Advantages and Disadvantages of Internet Banking

Updated on May 7, 2020
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Anuj is a freelance writer and software engineer by profession. In his spare time, he writes about finance and technology.

Learn all about the pros and cons of internet banking.
Learn all about the pros and cons of internet banking. | Source

Today, we can access many banking services online. Some of these services include paying bills, transferring funds, and viewing account statements. Banks also deliver their latest products and services over the internet. Internet banking is performed through a computer system or similar devices that can connect to the banking site. Nowadays, you can also use internet banking on your mobile phones, using a Wi-Fi or 3G connection. With the easy availability of cyber cafes and mobile phones in India and China, online banking has become quite popular.

You no longer need to visit the bank in person to deposit or withdraw money, request an account statement, or stop a payment. You can do all of these tasks, and many more, using the online services offered by the banks. You can also keep track of your account transactions and balance at all times. You no longer need to get passbooks updated to know your total account balance.

While online banking has many positives, there are also a few cons. Let's take a look at the advantages and disadvantages of online banking.

Pros and Cons of Online Banking

Advantages
Disadvantages
An online account is simple to open and easy to operate.
Understanding the usage of internet banking might be difficult at the first. That said, there are some sites which offer a demo on how to access online accounts (not all banks offer this). So, a person who is new to technology might face some difficulty.
It's convenient, because you can easily pay your bills and transfer your funds between accounts from nearly anywhere in the world.
You cannot have access to online banking if you don’t have an internet connection; thus, without the availability of internet access, it may not be useful.
You do not have to stand in a queue to pay off your bills. Also you do not have to keep receipts of all of your bills, as you can now easily view your transactions.
Security of transactions is a big issue. Your account information might get hacked by unauthorized people over the internet.
It is available all the time. You can perform your tasks from anywhere and at any time, even at night or on holidays when the bank is closed. The only thing you need to have is an active internet connection.
Password security is a must. After receiving your password, change it and memorize it. Otherwise, your account may be misused.
It is fast and efficient. Funds get transferred from one account to the other very fast. You can also manage several accounts easily through internet banking.
Your banking information may be spread out on several devices, making it more at risk.
You can keep an eye on your transactions and account balance all the time.
If the bank’s server is down, then you cannot access your accounts.
You can get to know about any fraudulent activity or threat to your account before it can pose any severe damage.
If the bank's server is down, due to the loss of net connectivity or a slow connection, then it might be hard to know if your transaction went through.
It's a great medium for the banks to endorse their products and services.
You might get overly marketed too and become annoyed by notifications. That said, these can easily be turned off.
More online services include loans and investment options.
You might become annoyed by constant emails and updates.

Various Online Services

An online banking account is easy to open and operate. That said, the online services offered might differ from bank to bank and from country to country. To learn about the various services, always go through the welcome kit that you get at the time of opening the account.

Common Online Banking Services

  • Transactional activities like funds transfer, bill pay, loan applications and transactions.
  • Non-transactional activities like request for cheque book, stop payment, online statements, and updating your contact information.

Online Banking Around the Globe

Country
Percentage of Online Bank Users
Norway
92%
Denmark
90%
Finland
87%
Sweden
86%
U.K.
68%
U.S.A
67%
India
51%
China
42%
Greece
25%
Bulgaria
5%

Online Banks Around the Globe

Banking over the internet has made life easy for users by providing online access to various banking services. But choosing the right bank can be hard. Here are nine banks from around the globe and a few pros and cons for each.

1. Simple

Simple is an American direct bank. It's based in Portland, Oregon. The company provides FDIC-insured checking accounts to US Citizens only through a partnership with The Bancorp and BBVA Compass and is part of the STAR network for surcharge-free access to around 55,000 ATMs.

Country of Origin: U.S.A

Type: Savings

Annual percentage yield (APY): 2.02% (changes over time)

Pros and Cons of Using Simple Bank

Pros
Cons
No monthly maintenance fees or minimum balances.
No way to deposit cash directly.
About 40,000 domestic ATMs available.
Simple's bill-pay feature can't process some payments, including taxes.
No overdraft fees.
Not Available Internationally — Unlike Chase or Schwab, Simple is only available in the U.S. They're focusing on the basics but they plan to expand internationally at some point.

