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Advantages and Disadvantages of Internet Banking

Learn all about the pros and cons of internet banking.

Learn all about the pros and cons of internet banking.

What Are the Advantages of E-Banking?

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


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 include funds transfer, bill pay, loan applications, and transactions.
  • Non-transactional activities include requests for cheque books, stop payment, online statements, and updating your contact information.

Online Banking Around the Globe

CountryPercentage of Online Bank Users





















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: USA
  • Type: Savings
  • Annual percentage yield (APY): 2.02% (changes over time)

Pros and Cons of Using Simple Bank


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: USA
  • Type: Savings
  • Annual percentage yield (APY): 2.36% (changes over time)

Pros and Cons of Using Citibank


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: USA
  • Type: Savings
  • Annual percentage yield (APY): 2.35% (changes over time)

Pros and Cons of Using PNC Bank


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: USA
  • Type: Savings
  • Annual percentage yield (APY): 2.25% (changes over time)

Pros and Cons of Using Goldman Sachs


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: USA
  • Type: MMA
  • Annual percentage yield (APY): 2.00% (changes over time)

Pros and Cons of Using Capital One


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


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 was ranked 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


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


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


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


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.

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, or

What Are the Safest Online Banks?

Bank# of Stars

Synchrony Bank

5 stars

Capital One 360

5 stars

FNBO Direct

4 stars


4 stars

HSBC Direct

4 stars

E*Trade Bank

4 stars


3 stars

Is the Interface Easy to Use?

The user interfaces for online banks are usually super easy to use. Banking online means not worrying about trying to get to a building during bank hours or 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.


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.


atalya on July 01, 2020:

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

Munezero on April 30, 2020:

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Jason D Koontz from West Virginia on April 18, 2020:

Well written and informative.

tanu on October 17, 2019:

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CHARAN KUMAR N on March 01, 2019:

Mine is SBI rupey card can I open internet banking

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not bad doo some small points

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AARADHYA on June 23, 2018:



Prakriti on June 22, 2018:

Thanx for this imformation it was very helpful

Ayush Roy on June 09, 2018:

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

ARUNABH TUSHAR on April 16, 2018:

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

yash on March 12, 2018:

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Anonymous on September 13, 2017:

Can it be used to send money to all countries

Radha on August 27, 2017:

It is very useful for people

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It is very important for all

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it is to many peoples advantages

Janaki on May 17, 2017:

Thanks for Information. But Plz give more points

jeff marley on March 02, 2017:


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michelle takyo on November 23, 2016:

e-banking is a very good system

tamuyfguoi on November 14, 2016:


Geetha on November 12, 2016:

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

Geetha on November 12, 2016:

The first time using net banking is bit difficult.

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How is no on 40

Mio on November 01, 2016:

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sony rao on October 31, 2016:

internet banking is so fast and convenience is very useful for me

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brunomaizer on July 05, 2016:

thanks a lot

priyanka on June 10, 2016:

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

peehu on May 30, 2016:

I used in very rare cases...

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

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amulya on July 05, 2015:

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tipstoretireearly from New York on June 04, 2012:

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.