Essay on Internet Banking
In this essay we will discuss about Internet Banking. After reading this essay you will learn about: 1. Meaning of Internet Banking 2. Objectives and Drivers of Internet Banking 3. Trends in India 4. Facilities Available 5. Emerging Challenges 6. Main Concerns 7. Strategies to be Adopted by Indian Banks.
- Essay on the Strategies to be Adopted by Indian Banks for Introducing Internet Banking
Essay # 1. Meaning of Internet Banking :
With the growth of internet and wireless communication technologies, telecommunications etc. in recent years, the structure and nature of banking and financial services have gone for a sea change. Internet banking or e-banking is the latest in this series of technological wonders in the recent past which involves use of internet for delivery of banking products and services.
Even the Morgan Stanley Dean Witter Internet Research emphasised that web is more important for retail financial services than that for many other industries. Internet banking or e-banking is changing the banking and its structure and is having major effects on banking relationships.
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Banking activity is now no longer confined to the branches where a customer has to approach the branch in person, for withdrawing cash or deposit a cheque or request for a statement of Accounts.
In accessing a true internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Thus providing Internet banking is gradually becoming a “need to have” than a “nice to have” service.
The net banking is, therefore, more of a norm rather than an exception in many developed countries because it is the cheapest way of providing banking services. Under this system, online banking is possible where every bank customer is provided with a personal identification number (PIN) for making online transactions with the bank through internet connections.
Internet banking or e-banking falls into four main categories, from Level 1—minimum functionality sites that offer only access to deposit account data—to level 4 sites highly sophisticated offering, enabling integrated sales of additional products and access to other financial services—such as investment and insurance.
In other works, a successful internet banking solution offers:
1. Exceptional rates on savings, CDs and IRAs.
2. Checking Account with no monthly fee, free bill payment and rebates on ATM surcharges.
3. Credit card facilities with low rates.
4. Easy online applications for all accounts including personal loans and mortgages.
5. 24-hour account access.
6. Quality customary service with personal attention.
Essay # 2. Objectives and Drivers of Internet Banking :
The internet has developed level playing field and thereby afforded open access to customers in the global market-place. Internet banking is a cost-effective delivery channel for the modernized financial institutions.
In this system, consumers are embracing many benefits of e-banking. To have access to one’s accounts at any time and from any location through world wide web (www) is a convenient practice, which was unknown a short time ago.
Thus, a bank’s internet presence transforms from ‘brochure/ware’ status to ‘internet banking’ status once the bank goes through a technology integration effort so as to enable its customer to access information about his or her specific account details.
Following are the six primary objectives or drivers of internet banking:
1. To improve customer access.
2. To facilitate the offering of more services.
3. To increase customer loyalty.
4. To attract large number of customers.
5. To provide cost-effective services offered by competitors.
6. To reduce customer attrition.
Keeping objectives in mind, the internet banking facilities has been progressing at a rapid pace throughout the world.
Essay # 3. Trends of Internet Banking in India :
In India, initially a beginning was made in internet banking only in some big cities which was just in rudimentary stage. After getting initial success, the internet banking facility is gradually being expanded in all cities and towns to make the system popular.
The banking industry in India is also facing unprecedented competition from non-traditional banking institutions which are now a day’s offering banking and financial services over the Internet. The deregulation of the banking industry along with emergence of new technologies are enabling the new competitors in the banking sector to enter the financial services market quite efficiently and quickly.
Core or Anywhere Banking:
In order to support internet banking facilities another new concept of banking i.e., core or anywhere banking is introduced. Initially introduced by the foreign banks, the same concept in new increasingly adopted by public sector banks and also the private sector banks.
Under this concept of banking, bank customers who have an account with any select branch can easily operate his account from different designated branches on the bank spread throughout the country.
Under this system, a customer can avail cash withdrawal, cash deposit, transfer of funds, inter-city and intra-city transactions, collection of draft and cheques etc. facilities from any of such designated branches conveniently irrespective of its locations.
Core banking concept has improved the standard of the banking services with the help of modern technology. In present times, most of the public sector banks have already adopted this concept and started extending these facilities to its customers gradually by including more and more of its important branches under this category.
Progress of Internet Banking:
In India, internet banking is gradually being developed throughout the country.