2. Citibank

Citibank is the consumer division of Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City Bank of New York. Citibank provides credit cards, mortgages, personal loans, commercial loans, and lines of credit.

Country of Origin: U.S.A

Type: Savings

Annual percentage yield (APY): 2.36% (changes over time)

Pros and Cons of Using Citibank

Pros
Cons
Citibank has a large network of ATMs that you can use free of charge.
You can't open just a checking account or just a savings account. You have to open a "package," which includes both a checking and savings account.
You can make mobile deposits with the Citibank app.
The rates on their savings and CDs are on the low side.
You don't need a minimum opening deposit to open any Citi checking account package.
Even if you link an eligible deposit account to cover overdrafts, it will still cost you money.

3. PNC Bank

PNC is a bank holding company and financial services corporation based in Pittsburgh, PA. Its banking subsidiary, PNC Bank, operates in 19 states and the District of Columbia with 2,459 branches and 9,051 ATMs.

Country of Origin: U.S.A

Type: Savings

Annual percentage yield (APY): 2.35% (changes over time)

Pros and Cons of Using PNC Bank

Pros
Cons
Strong online and mobile tools, and many customer service options.
$36 overdraft fee can be charged four times daily.
9,000 fee-free ATMs and 2,600 branches in about 20 states and Washington, D.C.
PNC only operates in 19 states.
College students don't pay monthly fees.
You need at least $500 in your account to avoid fees if you don't use direct deposit.

4. Goldman Sachs Bank USA

The Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company headquartered in New York City. It offers services in investment management, securities, asset management, prime brokerage, and securities underwriting.

Country of Origin: U.S.A

Type: Savings

Annual percentage yield (APY): 2.25% (changes over time)

Pros and Cons of Using Goldman Sachs

Pros
Cons
Goldman Sachs has excellent rates on its savings account and CDs.
There’s no checking account or ATM network.
No overdraft fees.
No goal-setting feature.
No minimum deposit to open account.
You need an external account for transferring money, so expect delays when making any transaction.

5. Capital One

Capital One is a bank holding company that specializes in credit cards, auto loans, and banking and savings accounts. It's headquartered in McLean, Virginia. Capital One is ranked 10th on the list of largest banks in the United States by assets.

Country of Origin: U.S.A

Type: MMA

Annual percentage yield (APY): 2.00% (changes over time)

Pros and Cons of Using Capital One

Pros
Cons
No annual fee on credit card.
As the Platinum is geared toward people with average credit, it offers relatively low credit lines: its minimum credit line is $300.
When you pay your first 5 monthly payments on time, you'll be eligible to increase your line of credit.
The Platinum's high APR means carrying a balance on this card will result in having to pay a lot of interest.
No foreign transaction fee and no balance transfer fee.
In addition to having an "average" credit score, your income will need to meet a certain threshold.

6. Indianbank

Indian Bank is an Indian state-owned financial services company established in 1907 and headquartered in Chennai, India. It has 20,924 employees, 2,900 branches with 2,861 ATMs, and 1014 cash deposit machines. It is one of the top-performing public sector banks in India.

Country of Origin: India

Type: Savings

Annual percentage yield (APY): 2.35% (changes over time)

Pros and Cons of Using Indianbank

Pros
Cons
Knowledgeable agents
Poorly designed website.
Reliable ATM card
Less secure website.
Relatively high APY
Customer service is hit or miss

7. State Bank of India

The State Bank of India is an Indian multinational, public-sector banking and financial services statutory body. It is headquartered in Mumbai, Maharashtra. SBI is ranked as 216th in the Fortune Global 500 list of the world's biggest corporations of 2018.

Country of Origin: India

Type: Savings

Annual percentage yield (APY): 2.75% (changes over time)

Pros and Cons of Using State Bank of India

Pros
Cons
Qualified banking staff.
Online customer service can be spotty.
High APY.
Access to ATMs is more spread out.

