does It Work?

Some banks don't have any physical locations. Instead, they solely rely on digital platforms to provide customer service nowadays. This mode of banking is called online banking, which users can access through mobile devices, laptops, or computers via the internet.

Internet connections like Wi-Fi or 5G make this type of banking possible since it allows people to access their accounts anywhere in the world.

Clients must first sign up for your bank's online version to gain access to online banking. After the registration, you're free to use the website for any banking needs.

Online Banking: What Are the Benefits?

In today's digital world, more and more people are turning to online banking to manage their finances. And it's no wonder why! Online banking offers many advantages over traditional brick-and-mortar banking, including increased convenience, lower fees, and higher interest rates.

Let's take a closer look at the top benefits of online banking:

1. Easy Access

Why visit brick-and-mortar bank locations if you can only access your account during their set business hours? Their usual operating hours are 9 AM to 5 PM. And on Saturdays, they're open for only a few additional hours. With online banking being available 24/7, you never have to worry about banking hours ever again.

2. Paperless

Filling out application forms, account opening forms, or withdrawal slips will not be a problem anymore. And if you need to deposit a check, most platforms will let you take a picture from your phone and upload it.

You have access to your account information 24/7, so there's no need for paper statements. However, if you would feel more comfortable with physical records of your transactions, most banks still offer monthly paper statement mailings upon request.

3. Convenience

Online banking is a fast and convenient way to manage your finances. You can easily transfer funds between accounts, usually instantly if they're both with the same bank. This convenience is helpful, especially for people who don't live near a physical bank branch or who have trouble getting to one during standard business hours.

Online banking also eliminates the need to take time out of your busy schedule to go to the bank, which can be a real lifesaver.

4. Real-Time Notifications

You can receive tailored text messages and email notifications. If you made a large purchase or your account balance becomes negative, you’ll immediately receive a text or email notification so you can monitor your account.

5. Better Rates and Fees

Another benefit of online banking is that many offer better interest rates and lower fees for their online customers. These incentives are present because it costs banks less money to maintain an online presence than to maintain physical branches.

Banks can provide more attractive terms to their customers by using technology to automate manual processes. This includes higher interest rates on savings accounts and lower fees for checking accounts.

Online Banking: What Are the Downsides?

Online banking is a convenient way to manage your finances, but it's not without risks. Here are some of the potential challenges of banking online:

1. Cybersecurity Breaches

A survey conducted by software company SAS found that data privacy is now a top concern for Americans, with 74% saying they’re more worried about it than they were 12 months ago. 64% feel their personal information is less secure today than in the past.

Also, there are individuals taking advantage of the flaws of cybersecurity. Here are some of the usual cybersecurity threats:

  • Identity Theft and Fraud
  • Phishing Scams
  • Malware Attacks

2. Limitations

Occasionally, it's necessary to visit a bank in person rather than conducting all transactions online. Some banks offer special services like coin-counting or safe deposit box rentals at physical locations only.

And if you need to encash a hefty amount using a check or get a money order, you may not be able to do so through an online bank.

3. No Physical Interaction

When you bank online, you will not get the same personal experience as if you walked into a physical building. You can still talk to customer service through the chat on the website or contact them by phone, but there is no in-person interaction.

Online Banking: How Do You Set up an Account?

Nowadays, there are many reasons why you might want to set up an online bank account. Perhaps you want to earn interest on your savings, or you need a convenient way to transfer money between different accounts.

Whatever your reason, setting up an online bank account is easy and only takes a few minutes. Here's how:

1. Create a checking or savings accounts (either through app or website)

Enter your personal information. When creating an account, the system needs basic information about you, such as your name, address, date of birth, and Social Security number. You can connect your existing debit card as long as with the same bank.

They may also ask you to create a username and password. Be sure to choose a strong password that you'll remember!

2. Activate and log into your account

After you open an account, you'll be able to access the bank's website or app. Login and manage your money online. You can also check your balances and statements and order a debit card for in-person transactions.

Once you've entered your personal information, you can also link your new online bank account to an existing one. All you have to do is provide your routing and account number.

3. Explore

There are a lot of promos and limited-time offers, especially to newly created accounts. Make it a habit to discover and explore the bank’s website or app. You’ll never know; there may be exciting rewards waiting for you!

4. Maintain and secure your account

Now that everything's in place, you can start using your new online bank account like any other checking or savings account. All that’s left to do is maintain and secure your account.

Here are the best ways to protect your online banking account:

  • Use a Multi-factor Authentication (MFA)
  • Avoid connecting on public WIFIs when banking online
  • Monitor your transactions
  • Report lost/stolen cards immediately
  • Don’t use a shared computer when accessing your account
  • Verify links before clicking them
  • Only visit trusted websites

Explore Online Banking Today

There are several banks you can choose from, both traditional and digital. Some online banks offer higher interest rates, financial rewards, or incentives just by signing up and opening an account.

As with any technology, it’s crucial to safeguard your account. Compare traditional and digital banking and decide what fits best your lifestyle and situation. Get started today!

Related Articles