As per the recent study it is observed that:
(a) A number of banks have already adopted internet banking and are offering varied kind of services through it,
(b) These internet sites generally offer only most of the basic services. Only 50 per cent are known as ‘entry level’ sites offering little more than company information’s and basic marketing materials and 10 per cent are offering ‘advanced transactions’ such as online funds transfer, transactions and cash management services etc.; and
(c) Most of the foreign and private banks in India are much advanced in terms of the number of sites and their level of development in terms of rendering advanced technology linked services to its customers. Recently, an authority of ICICI Bank observed, “Our Internet banking base has been growing at an exponential pace over the last few years. Currently around 78 per cent of the bank’s customer base is registered for Internet banking.”
Security Precautions :
In order to make their bank account safe, one should follow certain security precautions. Customer should never share personal information like PIN number, passwords etc. with anyone, including employees of the bank. It is important that documents that contain confidential information are safeguarded. PIN or password should be changed immediately and memorized before destroying the mailers.
Customers are also advised not to provide sensitive account-related information over unsecured e-mails or over the phone. He must take simple precautions like changing the ATM, PIN and online login and transaction passwords on a regular basis. It is also important to ensure that the logged in session is properly signed out.
Essay # 4. Facilities Available Under Internet Banking in India:
Following facilities are made available for customers under internet banking in India:
(i) Bill Payment Service:
Bill payment service is a utility service of internet banking. Accordingly, each bank has tie-ups with various utility companies, service providers, insurance companies across the country. Such tie-ups can facilitate online payment of bills of electricity, telephone, mobile phone, credit card, insurance premium bills etc.
In order to make online payment of bills, a simple one-time registration for each bills has to be made and a standing instruction has to be made to make online payment of recurring bills automatically. Most interestingly, the bank usually does not charge customers for such online bill payment.
(ii) Fund Transfer:
Internet banking has made provision for transfer of any amount of fund from one account to another of the same or any other bank. Accordingly, customers can send money anywhere in India. Once a customer logs in his account, he needs to mention the payee’s account number, his bank and the branch. The transfer will take place in a day or so, whereas in a traditional method it takes about three to four working days. ICICI Bank recently reported that its online bill payment and fund transfer facility have been most popular online services.
(iii) Credit Card Customers:
Internet banking provides the facility of credit card to its customers. With internet banking, customers can not only pay their credit card bills online but also gets a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and in case the card is lost, one can report lost card online.
(iv) Railway Pass and Online Booking:
Through Internet banking facility to issue Railway pass is also available. Indian Railways has tied up with ICICI bank for this purpose and one can now make railway pass for local trains online. The pass can be delivered to the customer at his doorstep. Initially, the facility was limited to Mumbai, Thane, Nashik, Surat and Pune. The bank would just charge Rs 10 + 12.24 per cent of service tax. Moreover, online booking of e-tickets of Railways, Airlines etc. can also be made with some arrangement with banks through Internet banking.
(v) Investing through Internet Banking:
Through Internet banking, opening a fixed deposit account has become easier. A customer can now open an FD account online through funds transfer. Online banking can also be a great friend for lazy investors. Moreover, investors with interlinked de-mat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their de-mat account.
Besides, some banks provide its customers the facility to purchase mutual funds directly from the online banking system. Nowadays, most leading banks offer both online banking and de-mat account facilities. However, if a customer is having his de-mat account with independent share brokers, then he needs to sign a special form, which will link his two accounts.
(vi) Recharging Prepaid Phone:
Through Internet banking, recharging of prepaid phone has also become possible. It is no longer needed to rush to the vendor to recharge prepaid phones as and when talk time runs out. Here the customer just tops-up his prepaid mobile cards by logging in to Internet banking. By just selecting operator’s name, entering mobile number and the amount of recharge, the prepared phone of the customer is again back in action within few minutes.
(vii) Shopping at Fingertips:
Internet banking provides facility of shopping at fingertips. Leading banks have tied-up with various shopping websites. With a range of all kind of products. One can shop online and the payment is also made conveniently through his account. One can also buy railway and air tickets through Internet banking.
Essay # 5. Emerging Challenges of Internet Banking in India :
In India, a large sophisticated and highly competitive Internet Banking Market is gradually being developed with market pressure and is subjected to the following emerging challenges:
1. Demand side pressure due to increasing access to low cost electronic services.
2. Emergence of open standards for banking functionally.
3. Growing customer awareness and need for transparency.
4. Global players in the fray.
5. Close integration of bank services with web based E-commerce or even disintermediation of service through direct electronic payments (E-cash).
