Advantage & Disadvantage of Online Banking
Online banking allows customers to complete their financial transactions over the Internet, which they can do from the comfort of their own homes. Utilizing the latest in computer technology, online banking is designed to bypass those unfavorable aspects of traditional banking. These include the time wasted waiting in line at a branch building and the excessive use of paper. While Internet banking seems poised to be the future of the world's financial systems, it still has its disadvantages, especially when it comes to keeping financial information secure.
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Facts
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Online banking--also known as home banking, electronic banking or Internet banking--is a service offered by most national banks as well as many regional and smaller banks. Banks that provide the service are sometimes called "brick-to-click" banks, indicating that the bank is a physical building as well as a provider of online banking. "Brick-and-mortar" banks do not provide online banking, while virtual or online banks have no physical branch at all. Although virtual banks may save on teller and building costs (and pass those savings on to you), they do not own any ATMs, which means customers may pay a surcharge for every ATM withdrawal.
Convenience
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One of the greatest advantages of online banking is that it is available 24 hours each day, every day. Even if an online banking customer is out of the state or even the country, he can log on to the site and complete transactions. The service is great for people who work during normal bank hours or who have disabling health problems. However, with most banks, registration for online banking requires you to fill out a form at a bank branch and provide ID. Also, there is often a sign-up fee.
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Efficiency
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Online banking customers can view and manage multiple accounts, including securities, CDs and IRAs, all from one site. Most services include sophisticated financial tools, such as stock quotes, portfolio managing programs and rate alerts. These tools are supposed to help you manage your finances. However, they are often confusing, and adding to the problem are updates and site changes, which can add new features and rearrange familiar ones.
Security
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In general, online banking is very secure, but this does not mean it is always secure. Identity theft is on the rise, and online financial and personal information is always at risk. It is prudent to make sure the online banking site you are using has a legitimate security certificate, and with virtual banks it would be wise to make sure your deposits are insured by the Federal Deposit Insurance Corp.
Customer Service
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The customer service provided for online banking will often require navigating phone menus before a person ever speaks to you live. This can be frustrating and time-consuming. Many people are comforted by having tellers to talk with face-to-face, and that is why they complete transactions at branch locations.
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