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.
Benefits of Internet banking are that it helps save you time and money and provides you with simple and flexible ways to access your account and conduct transactions. Some disadvantages are that Internet banking is vulnerable to security risks and comes with limitations for transactions.
Pro: Simplicity and Flexibility
Many people 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 your 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.
Pro: Time 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.
Con: 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.
Con: Transaction Limitations
Despite all of its conveniences, there are certain things Internet banking isn't capable of doing. One glaring 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 services, though. Also, delays in deposit and withdrawal transactions appearing in your account make it difficult to get real-time balance information.
- Best Online Banks and Rates - July 2020 | US News Money
- Online Banking: Why Bank Online with Ally? | Ally Bank
- AccountNow: 4 Advantages of Online Banking
- Consumer Financial Protection Bureau. "Online and Mobile Banking Tips for Beginners." Accessed Aug. 19, 2020.
- Ally Bank. "Ally Bank Asks: Why Has Branchless Banking Become So Popular?" Accessed Aug. 19, 2020.
- J.D. Power. "2020 U.S. Direct Banking Satisfaction Study." Accessed Aug. 19, 2020.
- American Bankers Association. "Survey: Bank Customers Preference for Digital Channels Continues to Grow." Accessed Aug. 19, 2020.
- Chime. "Banking With No Hidden Fees and Free Overdraft." Accessed Aug. 19, 2020.
- Capital One. "What Is Mobile Deposit?" Accessed Aug. 19, 2020.
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.