6. More convenient international transactions due to the fact that the Internet along the general deregulation trends, eliminate geographic boundaries.
7. Move from one stop shopping to ‘Banking Portfolio’, i.e., unbundled product purchases.
The Internet and its underlying technologies have been changing and transforming not just banking but all aspects of finance and commerce. It usually represents much more than a new distribution opportunity. Internet banking will also enable nimble players to leverage their traditional brick and mortar presence for improving customer satisfaction and gain share.
Essay # 6. Main Concerns in Internet Banking :
Internet banking in India has its areas of concern. In the mean time, a number of cases related to fraud and cheating of banks and customers by unscrupulous persons have already been lodged in India with this type of banking facilities. Irrespective of that attempts have been made by the RBI and the banking authorities for promoting safety and soundness of online and e-banking facilities in the country by issuing necessary guidelines.
In a recent survey conducted by the Online Banking Association, member institutions rated security as the most important issue of online banking. Thus there is a dual requirement to protect customers privacy and product against fraud.
Banking Securely:
Online Banking provides an overview of Internet Commerce and how one company can handle secure banking practices for its financial institution clients and their customers. Moreover, some basic information on the transmission of confidential data is presented in Security and Encryption on the web. In this respect, PC Magazine Online also offers a primer as to how encryption works.
Besides, a multi-layered security architecture comprising firewalls, filtering routers, encryption and digital certification ensures that customers account information is protected fully from un-authorised access in the following manner:
(i) Firewalls and filtering routers ensure that only the legitimate Internet users are usually allowed to access the system.
(ii) Encryption techniques used by the bank (including the sophisticated public key encryption) would ensure that privacy of data flowing between the browser and the Infinity system is protected.
(iii) Digital certification procedures provide the assurance that the data a customer receive is from the infinity system.
Essay # 7. Strategies to be Adopted by Indian Banks for Introducing Internet Banking :
In present times, Internet banking has no alternatives. Indian banking is gradually getting more and more access of Internet banking. Thus, Internet banking would drive us into an age of creative destruction due to non-physical exchange; complete transparency is also giving rise to perfectly electronic market place and customer supremacy.
At this moment, the question may be asked “what the Indian Banks should do under the present circumstances?” Whatever is the strategy chosen and options adopted, certain key parameters would largely determine the success of banks on web.
In order to attain long term success, in respect of Internet banking, a bank may follow:
(i) Adopting a webs mindset.
(ii) Catching on the first mover’s advantage.
(iii) Recognising the core competencies.
(iv) Enabling handling multiplicity with simplicity.
(v) Initiating senior management to transform the organisation from inward to outward looking.
(vi) Aligning roles and value propositions with customers segments.
(vii) Redesigning optimal channel port-folio.
(viii) Acquiring new capabilities through strategic alliances.
However, the above mentioned steps can be implemented by following four steps mentioned below:
(i) In the first phase, the customer be familiarized to new environment by demo version of software on banks, website. This will enable users to give suggestions for improvements, which can be incorporated in its later versions wherever possible.
(ii) The second phase provides various services such as account information and balances, statement of account, transaction tracking, mail box, check book issue, stop payment, financial and customized information.
(iii) The third phase may include additional multi-utility services like fund transfers, DD issue, standing instructions, opening fixed deposits and intimation of loss of ATM cards.
(iv) The final phase should include advanced corporate banking services like third party payments, utility bill payments, establishment of L/Cs, Cash Management Services etc. Enhanced plan for the customers in future may include requests for demand drafts and pay orders and many more to bring in the ultimate in banking convenience.
Thus by following the above mentioned strategies, it will help banks to translate their traditional business model into a Internet banking one, falling into the following three main categories:
(i) One-stop shop.
(ii) Virtual one stop shop.
(iii) Best of Breed Supplier.
Thus by following the above steps, the Indian bankers can pave the way for the successful introduction and popularizing the new concept of Internet banking on a large scale.
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- Traditional Bank vs. Online Bank
Online Banking: A Quick History
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- Personal Finance
Internet Banks: Pros and Cons
How Online-Only Banks Stack up Against Traditional Institutions
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Figuring out where to bank starts with a decision about the type of institution you want. Do you prefer a bank with brick-and-mortar branches and its own automated teller machines (ATMs) or an online-only alternative that maximizes the mobile banking experience?