8. Barclays

Barclays is a British multinational investment bank and financial services company. It is headquartered in London, England. Apart from investment banking, Barclays is organized into four core businesses: personal banking, corporate banking, wealth management, and investment management.

Country of Origin: United Kingdom

Type: Savings

Annual percentage yield (APY): 2.20% (changes over time)

Pros and Cons of Using Barclays

Pros
Cons
2.20% APY on savings, among the best you'll find.
No ATM network and only 5 branch locations for U.S. customers.
$5 nonsufficient funds fee; many banks charge $30 or more for similar fees.
No checking account.
High interest rates on CDs.
No cash deposits or withdrawals from ATMs.

9. HSBC China

HSBC Bank (China) was one of the first foreign banks to incorporate locally in mainland China (back in 2007). It is part of the worldwide HSBC Group and is wholly owned by Hong Kong-based The Hongkong and Shanghai Banking Corporation Limited.

Country of Origin: United Kingdom (China headquarters in Shanghai)

Type: Savings

Annual percentage yield (APY): 1.75% (changes over time)

Pros and Cons of Using HSBC China

Pros
Cons
HSBC often offers high cash bonuses to new customers for opening a new checking account (and meeting certain requirements).
HSBC's checking accounts come with some pretty steep fees. There is a monthly service fee, unless you can meet direct deposit and/or balance requirements.
HSBC is a global bank operating in 67 countries.
If you have a lot of money to park in a bank, other online banks offer better deposit rates, so your money can grow faster.
No ATM withdrawal fees worldwide.
Except for HSBC Direct's online savings account, the other accounts offer low interest rates.

10. E*Trade Bank

E-Trade offers an electronic trading platform to trade financial assets. These include common stocks, preferred stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed-income investments.

Country of Origin: United Kingdom (China headquarters in Shanghai)

Type: Savings

Annual percentage yield (APY): 1.75% (changes over time)

Pros and Cons of Using E*Trade Bank

Pros
Cons
E*TRADE fees are higher than many online discount brokerages.
E*TRADE's website is easy to navigate and has a great built-in investor education center.
You need a minimum of $500 to open an account on E*TRADE.
You can open and maintain checking accounts and IRAs, and even apply for a mortgage.
Fees are $6.95 per trade, which is more than competitors like TradeKing (now Ally Invest).
All traders have access to the basic research center, which features real-time quotes, interactive charts, and even tax advice.

FAQs About Online Banking

What are the risks of online banking?

  • Phishing: If you have an online bank account, you might fall victim to phishing. Phishing generally involves tricking somebody into clicking a link in an email message. The link often downloads software to a computer that can be used to gather sensitive information such as usernames and passwords.
  • Identity Theft: Even if hackers don't steal from your account, you can still have your identity stolen. This includes information such as your social security number and other identifying info. This info could be used to hack into your other accounts.
  • Pharming: While pharming is harder for hackers to carry out, it's more common than you'd think. Pharming occurs when hackers are able to hijack a bank’s URL. When you try to access your bank’s website, you get redirected to a fake site that looks like the real thing, but actually steals your information.

Are online banks safe?

As stated above, online banks come with potential risks. Make sure the online bank you use is FDIC insured. Banks are aware that they're a target for hackers, so they work hard to keep your money—and their money—safe.

How can I keep my online banking safe?

  • Confirm your online bank’s legitimacy: Read the information found on the site. Check whether or not it is insured with the FDIC. The FDIC has a tool that lets you search for banks, which is easy to access.
  • Protect your computer from hackers: Hacking attacks are not always directed at banks. In fact, many attacks are directed at customers. Make sure to have the latest virus and malware scanning software installed on your computer. You should also ensure that all the software you use on your computer has been patched with the latest updates.
  • Watch out for copycat websites: Be sure that you do not fall prey to sites that use a name that is very similar to your online bank's name. For example, BankofAnerica.com or Citigrop.com.

What Are the Safest Online Banks?

