How Online Banking Works

  1. Opening Accounts

    • Opening an account for an online bank requires the account holder to either sign up at a local branch, send in a paper application or apply directly using the online banking website. Typically, the applicant will be required to supply a full name (including a middle name), date of birth, personal address and telephone contact information. He will also need to provide a Social Security number (or government identification), work telephone and a driver's license number or military identification with issuing state and expiration date. Several days are required to load the information and set up the account to ensure the online security checks are working properly. Most banks have the option of accessing the account by cell phone, computer or PDA.


    • Once the general account has been set up, the user is able to select features. Users enter by logging onto the main site and entering a password. Access is then available to checking and savings accounts. Banks allow account holders to transfer money between savings and checking or checking to checking. This can also be done between accounts at different banking institutions. If the account is used for online and paper, many banks offer online scans of paper checks. Most banks also offer bill-paying services. Integrated budgeting and copyrighted services, such as Wells Fargo's service called "My Savings Plan," are available from many banks. This service allows a set amount of funds to be removed each month. Many banks, including Merchants & Southern Bank, allow the account holder to integrate files from Quick Books, Microsoft Money and Quicken into their online account.


    • Banks require security information to verify the user. The mother's maiden name or the last home address is usually used. Many banks allow users to also record a security word. This information is used if the bank believes that account security has been breached. A telephone call from an individual banker will substantiate identity and the account will then be reopened for online access. Passwords are typically issued using a combination of letters and numerals, but these may be changed once the information arrives via snail mail at the physical address listed in the contact information. Many banks also allow the user to select an online security image (called a security or site key) as a form of online bank identification. The site key is one way to quickly identify an authentic banking site. Another way online banks incorporate security is with the use of secure websites, which use special security programming to block others' viewing information and are easily identified by the use of an "s" in front of the web address.


    • One of the few transactions that online banking is not able to accommodate is a cash withdrawal. If the online bank partners with brick and mortar banks as part of a cooperative such as Star, LINK, PULSE, or Plus, then ATM cash machines displaying the appropriate affiliation may be used locally to obtain cash from the online account.

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