Advantages & Disadvantages of Internet Banking

by Neil Kokemuller ; Updated July 27, 2017
A woman is holding her credit card next to her laptop.

Internet banking has expanded opportunities for consumers and businesses to conduct financial activity. Flexibility, simplicity, time-savings and cost-savings are other advantages. Security concerns, inability to handle cash and transaction limitations are among its primary drawbacks.

Simplicity and Flexibility

Many find online banking more convenient, flexible and simpler to manage than traditional banking. You can transfer money between accounts and make bill payments from the comforts of home. Many banks also have mobile applications, which allow you to scan and deposit checks wherever you happen to be. Online banking also allows you 24/7 anytime access to your balances and transaction records.

Time-Savings and Cost-Savings

Every time you transfer funds electronically or make other online or mobile transactions, you effectively save a trip to the bank. Online banks also offer online account enrollment for many products, which means you don't even have to visit a physical bank branch to open new checking, savings, credit card or brokerage accounts. Paying bills electronically minimizes use of costly paper checks, envelopes and stamps. Because online banking is mostly automated, banks have fewer costs relative to a brick-and-mortar facility. Therefore, you avoid some administrative and account maintenance fees banks charged in the past to cover such things as check processing, customer service and statement printing.

Security Concerns

Identity theft is a major social and criminal problem. While many online banks have elaborate security systems in place, there is no foolproof protection against hackers and thieves. In many cases, hackers have as much knowledge about your bank's security equipment and tools as the people who put them in place. Therefore, the private and confidential data banks hold on customers is at-risk to thieves. In addition, hackers can siphon off your funds into their own accounts. While your liability for such criminal acts is limited, it's still a major inconvenience to correct the damage.

Transaction Limitations

Despite all of its conveniences, there are certain things Internet banking isn't capable of doing. One glowing deficiency is its inability to handle cash. You can't withdraw money from an online banking portal and you can't make cash deposits from one either. Email customer service processes are less timely than trips to the bank in many cases. Some banks do offer real-time chat service, though. Also, delays in deposit and withdrawal transactions appearing in your account make it difficult to get real-time balance information.

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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