Bank
# of Stars
Synchrony Bank
5 stars
Capital One 360
5 stars
FNBO Direct
4 stars
Barclays
4 stars
HSBC Direct
4 stars
E*Trade Bank
4 stars
EverBank
3 stars

Is the Interface Easy to Use?

The user interfaces for online banks is usually super easy to use. Banking online means not worrying about trying to get to a building during bank hours of having to wait in line.

Do Online Banks Have Fees?

Most online banks don’t have a minimum deposit to start a checking account. Also, they usually don’t have maintenance fees. That said, you may run into some fees if you overdraft.

Is There a Limit to How Much I Can Deposit at Once?

In most cases, if your check is bigger than $5,000, you won’t be able to send it via picture. Unfortunately, that’s not very good news for small business owners or freelancers who make large sums of money in a single check. Direct deposit services work great, but they’re not always available. Sometimes, a traditional bank account is better for your deposits.

Can I Make Cash Deposits Through My Online Bank?

If your bank does not have a physical location, and you get tips or are paid in cash, depositing that money can be complicated. There are sometimes deposit-accepting ATMs that you could use, but if there are none near you, you’ll have to use a money order. You can also use a reloadable prepaid debit card.

Sources

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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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    • profile image

      atalya 

      13 days ago

      Common Online Banking Services

      •Transactional activities like funds transfer, bill pay, loan applications and transactions.

      •Non-transactional activities like request for cheque book, stop payment, online statements, and updating your contact information.

      does anyone have book/ journal resources about this kind of " Common Online Banking Services"

      Thank you

    • profile image

      Munezero 

      2 months ago

      10x for this information it help us to study

    • Jason D Koontz profile image

      Jason D Koontz 

      2 months ago from West Virginia

      Well written and informative.

    • profile image

      tanu 

      9 months ago

      This was helpful for my project. Thanks.

    • profile image

      11 months ago

      very useful and accurate

    • profile image

      dipika 

      15 months ago

      useful as well as useless

    • profile image

      dipesh 

      15 months ago

      very useful

    • profile image

      matthew 

      16 months ago

      cheers pal

    • profile image

      CHARAN KUMAR N 

      16 months ago

      Mine is SBI rupey card can I open internet banking

    • profile image

      Tanishqa 

      16 months ago

      It is very helpful for me thanks

    • profile image

      Palak Chauhan 

      18 months ago

      Thx it’s really really good and it helped me a lot

    • profile image

      timmywabalonglong 

      21 months ago

      thx great website

    • profile image

      puppy 

      21 months ago

      thank you

    • profile image

      guruprasad 

      22 months ago

      Thank you for your information about internet banking it more helpful information

    • profile image

      kaviya 

      22 months ago

      It useful to know about internet banking

    • profile image

      Ganga 

      22 months ago

      Thank you for giving good information

    • profile image

      junaid 

      23 months ago

      not bad doo some small points

    • profile image

      sokhela 

      23 months ago

      good info

    • profile image

      Vivek singh 

      23 months ago

      Thanks for the information

    • profile image

      hello 

      24 months ago

      Thank u so much for this information.it was very useful for me to get access to my exams.by the usage of this facts which i could study..

    • profile image

      N Yogesh Kumar 

      2 years ago

      Thank you so much for information

    • profile image

      AARADHYA 

      2 years ago

      VERY USEFUL TO ME

      THNX

    • profile image

      Prakriti 

      2 years ago

      Thanx for this imformation it was very helpful

    • profile image

      Ayush Roy 

      2 years ago

      Thank you for giving me the real disadvantages and the advantages of internet banking ...!!!

    • profile image

      ARUNABH TUSHAR 

      2 years ago

      Thanks for solving my problems, after read your article now i am going to use internet banking

    • profile image

      yash 

      2 years ago

      good info

      good thoughts

    • profile image

      Sai Bharat Jagtap 

      2 years ago

      Nice information

    • profile image

      Anjali thakur 

      2 years ago

      Nice information

    • profile image

      Soni 

      2 years ago

      It is useful for us

    • profile image

      Anjum 

      2 years ago

      Thank you sooooo much

    • profile image

      shipu 

      2 years ago

      thanks

    • profile image

      siri 

      2 years ago

      not bad

    • profile image

      sri 

      2 years ago

      nice

    • profile image

      Ayesha 

      2 years ago

      This is very useful and helpful to every one

      By using this we can save our time also and our work also finish soon.