There are advantages to online banking:
- You may get a significantly better interest rate for your savings
- Some online banks have lower fees and fewer of them
- Most online banks demand low or no minimum deposits to open accounts
Brick-and-mortar branches also have advantages:
- Accountholders have access to personal service on demand at convenient storefront branches
- Depositing cash is much easier
- Brick-and-mortar banks have apps as well, and they're getting better
Key Takeaways
- Before choosing an online bank, it's important to decide what features are most important to you.
- The lack of overhead gives internet banks advantages over traditional banks, including fewer or lower fees and accounts with higher APYs.
- Internet banks lack personal relationships, no proprietary ATMs, and more limited services.
Traditional Bank vs. Online Bank: What's the Difference?
Traditional and online banks—also known as direct banks—both offer you access to your account online, and the ability to transfer money or perform other tasks with a few clicks of your cursor or taps on your phone screen. They're both subject to the same laws and regulations—online-only accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) just like the accounts held at traditional banks. Security is the same overall, with both types employing such measures as encryption to protect your funds and identity.
But even if both types have become close cousins in some ways, important distinctions remain. Direct banks leverage their lower costs to offer better interest rates and, often, lower fees. Brick-and-mortar institutions offer a convenient array of options for deposits and other transactions including offering the option for face-to-face service at a bank branch when you need it. If you're on the fence about internet banks, this article may help you. It outlines the main pros and cons of this part of the banking industry.
As the commercialization of the internet evolved in the early 1990s, traditional brick-and-mortar banks began looking for ways to deliver online services to their customers. Though limited at first, the success of these early efforts led many banks to expand their internet presence through improved websites featuring the ability to open new accounts , download forms, and process loan applications .
This led to the birth and rise of internet-only banks. These institutions offer online banking and other financial services without a network of branch offices. The first fully-functional direct bank insured by the FDIC was the Security First Network Bank, which began operations on Oct. 18, 1995. Security First and those that followed were able to offer higher interest rates on deposit accounts and reduced service fees all because of the lower costs due to a lack of overhead .
As the choice in virtual banks grew, so did customers' enthusiasm for banking online. More than 60% of account holders do at least some of their banking on the internet, according to the latest report on banking behavior from the FDIC .
Investopedia / Jake Shi
Pros of Internet Banks
Despite the rising virtual presence of traditional banks, online-only competitors still offer some clear advantages for consumers.
Better Rates, Lower Fees
The lack of significant infrastructure and overhead costs allow direct banks to pay higher interest rates or annual percentage yields (APYs) on savings. The most generous of them offer as much as 1% to 2% more than you'll earn on accounts at a traditional bank—a gap that can really add up with a high balance. While some direct banks with especially generous APYs offer only savings accounts, most of them offer other options including high-yield savings accounts, certificates of deposit (CDs), and no-penalty CDs for early withdrawal .
You're less likely to be dinged with a wide range of fees at a direct bank including those associated with keeping an account open with a low balance, making direct deposits, or paying by check or debit card. Accounts at direct banks are more likely to carry no minimum balance or service fees .
Better Online Experiences
Traditional banks are investing heavily in improving their virtual presence and service, including launching apps and upgrading websites. But overall, direct banks appear to retain an edge when it comes to the online banking experience.
A 2018 Bain and Company survey of retail banking customers found traditional banks lagged behind direct banks in the areas that mattered most to customers, including the quality of the banking experience and the speed and simplicity of transactions.
The gap between the interest rates earned by accounts in traditional banks and internet-only banks.
Cons of Internet Banks
Banking with an online institution also has its share of drawbacks and inconveniences.
No Personal Relationships
A traditional bank provides the opportunity to get to know the staff at your local branch. That can be an advantage if and when you need additional financial services, such as a loan, or when you have to make changes to your banking arrangements. A bank manager usually has some discretion in changing the terms of your account if your personal circumstances change, or in reversing a mandatory fee or service charge .
Less Flexibility With Transactions
In-person contact with a banking staffer isn't only about getting to know you and your finances. For some transactions and problems, it's invaluable to head to a bank branch .
Take, for example, depositing funds—the most basic of banking transactions. Depositing a check is possible with a direct bank by using its banking app to capture both the front and back of the check. However, depositing cash is downright cumbersome at many online banks. So it's worth checking the bank’s policy if this is something you plan to do frequently. International transactions may also be more difficult, or even impossible, with some direct banks.
