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Pros and Cons of Online or E-Banking

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 and pay bills.

Online e-banking makes it easy to transfer money and pay bills.

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-changer. You can manage your funds from anywhere. E-banking is a cost effective way for banks to do business and is a convenient service for most customers.

Pros and Cons of Internet Banking

Advantages of Banking Online

  • Convenience; the internet is open 24/7.
  • Mobile capability; bank on-the-go via your smartphone or laptop.
  • Environmentally friendly, saves paper; receive all your correspondence by email and text.
  • Saves time; bank whenever and wherever you want, avoid parking issues.
  • Saves money; e-banks often offer better savings and mortgage interest rates.
  • Several layers of security; password plus phone ID required to manage account.

Disadvantages of Internet Banking

  • You check your finances way too often!
  • No paper trail of transactions; you are reliant on emails and texts.
  • No face-to-face contact; this is a more impersonal service.
  • Credit scoring may be tighter; online banks cherry-pick their customers.
  • Phishing scams; be wary of unexpected emails asking for password and other bank account details.

Internet Banking is Open 24/7


If you are working full time or don't 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.)

Digital Banking Means Mobile Convenience


You can check your bank account from your cell-phone, tablet or laptop. E-banking gives you maximum accessibility to your finances. Providing you have a secure internet connection, you can pay bills, transfer money online or chat to your bank via the internet where ever you are on your travels.

If you have several checking and savings accounts you can keep track of your spending with this useful tracker app. The app makes household budgeting and keeping your finances in order very easy.


Not all internet connections are secure. Public wi-fi networks can be hacked. It's easy to become complacent and leave your account vulnerable to attack. Once a hacker has your bank password and log-in details, they can steal your money and empty your checking and savings accounts.

Use your smartphone for convenient contactless payments.

Use your smartphone for convenient contactless payments.

Save Paper and 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.

Online Transactions Save Time


Internet banking means you can check your balance, and transfer money to others in the comfort of your own home. You don't have to search for a parking space, battle rush-hour traffic or waste time in a queue for a busy bank teller.


There's 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'll need to use an ATM or visit a branch in person. Otherwise all your transactions will have to be e-payments.

Save Money By Using e-Banking


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

If you're 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 with a good score can benefit from lower interest rates on offer.

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.

As banking moves online, most bills are now paid electronically. There is less need for people to carry cash.

As banking moves online, most bills are now paid electronically. There is less need for people to carry cash.

NatWest Bank's Top Tips to Stay Safe Online

  1. The best way to protect yourself from fraud is to be aware.
  2. Never disclose your full Online Banking PIN or password.
  3. Never disclose card reader codes over the phone under any circumstances.
  4. Never transfer money from your account after being instructed to do so.
  5. Never allow remote access your computer when someone calls you unexpectedly.

Is E-Banking the Same as Internet and Online Banking?

Internet and online banking as terms used to describe a method that banks use to connect to their customers. Other channels would be postal banking, phone banking, and branch (in person) banking.

Traditional banks started with high street branches and then expanded into the internet to offer customers online access to their accounts. E-banks have taken this one step further and carry out all customer communication and account transactions via the internet. They do not have a physical branch presence.

E-banks have much lower overheads than old-fashioned banks. They don't need to maintain a network of high street buildings. They also employ fewer staff. They may pass these savings on to customers by offering lower account charges.

Check Your Online Account Regularly

E-banking is so easy, it's easy to forget about it. Payments into and out of your account happen without you having to do anything. This is all well and good if they are authorized payments, like direct debits, or your monthly paycheck. But beware of unauthorized transactions.

Fraudsters may try to hack your account and send a small test payment to see if you notice. If you don't query it with your bank, you may find that a few months later, when you have just received your salary, the same fraudsters will make an unauthorized withdrawal and steal your hard-earned cash.

To prevent this happening, check your online banking account regularly. I suggest you do this at least once a week. That way you can stop scammers before they have a chance to hurt you.

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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