What are the Advantages and Disadvantages of Internet Banking?
Advantages and Disadvantages of Internet Banking: In recent years internet banking has expanded opportunities for consumers and businesses to conduct financial activity. Also with Flexibility, simplicity, tim and cost-savings come security concerns, inability to handle cash and transaction limitations etc.
Below are some of the advantages of internet banking:
Online banks are accessible 24/7, as long as you have an internet connection. Some online banks, such as Ally Bank, kicks this perk up a notch, giving you 24/7 phone access to a real-life customer service agent.
This can be extremely helpful if you don’t have access to the internet, or if you feel you need the assistance of a human brain, rather than a computer algorithm.
Time and Cost Savings
Every time you transfer funds electronically or make other online or mobile transactions, you effectively save a trip to the bank.
Paying bills electronically minimizes use of costly paper checks, envelopes and stamps. Because online banking is mostly automated, banks have fewer costs relative to a brick-and-mortar facility.
Therefore, you avoid some administrative and account maintenance fees banks charged in the past to cover such things as check processing, customer service and statement printing.
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.
Many people find online banking more convenient, flexible and simpler to manage than traditional banking. You can transfer money between accounts and make bill payments from the comforts of your home.
Many banks also have mobile applications, which allow you to scan and deposit checks wherever you happen to be. Online banking also allows you 24/7 anytime access to your balances and transaction records.
Internet banks normally have better quality websites than traditional banks, with more comprehensive content. Such features can include functional budgeting and forecasting tools, online financial planners, investment analysis tools, trading platforms and loan calculators.
Bank on Your Phone With a Mobile App
You can quickly check up on your accounts when you are out shopping, transfer funds so you don’t end up overdrawing, or make sure a merchant hasn’t double-charged you.
Banking apps typically let you deposit checks by using the camera on your phone to take photos of the front and the endorsed back of the check.
You usually have to write something like “For mobile deposit only at [name of bank]” on the back of the check as well.
Internet banking now almost always includes mobile capabilities. New applications are continuously being created to further expand and improve this capability on smart phones and other mobile devices.
Disadvantages of Online Banking
Below are some of the disadvantages of internet banking:
Internet banks are required to obey the same laws and regulations as a traditional bank, and the FDIC insures the bank accounts.
However, having electronic access to your accounts always carries some additional risk to your data, regardless of whether you’re using a traditional bank or an Internet bank.
When using an Internet banking account, the account owner may have no face to face interaction with a bank employee if the bank does not have a brick and mortar location.
This can make resolving disputes more difficult as the account holder will have to make a phone call and possibly wait on hold, or be forced to send an email.
Inconvenient for Deposits
It might seem counterintuitive that a bank, whose purpose is to attract assets, makes it hard for customers to make deposits, but that can be true in the case of some online banks.
With an online bank, you can’t simply drop off cash or a check at a local branch. In fact, some online banks, like Ally Bank, won’t accept cash deposits at all.
Using Ally Bank as an example, to make a deposit you’ll have to mail a check, transfer money from another bank or another account, or use the bank’s e-check deposit service.
Inconvenient for Withdrawals
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.
Email customer service processes are less timely than trips to the bank in many cases. Some banks do offer real-time chat services, though. Also, delays in deposit and withdrawal transactions appearing in your account make it difficult to get real-time balance information.