The Absence of Their Own ATMs
Since they lack their own banking machines, online banks rely on having customers use one or more ATM networks such as those from AllPoint and Cirrus. While these systems offer access to tens of thousands of machines across the country—even around the world—it's worth checking the available machines near where you live and work.
Check, too, for any fees you may rack up for ATM use. While many direct banks offer free access to network ATMs or will refund any monthly charges you incur, there are sometimes limits on the number of free ATM transactions you can make in a given month.
More Limited Services
Some direct banks may not offer all the comprehensive financial services that traditional banks offer, such as insurance and brokerage accounts . Traditional banks sometimes offer special services to loyal customers, such as preferred rates and investment advice at no extra charge.
In addition, routine services such as notarization and bank signature guarantee are not available online. These services are required for many financial and legal transactions.
Traditional and online-only banks both have their advantages. Basically, you have to decide whether a brick-and-mortar institution's services and personal touch outweigh the often higher costs, in terms of lower interest rates and more numerous fees, of banking there.
It's also worth considering dividing your business between one of each. True, this arrangement may not be practical for you, and the fees for holding multiple accounts may be an issue. But having accounts at both a traditional bank and an online bank can facilitate the best of both worlds—higher interest rates, along with access to in-person help with transactions and problems when you need it.
Federal Deposit Insurance Corporation. “ Deposit Insurance .”
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Online Banks Vs. Traditional Banks: Which Are Better?
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Published: Aug 24, 2023, 9:10am
Online banking lets you manage your money from anywhere at any time, and it’s outpacing in-person banking. More than three in four Americans say they’d rather bank via a mobile app or website than go into a local branch.
While most financial institutions offer digital banking, online banks operate fully online and often have more robust, user-friendly websites and mobile apps than traditional banks. Often, these digital banks also tout lower fees and more competitive interest rates. But for some people, traditional banks may win out.
What Is Online Banking?
Online banking is banking that takes place digitally through a computer or smartphone. Most financial institutions now allow customers to access their accounts online through a website or mobile app and complete basic actions like balance inquiries, electronic transfers and bill payments.
There are also online banks , which are financial institutions that operate mostly or fully online—like Ally Bank , Vio Bank and Axos Bank . Online banks don’t typically have physical branches, although some hybrid banks like Capital One 360 operate a handful of brick-and-mortar locations. Like traditional banks, online banks are usually chartered and insured by the FDIC to keep your deposits safe.
With online banks, you can take care of all your banking needs electronically, including:
- Opening a new account
- Depositing checks
- Transferring funds
- Paying your bills
- Tracking expenses
- Saving money
Many online banks operate ATM networks where you can deposit and withdraw cash, often without fees. Others may offer ATM fee reimbursements for using out-of-network ATMs.
What Are the Advantages of Using Online Banks?
Because online banks are completely digital, they tend to have lower overhead costs and focus more on building user-friendly, feature-rich mobile apps and websites. This allows them to offer the following perks:
- No or low fees. Most online banks don’t charge monthly maintenance fees. And others, like Discover Bank , go even further by eliminating all common banking fees , including overdraft fees or out-of-network ATM fees. Almost all of the best no-fee checking accounts and best no-fee savings accounts are available with online banks.
- Competitive interest rates. Online banks tend to offer the highest annual percentage yields (APYs) on deposit accounts. Online banks also have many of the best high-yield savings accounts and high-yield checking accounts . If you’re looking for the best CD rates , credit unions and online banks usually come out on top.
- Low or no minimum deposit requirements. Unlike some traditional banks, most online banks don’t require you to maintain a minimum balance. They also tend to have low or no minimum deposit requirements to open an account.
- Early paychecks. If you get direct deposits from an employer, some online banks, like Capital One and SoFi , will let you get paid up to two days early.
- Automated bill payments. Online banks make it easy to schedule automatic bill payments electronically so you can avoid missing payments and track when money will be withdrawn from your account.
- Mobile check deposits. Most online banks let you deposit checks electronically by snapping a photo of your check and uploading it to the mobile app.
- Free ATM withdrawals. Some online banks operate fee-free ATM networks that are just as, if not more, expansive than those offered by traditional banks. Others, like Charles Schwab Bank , don’t have ATM networks but offer ATM fee reimbursements.
