Advantages of Online Banking

Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank, credit union or building society.

To access online banking, the customer would go to the financial institution’s website and enter the online banking facility using the customer number and password.

Some financial institutions have set up additional security steps for access, but there is no consistency to the approach adopted. The common features fall broadly into several categories.

A bank customer can perform some non-transactional tasks through online banking, including,

  • Viewing account balances.
  • Viewing recent transactions.
  • Downloading bank statements, for example in PDF format.
  • Viewing images of paid cheques.
  • Ordering checkbooks.
  • Download periodic account statements.
  • Downloading applications for M-banking, E-banking etc.

Bank customers can transact banking tasks through online banking, including,

  • Funds transfers between the customer’s linked accounts.
  • Paying third parties, including bill payments and telegraphic/wire transfers.
  • Investment purchase or sale.
  • Loan applications and transactions, such as repayments of enrollments.
  • Register utility billers and make bill payments.
  • Financial institution administration.
  • Management of multiple users having varying levels of authority.
  • Transaction approval process.
  • The process of banking has become much faster.

Virtual bank

An Internet-based financial institution that offers deposit and withdrawal facilities, and other banking services, through automated teller machines or other devices, without having a physical (brick and mortar) walk-in premises.

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The Benefits of Virtual Banking

Online banking has plenty of advantages. These include:


Direct banks are open for business anywhere there is an internet connection.

Other than times when website maintenance is being done, they are open 24 hours a day, 365 days a year. If internet service is not available, customer service is normally provided around the clock via telephone.

Better Rates

The lack of significant infrastructure and overhead costs allow direct banks to pay higher interest rates on savings and charge lower mortgage and loan rates.


Direct banks typically have more robust websites that offer a comprehensive set of features that may not be found on the websites of traditional banks.

These include functional budgeting and forecasting tools, financial planning capabilities, investment analysis tools, loan calculators and equity trading platforms.

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They also offer free online bill paying, online tax forms, and tax preparation.


Online banking now includes mobile capabilities. New applications are continually being created to expand and improve this capability on smartphones and other mobile devices.


Accounts can be automatically funded from a traditional bank account via electronic transfer.

Most direct banks offer unlimited transfers at no cost, including those destined for outside financial institutions.

They will also accept direct deposits and withdrawals that you authorize, such as payroll deposits and automatic bill payment.

Ease of Use

Online accounts are easy to set up and require no more information than a traditional bank account.

Many offer the option of inputting your data online or downloading the forms and mailing them in. If you run into a problem, you have the option of calling or emailing the bank directly.

One advantage of using online checks is that the payee’s information is retained, which eliminates having to re-enter information on subsequent checks to the same payee.

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Online banking is also environmentally friendly. Electronic transmissions require no paper, reduce vehicle traffic and are virtually pollution-free.

hey also eliminate the need for buildings and office equipment.

The Drawbacks Virtual banking

Banking exclusively online also has its share of drawbacks and inconveniences. These include:

Bank Relationship

A traditional bank provides the opportunity to develop a personal relationship with that bank.

Getting to know the people at your local branch can be an advantage when you need a loan or a special service that is not normally offered to the public.

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A bank manager usually has some discretion in changing the terms of your account if your personal circumstances change.

Service Issues

Some direct banks may not offer all the comprehensive financial services, such as insurance and brokerage accounts, that traditional banks offer.

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.

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