Advantages and Disadvantages of Internet Banking

Almost every bank, credit union or building society offers internet services in the 21st Century. The use of internet banking can provide one with a helpful resource for paying bills, making transactions, and different types of savings accounts, such is its designed purpose (besides providing an added way for your bank to stay competitive); however, it can also be a frustrating experience for those uncertain of modern technology.
Banking customers are a wide cross-section of the public, constituting the majority of working adults: naturally, therefore, they include those who are internet-au-fait, and also those who are comfortable with the old-fashioned world of high street banking transactions and have no particular desire to conduct their banking custom over the internet.

However, there are advantages to using internet banking to be considered for anyone who is a customer of a bank: the opportunity to check statements online without having to spend money on overpriced telephone banking calls, for example, is an obvious benefit. There is also the fact that one can avoid the frustrations of waiting in long queues at their lunch hour, or that of having to go into a bank to arrange a payment to a creditor or business: payments can be arranged very efficiently through the world of virtual banking, at any time, at the click of a mouse.

Major concerns amongst those customers who find the internet difficult to use is that many bank sites do not have a more user-friendly version of their normal website to help those who are not so comfortable online; rather, the typical sites that represent banks afford much space to advertise reduced rates for mortgages, or to try to attract custom for ISAs and other offers in attention-grabbing adverts on their home page. A typical ‘help and support’ icon or a ‘contact us’ link are to be found in small print in less noticeable areas of the screen.

Security, of course, is the primary concern for those who are wary of taking their banking online: there have been cases of successful breaches of some bank websites’ security (although truly rare) that shake the prudent and the under-cautious alike. Threats such as those may be worth heeding, whilst understanding that banks are fully aware of such concerns and use sophisticated countermeasures to prevent and halt such attacks.
More common security risks generally stem from customer-targeted campaigns by the cyber-criminal: deceitful emails claiming to be from your bank asking for you to sign into a false website, or viruses and spyware that seek to raid your computers information in order to retrieve your security details. These are avoidable tricks (most malicious “spam” emails are filtered by any modern email hosts, like hotmail), and identity theft is a matter that banks (and the police) take extremely seriously and mostly provide excellent help to combat, including security questions and checks that should eliminate unwanted access by outsiders. The most serious threat- of malware and other viruses- are able to be combated by way of trusted security programmes like McAfee or Norton, and one should never be without such support. The banks themselves also offer help, including tips and advice on their websites and some even offer downloadable software for free to fight security threats.

One of the more emotionally off-putting downsides to internet banking for many customers who might want to engage with the service, is that if one is for example applying for a loan, it is not possible to explain the subtleties of your business life to a form, and for most, the required exercise of patience for filling out and submitting lengthy paperwork is far less fluid in front of a screen than it may be in the company of a person who can explain technical terms and discuss your needs intelligently in a way that a faceless web service cannot.

Having looked at these negatives, it is worth examining some other reasons why, according to London’s Financial Times, approximately 50% of bank customers use internet banking services.

One of the major advantages of going online is that the very medium of this kind of banking provides the user with unique benefits: these tend to be rather technical, for example directly importing data, from some sites that have this capability, into one’s accounting software.

Furthermore, for those with more than one account or even bank, internet banking also allows for the highly useful option of being able to view and compare all of one’s accounts and related material online, without having to request information from each account or bank separately; an effort-saving benefit for those who live busy and fast-moving lives.
There is also the modern phenomenon of banks that only provide service online entirely. One can join these banks without ever having to set foot in a building belonging to the company. These companies abide by the lawful rules of trading, but are much harder to pursue if they do you wrong. Some sites are indeed bogus, and you should check their credentials before joining. There are incentives to switching online: in most cases these banks pass on the savings they make in removing labor costs by offering higher interest rates on savings accounts and lower loan charges and banking fees. However, the quality of service is likely to be significantly lower than rival bricks-and-mortar banks that also compete online.

On balance, as with any choice regarding engagement with services provided by a company, the nature of one’s own needs and what one is comfortable with are the decisive factors as to whether online banking is for you. Millions use online banking, because it suits their lifestyle and working needs, fewer have switched to an e-bank, whilst many remain contented to do business the normal way. The major disadvantage of banking online is the security threat: identify theft is big (criminal) business, but as long as you take no serious risks, especially by ensuring that you always use a secure internet connection and have an antivirus program on your computer, you should be safe.
However, if the benefits offered by online banking simply don’t appeal to you or offer no real financial incentive, it may be best just to continue with what you are comfortable with.

If you are undecided about going online, it is worth talking to a customer service employee of your bank, credit union or building society, or visit an independent financial advisor to assess whether banking over the internet is right for you.

Jim Dean is part of a blogging team who write about finance and money for clients such as Ulster Bank – who themselves offer Internet banking as well as much more. I also write about financial news at Money Matey