- Additional perks. Many online banks entice customers with benefits like cash-back debit cards , generous bank account sign-up bonuses and in-app saving and budgeting tools.
What Are the Drawbacks of Online Banks?
While online banks excel in many areas, there are some drawbacks to keep in mind:
- Cash deposits and withdrawals may be limited. While some online banks let you use an ATM to deposit cash, others don’t accept cash deposits at all. Some online banks that only offer savings products might not offer ATMs or allow you to withdraw cash. Instead, you’ll have to withdraw funds by transferring them to an external account.
- Most don’t have physical branches. Unless it’s a hybrid bank like Capital One, online banks don’t have branches you can visit, so you won’t be able to access in-person financial services.
- The range of account offerings may be limited. Most online banks offer fewer financial services than you’d find at a full-service traditional bank. An online bank may only offer a checking account, a savings account and a CD account, while big national banks like Chase and Bank of America offer a full range of lending and investment products in addition to bank accounts.
Are Online Banks Better Than Traditional Banks?
Online banks are better than traditional banks when it comes to minimizing fees and securing the most competitive rates. These banks also tend to offer superior websites and mobile apps with more features.
When it comes to finding a full range of financial services all in one place, traditional banks tend to win out. Plus, if you like banking in person or need to deposit cash, traditional banks may be better for you.
To reap the best of both worlds, consider having traditional bank accounts for in-person service and online accounts for low fees, high APYs and other perks.
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Internet Banking Effects and Results Essay
Introduction, development history, technical description/process of how it works, effects of internet banking.
Internet banking has certainly played a key role in the increase and ease of banking services the world over, and the reasons for this are not difficult to discern. Online banking provides flexible opportunities for customers to access online services. The highly integrated Customer Relationship Management (CRM) supported by advanced software integrates the basic financial services in demand the world over by individuals and organizations.
The three central areas of organizational requirements that include operational, analytical, and collaborative are addressed. CRM and online banking systems and their benefits have generated few research studies but continue to grow and dominate the activities within the banking sector thus defining and shifting the culture in which we handle our finances. The reason I have settled on this topic is based on a personal experience I had with my Dad when I was very young. To access banking services, one had to not only keep time but also make a long line behind other clients. This is the exact position we found ourselves in some fifteen years back in our attempt to access banking services. That is no more because internet banking has revolutionized the culture in the banking industry.
At the beginning of the 20 th century in the United States, demand exceeded supply and this precipitated a move by the company to change their business strategies in concentrating on selling as many products as they could afford to. In this case, companies did not pay attention to the customer and the customer’s needs and requirements. Heiko, Wayne, and Robert (1994) explain that “suppliers focused on product development, manufacturing capacity, and securing distribution outlets, without regard to their consumers”.
In the middle of the 20 th century, however, the economic situation changes, and by this time consumers had the power of choice due to excess supply which exceeded demand. Heiko, Wayne, and Robert (1994) point out that “The era of the passive consumer was coming to an end. Companies began to find out what their customers were, what they wanted, and how they could be satisfied; they analyzed data about their customers and segmented them based on their demographics, such as age, gender, and other personal information. Then they promoted their product or service to a specific subset of customers and prospects”.
This period was characterized by target marketing where each company invested much of its efforts on four P’s (price, promotion, product, and placement).In this regard, the concept of CRM and internet banking came in the late 1990s. Although there is no clear definition of CRM, Fareena and Roy (2000) define it as follows: Customer Relation Management “is about understanding the nature of the exchange between customer and supplier and managing it appropriately. With the advent of internet banking, companies changed their business emphasis in increasing the ‘share of wallet’ of their customer. They developed a close connection with their customers and took into consideration the customer needs, requirements and demands. All these were done to satisfy customer demands as well as retain them.
The emergence of CRM on the other hand made marketers carry out a comprehensive analysis of the customer. This was done with to categories customer based on long term period and retention. Moreover, this strategy contributed to cross-selling and up-selling (Greiner, 1972). In addition to the above, the dynamics of changing demographics and consumer purchasing patterns, coupled with ever stronger competition, have certainly put increased pressure on banks to adopt cutting-edge technologies to meet the growing demands of the consumer. These have impacted a lot on the banking sector globally and as such have devised new avenues for driving customer relations and developing distinct competencies that will ensure their survival. The adoption of CRM and internet banking has brought with it several benefits both to the customers and the banks. The scale of operations has improved and banking services the world over have not only been made easier but have also recorded a decline in general costs. These have impacted immensely on the culture of how we shop, procure goods, access our cash deposits, and relate with our banking services providers. One fundamental aspect of quality life is the ease by which we access both goods and services in fulfilling the constant demands in our lives. This has been made so by the rapid development of internet banking that has revolutionized our shopping culture.
