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The Advantages and Disadvantages of Internet Banking

Updated on March 23, 2017
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A former teacher of digital media studies in the UK, Paul now lives and works as a freelance writer in Florida, USA.

The number of people with internet bank accounts has exploded in recent years, with many people seeing it as an easier and more convenient way to control their personal finances.

Almost all banks now have online account options for their customers, allowing them to control such things as money transfers, and bill paying from home, work, or on the move, Smartphone apps have made the process even more easy to access.

There are downsides to doing your banking online too, however - customers who are not experienced computer users, for example, may have problems managing their account, plus there are also major issues involving internet security.

Here, in a list format, are the advantages and disadvantages of internet banking.

Advantages of Internet Banking

Once you are used to having 24 hour access to your account and get used to managing your financial affairs from home and work, it seems difficult to go back.  Waiting  in line to be served, or on the phone can be frustrating and time consuming.
Once you are used to having 24 hour access to your account and get used to managing your financial affairs from home and work, it seems difficult to go back. Waiting in line to be served, or on the phone can be frustrating and time consuming. | Source
  • Internet banking is convenient and quick compared to doing your banking in person or over the telephone. You never have to wait to be served at a bank counter, or work your way through the layers of questions that you often get with an automated phone service. If you know what you are doing, you can check your account balance, transfer money, etc in a matter of minutes when banking online.
  • Online access also gives you a sense of control over your account, as you can perform all your everyday banking tasks yourself, rather having to go through a bank staff member, which can sometimes be time-consuming and frustrating. You can also get an easier overview of your account, and search archives for older transactions.
  • You always have 24 hour banking with banking online. When visiting a bank in person, and sometimes with telephone services too, there are restricted hours of operation.
  • Banking can effectively be done paperless the vast majority of the time. No need for mountains of statements, letters, to be filed and stored for future reference. Some banks offer deals if you go paperless too.
  • Most banks now offer you smartphone apps, allowing customer to monitor and manage their finances on the move, as well as via a home or work computer.

  • Internet banking is especially useful and convenient for setting up and monitoring regular bill payments for utility services, rent, or mortgage payments etc.
  • It doesn’t matter where you are when you do your banking online - you can be in another part of the country to where your bank operates and still have access to your account, or even access your account from abroad for no extra cost.
  • Sometimes banking via the web is cheaper. This is because it costs the bank less in terms of staffing, property upkeep etc. You can therefore often get some great bargains with internet accounts.
  • It's often possible to get better interest rates through online banking. Some offers and deals are also only available online.

Online Banking, Is It Secure?

Disadvantages of Internet Banking

There are some cons of internet banking.  The dangers of identity theft and hacking make fraud easier in some ways, for example.  You also need to have a reasonable level of proficiency at operating a computer to manage your finances effectively.
There are some cons of internet banking. The dangers of identity theft and hacking make fraud easier in some ways, for example. You also need to have a reasonable level of proficiency at operating a computer to manage your finances effectively. | Source
  • You really need to have at least a basic level of internet and computer experience, if you wish to do your banking online. People who are used to traditional banking will find that the online version is completely different. Using a website is not straightforward to a novice and often the help and support from the bank is severely limited (banking websites are often more catered towards selling customers extra banking services, rather than helping them to use the website).
  • Fraud and ID theft are the biggest causes of concern for many people, although it’s fair to say in practice that more people are defrauded through scams where fraudulent emails ask them to sign into their account on counterfeit websites (giving their name and password), known as "phishing", rather than by having their accounts hacked into by outsiders. Financial organizations do lose sensitive information sometimes, however.
  • It can be easy to lose track of automated bill payments. You set them up and then don’t monitor them. Six months later you may come back to find that your bill has changed and you have been overpaying. Alternatively, sometimes you have more money debited from your account than you were expecting.

  • Banking online is completely impersonal. As well as making the experience less friendly, this can create problems with more complex transactions such as applying for a loan. The ability to convey subtle information is often lost when banking online and it is also difficult to know if the person at the other end grasps what you are trying to say.
  • Internet banking websites are often set up to prioritize advertising and sell extra banking services, rather than to help the customer use the website. Adverts often take up most of the spare space on the page, while links to help and support, or contact details for speaking to a member of staff in person are small text links that can be hard to find.
  • Online banking also relies on you having at the very least, a working computer and a reliable internet connection. If your computer is unreliable or old, or your connection speed is slow, or patchy, it is a difficult service to use.

Internet Fraud and Scams / Documentary / Video

Brief History of Internet Banking

Bricks and mortar banks are gradually disappearing from town and city centers, as financial transactions are increasingly carried out online.  Some customers miss the personal touch that traditional banks offer, as well as the expertise of the staff.
Bricks and mortar banks are gradually disappearing from town and city centers, as financial transactions are increasingly carried out online. Some customers miss the personal touch that traditional banks offer, as well as the expertise of the staff. | Source
  • The earliest version of internet banking began in New York City in 1981. The vast majority of customers did not take to the innovations, however.
  • The first American financial institution to to offer internet banking to all of its customers was the Stanford Federal Credit Union in In October 1994. Presidential Bank and then other banks followed suit not long after.
  • The first successful internet-only bank was called NetBank and was founded in 1996. It operated until 2007.
  • The advantages of online banking gradually became more apparent to both customers (e.g. more convenience and often better interest rates) and by 2000, the practice had become mainstream.
  • Bank of America had more than 3 million online banking customers in 2001, although that was still only a fifth of its total customers.
  • By 2010, many banks had introduced smartphone apps for customers wishing to do their banking on the move.

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© 2014 Paul Goodman

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