Pros and Cons of Online Banking

Updated on April 8, 2018
Beth Eaglescliffe profile image

I write about employment issues, ways to earn money and how to get best value when spending it.

Online e-banking makes it easy to transfer money.
Online e-banking makes it easy to transfer money. | Source

What is Online Banking?

Internet or e-banking means managing your bank account online. When you open an online account, you undergo the same security checks as you would for a high street branch, but all (or almost all) of your dealings with the bank are carried out via the internet.

For people who are internet savvy, switching to online banking is a no-brainer. You can access your account 24/7 making it easy to move your money, check your balance, even talk to the bank via online chat. If you find it hard to get to a physical branch because you work long hours, then using internet banking could be a life-saver.

Pros and Cons of Internet Banking

Convenience: open 24/7
You check your finances way too often!
Environmentally friendly: saves paper
No paper trail of transactions
Saves time: no parking issues
No face-to-face contact
Saves money: better interest rates
Credit scoring may be tighter
Several layers of security
Phishing scams

The Basics of Online Banking

Internet Banking is Open 24/7


If you are working full time or do not drive, it can be difficult to get to a bank during opening hours. Or perhaps you live out of town in a rural isolated settlement? The big advantage of online banking is that you can access it wherever you have an internet connection. There are no time restrictions as an internet “branch” is always open for business.


I find checking my bank balance becomes addictive. I glance hopefully at my cellphone or laptop every few minutes for unexpected payments. (There never are any but I keep looking anyway.)

You can check your bank account balance 24/7.
You can check your bank account balance 24/7. | Source

Save Paper and Save Trees


You can reduce the amount of paper you use by switching to e-bills. Chances are you will also save money by paying this way too. Utility companies and others often give a discount if you operate your account online. They save postage, paper and staff time by sending out accounts electronically. Some of these savings are passed to their customers. You can feel good about banking online; you are helping to save the planet and saving money at the same time.

You can store data (information) at home on a USB stick or keep it in a virtual environment in the “cloud”. This can be easily accessed should you need to produce records for tax purposes.


Tax authorities require you to keep accounts for at least the last 7 years. Being old school, I feel happier having a paper copy of my records. I am trying to get into the habit of backing up data regularly, so as not to delete it accidently. For the time being I still like the reassurance of printing out bank statements regularly.

Banking online saves time and money.
Banking online saves time and money. | Source

Save Time


Internet banking means all transactions are carried out in the comfort of your own home. You do not have to search for a parking space, battle rush-hour traffic or waste time in a queue for a busy bank teller. The time you save by using online banking could be spent with your family or doing a hobby.


There is no face-to-face contact with bank staff when you use an online account. You may miss the personal attention that comes with a high street branch.

To withdraw physical notes and coins you will need to use an ATM or visit a branch in person. Otherwise all your transactions will have to be e-payments.

Save Money


Online banks have lower overheads than those with a traditional branch network. They are thus able to offer better interest rates to both savers and borrowers compared to competitors.

If you are a borrower, you can use email or text reminders to stop your account going overdrawn. Taking prompt action on receipt of an alert can prevent overdraft charges arising.

You can also save money by using online bill-pay rather than paying accounts by check.


Internet banks cherry-pick who they lend to. Credit scoring of potential borrowers is tighter. Only those who are a good credit risk are able to benefit from the lower interest rates on offer.

Five models and three different generations of security token devices for online banking. The newer models are in the foreground.
Five models and three different generations of security token devices for online banking. The newer models are in the foreground. | Source

Online Data Security is Crucial


Banks have secure systems in place to protect your personal information. All banks are aware of the potential for accounts to be hacked. They have security checks to prevent fraudsters accessing your money. They use a minimum of a 2-step log-in and many banks use 3 or 4-step log-in process. These log-in steps consist of some or all of the following:

A username

A password (which only you know and should be changed regularly)

A captcha

A text to your phone with a one-time password

Answer a security question

A card-reader security device (in which you place your bank card to obtain a one-off code to enter online)


Scammers know that the weak link in the security chain is you, the customer. They may call pretending to be your bank and ask you for log-in information. Your internet bank will never do this. The NatWest bank recommends you follow the tips below to avoid being conned.

The best way to protect yourself from fraud is to be aware, so here are 4 top tips:

1. Never disclose your full Online Banking PIN or password.

2. Never disclose card reader codes over the phone under any circumstances.

3. Never transfer money from your account after being instructed to do so.

4. Never allow remote access your computer when someone calls you unexpectedly.

— NatWest Bank: Tips to help you stay safe Online

How to Bank Safely Online

Use of Internet Banking Continues to Rise

In UK, online banking is now used by the majority of account holders. The proportion of people using internet banking has risen from 30% in 2007 to 60% in 2016.

In US, the figures are similar. Online banking penetration was 50% in 2013 and is expected to exceed 60% by 2018.

(Statistics from


Submit a Comment

  • Joe Rosenberg profile image

    Joseph L Rosenberg 8 months ago from florham park, NJ

    I'll reconcile my bank regularly having online access, won't have to wait until the end of the month to see if anything unusual pops up.

  • Coffeequeeen profile image

    Louise Powles 8 months ago from Norfolk, England

    I do have online banking, but only use it now and again to check my account. I usually go in the bank though.

  • annart profile image

    Ann Carr 8 months ago from SW England

    Good information and advice here. I bank online but also have an account with another where I can do transactions as well as go into the local branch, the best of both worlds!

    It is very handy and I like the ease and speed. I can always phone should there be a power cut!