Internet banking; also referred to as e-banking allows clients to carry out financial transactions on a secure site that belongs to their banking services provider. This can either be a virtual bank or a credit union. They offer safe banking solutions to their customers on the internet and have been embraced by a large number of clients the world over due to their ease and convenience in accessing banking services. Common transactions that are offered by internet banking include bill payments, wire transfers, account-to-account transfers, loan applications, and the opening of new accounts. In addition to the above, it offers non-transactional services to the clients such as online statements and lives chats with the customer relations services. Security is handled by the authentication of a single password in the form of PIN/TAN or signature-based online banking that involves the digital encryption of all transactions.
In the analysis of the world’s economy, the online banking service sector has precipitated the increase in the number of those using banking facilities and drastically changed the culture of our banking and shopping. This translates to a more vigorous banking sector that can play an important in an economy. The general population has befitted immensely from the availability of loans and capacity to provide safe custody for the deposits at the touch of a mouse. Shortly, the rate of internet banking will depend on the rate at with the customers embrace and appreciate the use of internet banking in carrying out their financial transactions and the ability to instill mote secure online banking operations that can deal with cybercrimes.
Online banking has remained a business topic that has generated much impact because of its ability to only ease the banking process but also effectively deal with the increasing demands of fast, safe, and convenient banking services. This is because it has enabled us to acquire the basic goods and services with little effort in comparison to the traditional model of buying and selling. It is therefore worth appreciating that the little things that make human lives easy impact greatly on our culture.
- Fareena, G. & Roy B. H. 2000, Consumer Preferences of Internet Services Overtime: Initial Exploration. New York: Sage.
- Greiner, L. 1972, Evolution and revolution as organizations grow. Harvard Business Review , 50 (4), 37-46.
- Heiko, L.,Wayne, J and Robert, A. 1994, Retailing and Online Consumer Information Services. Washington: OLCISs.
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What Is Online Banking? Definition, Pros and Cons
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Definition: What is online banking?
Online banking means managing your bank accounts using a computer or mobile device, and internet connection. Online banking allows you to make the same transactions as you would at a brick-and-mortar bank — including transferring funds, depositing checks and paying bills — but using your computer or mobile device instead of doing them in person. Online banking can sometimes be referred to as digital banking, electronic banking, internet banking or web banking, or even mobile banking (though mobile banking specifically refers to banking done on a mobile device, rather than a computer).
Traditional banks and credit unions with branches typically let customers access their accounts through the internet, too. But online banks and providers offer primarily mobile access. You won’t meet a banker face to face, but with a mobile device or computer, you can reach your account anytime. Here's a closer look at online banks.
Ready to start banking online?
Say goodbye to waiting in line at a branch and hello to convenience.
Pros of online banks
To better understand how online banking works, consider the advantages of online banks.
Because online banks don’t have to spend money on branch maintenance, they tend to have low or no fees. Many online accounts don’t charge monthly service fees, for example, and some don’t charge overdraft fees, either.
To compare, accounts at large brick-and-mortar banks often charge a monthly service fee of around $10, though they may waive it if you meet certain requirements, such as having a $1,500 minimum daily balance. In addition, an overdraft fee at a large bank can cost $30-$35 .
» Tend to overdraw your account? See our picks for the best banks for overdrafts
Better interest rates
At online banks, deposit accounts tend to have higher annual percentage yields. The best online savings accounts, for example, have APYs around 5%. Compare that with the national average savings rate of 0.45% , and some of the largest brick-and-mortar banks, which have savings accounts that earn only 0.01% APY.
A few percentage points' difference might not sound like much, but the larger your balance, the more it matters. A balance of $10,000 deposited for a year at 0.01% will earn a dollar; at 5%, it earns just over $500.
» Use our tool: Calculate your earnings with NerdWallet’s savings calculator
Online cash management accounts are another option for earning interest. These financial products are offered by nonbank service providers, such as brokerages. They typically combine the features of checking, savings and investment accounts, and can also have good yields.