      Thanks for this Facilities.

    • profile image

      Shubham M G 

      2 years ago

      it is very usefull and nice information

    • profile image

      ethan golding 

      2 years ago

      Very useful source, full of information!

    • profile image

      Antetukumpo 

      2 years ago

      very useful indeed. well organized and presented

    • profile image

      Antetukumpo 

      2 years ago

      very efficient and very accessible and easy

    • profile image

      mbuthi 

      2 years ago

      very useful indeed. well organized and presented.

    • profile image

      RAVINDER 

      2 years ago

      it is very useful for our life

    • profile image

      shivani 

      2 years ago

      it is very usefull and nice information.

    • profile image

      Kajal 

      2 years ago

      This is nice information.

      Thank's

    • profile image

      Kajal patil 

      2 years ago

      Nice Information

    • profile image

      Anonymous 

      2 years ago

      Can it be used to send money to all countries

    • profile image

      Radha 

      2 years ago

      It is very useful for people

    • profile image

      sachin at chiria 

      3 years ago

      It is very important for all

    • profile image

      Vidya 

      3 years ago

      it is very useful for all

    • profile image

      justicemalingwa 

      3 years ago

      it is to many peoples advantages

    • profile image

      Janaki 

      3 years ago

      Thanks for Information. But Plz give more points

    • profile image

      jeff marley 

      3 years ago

      hey!

    • profile image

      elvis 

      3 years ago

      best way to bank

    • profile image

      MD. JAFOR IQBAL 

      3 years ago

      it was very useful for me , Thank you very much

    • profile image

      michelle takyo 

      3 years ago

      e-banking is a very good system

    • profile image

      tamuyfguoi 

      3 years ago

      good

    • profile image

      Geetha 

      3 years ago

      e banking is difficult but for of emergency it very useful.............

    • profile image

      Geetha 

      3 years ago

      The first time using net banking is bit difficult.

    • profile image

      ewan may 

      3 years ago

      How is no on 40

    • profile image

      Mio 

      3 years ago

      Thank you for this helpfull information.

    • profile image

      sony rao 

      3 years ago

      internet banking is so fast and convenience transaction..it is very useful for me

    • profile image

      3G 

      3 years ago

      very useful, thank you

    • profile image

      Adithyan 

      3 years ago

      Very short and effective information's .Thank you

    • profile image

      mushaya abbie 

      3 years ago

      very useful, thank you very much

    • profile image

      VISHALINI DHARUMAN 

      3 years ago

      NO,I DON'T KNOW HOW TO USE E BANKING.BUT,I HAVE STUDIED THIS CHAPTER IN MY UG COURSE.

    • profile image

      pigeon 

      3 years ago

      really very helpful

    • profile image

      Jagjeet kataria 

      3 years ago

      It make easy life & save our precious time.

    • profile image

      brunomaizer 

      4 years ago

      thanks a lot

    • profile image

      priyanka 

      4 years ago

      yep, it was helpful but some features of net banking can be added to make it more appropriate

    • profile image

      peehu 

      4 years ago

      I used in very rare cases...

      And that time i got my best process by e banking....

    • profile image

      karthi 

      4 years ago

      very useful this page

    • profile image

      Husen basha 

      4 years ago

      Afcourse it is very helpful for all.

    • profile image

      anita saji 

      4 years ago

      This is very useful to me

    • profile image

      amulya 

      5 years ago

      this is advatage for me

    • tipstoretireearly profile image

      tipstoretireearly 

      8 years ago from New York

      Internet banking has important disadvantages. First, it can be difficult getting a bank or cashier's check if you don't have access to a bricks-and-mortar bank. Second, it can be difficult to get other personalized banking services such as signature guarantees. A good solution is to open a no-fee checking account at a local brick-and-mortar bank to get access to such personalized services, but do the majority of your banking online.

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