» Cash management accounts: See our top picks for these APY-earning online hybrids
Cons of online banks
Before you jump into online banking, learn more about the disadvantages of online banks.
No branches
With an online bank, prepare to have limited access to in-person help. Instead of face-to-face meetings, many banks offer phone-based customer service. Some banks offer assistance through social media and online chat, as well.
Cash can be hard to deposit
Online banks often have cumbersome cash deposit processes. You might have to find a deposit-accepting ATM. Or you may need to put money into a traditional bank account and transfer it to your online account. You could also use cash to buy a money order, and then deposit it electronically using your online bank’s mobile app.
Some providers also partner with a third-party service, such as Green Dot, to let retailers and convenience stores accept cash deposits. But these services typically charge fees of around $5 for deposits.
» MORE: How to deposit cash at an online bank
Fewer one-stop-shop options
Some online banks have outstanding savings accounts but don’t offer checking or certificates of deposit, so you might have to open one type of account at one institution and a separate type of account at another.
» CONSIDER: 4 advantages of traditional banks over online banks
Online banks' standard bank services
Though online banks typically offer higher rates and lower fees, many still have basic banking features you can expect to find at traditional banks, including:
ATM access. A good online bank will be part of an ATM network, like Allpoint or MoneyPass , with thousands of fee-free machines nationwide. If you need to withdraw cash from a non-network machine, some online banks will also reimburse any fees the ATM owner charges.
Security. Online banks with standard security measures are just as safe as traditional banks. Look for features such as encryption and fraud monitoring, and before you open a bank account, make sure the money is insured by the Federal Deposit Insurance Corp . There are also measures you can take to ensure secure online banking , including avoiding public Wi-Fi networks and keeping anti-virus software up to date.
Accessibility. You can access your bank accounts and bank services wherever there’s internet — on your computer or mobile device — around the clock. You can also reach customer service by phone — in some cases, 24 hours a day, seven days a week.
Frequently asked questions about online banking
Here are answers to common questions about online banking.
What is the meaning of online banking and how do you use online banking?
To bank online means to manage your bank accounts using your computer or mobile device. You can bank online — transfer money and pay bills electronically — through bank websites or by using a bank’s mobile app. Banks often also offer check deposits via their mobile apps.
Most standard or traditional banks offer online account management, so you can handle your banking tasks via the bank website or app. With an online-only bank, all banking tasks are handled online via the bank website or app. Some banks are app-based, so account management is handled primarily through their mobile apps.
What are the types of online banking?
You can use online banking through bank websites on your computer or mobile device, or by using mobile banking apps.
Can you open a bank account online?
You can open a bank account online for both online and brick-and-mortar banks. Online-only banks require you to open a bank account online; there’s no option to go to a branch to open an account.
» LEARN: How to open a bank account online in 4 steps
What about neobanks?
Financial technology companies that offer banking services are often called neobanks . They are not banks. With these providers, FDIC insurance is a little more complicated than with traditional institutions. But accounts often have the low monthly fees and strong rates that many online banks have. However, neobanks may lack traditional banking features, such as access to personal or cashier’s checks and wire transfers. They can be a solid option if you prefer online-only banking, but consider these factors and questions to ask before opening a neobank account .
Should you open an online bank account?
If you want higher rates and lower fees and don’t need frequent branch banking services, an online bank may be worth considering. Keep in mind, you can choose to open an online account without giving up an existing account at your local institution. In fact, having accounts at both a traditional bank and an online bank could give you the best of both worlds: the best savings rates and access to in-person help when you need it.
Or you could take a bigger action and move your accounts to an online-only institution (see our guide on how to switch banks ). Either way, you can open a new online account in minutes, and have access at your fingertips at any time.
On a similar note...
| 11 pages•Date: February 21, 2024 and This research paper delves into the profound influence of internet banking on both financial inclusion and economic growth. With the rapid expansion of digital technologies, internet banking has emerged as a pivotal tool in bridging financial gaps and fostering economic development. Through an extensive review of literature, this study analyzes the multifaceted impacts of internet banking on various stakeholders, including individuals, businesses, and governments. The paper first examines how internet banking facilitates greater access to financial services, particularly among underserved and marginalized populations. : , , |
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This research paper delves into the profound influence of internet banking on both financial inclusion and economic growth. With the rapid expansion of digital technologies, internet banking has emerged as a pivotal tool in bridging financial gaps and fostering economic development.