The evolution of technology has changed the norm in many sectors and banking is one of them. Banking is no longer dependent on human manpower. We no longer need to make long queues at the bank to send money, deposit cheques, pay our bills, check our account balance or even take out a loan. The online banking system has made banking easier.
Online banking is carrying out financial transactions via the internet by using a digital device like a computer or smartphone. The traditional banks like BancorpSouth and BanRegio have promoted online banking by creating apps and online platforms for their customers. It is not surprising that many people opt for this banking system because the use of digital devices has increased. What are the pros and cons of this type of banking? Read along to find out.
Pros of online banking
Easy to set up and use
Online banks are user friendly. More often than not, we do not need any assistance when creating an account because the instructions are clear. Additionally, we can open an account any day and any time. The accounts are easy to manage thus giving us a chance of being in charge of our finances. Planning ahead and budgeting is also possible. This is because we can set up automatic payments for our bills and keep an eye on our transactions by checking our transaction history and account balance.
There are quite a number of fees that we usually pay when using traditional banks. Some of them include monthly maintenance fees, overdraft fees, non-sufficient funds fees and withdrawals fees. Most online banking platforms do not charge monthly fees. Moreover, for some of them, there is no minimum account balance required. As a result, we do not have to worry about paying fees like the non-sufficient funds fees.
Higher interest rates
Online banking is not only advantageous to the customers but also to the platform providers. There are lower fees that the providers need to cater for due to the absence of a physical institution. For example, they do not need to worry about employing a large number of people or managing different bank branches. Consequently, they can offer higher interest rates to their customers. In most cases, the APY of the savings accounts on an online banking platform is usually higher than that of a traditional banking system.
It is fast
Long gone are the days when we would need to make a queue at the bank just to find out our account balance or transaction history. We can simply log into our online account and find this information. This process takes a few minutes.
Cons of online banking
Lack of one on one assistance
Although we would like to manage our finances on our own, not all of us fully understand financial matters. As such, we may need assistance in one matter or the other. When this is the case, it is better to have a one on one discussion with an expert in that area.
Some of the online banking platforms do not have physical offices where we can go to get the assistance that we need. Instead, the customers can get assistance by emailing the customers service office or calling them. At times the line is busy or unavailable and the customer service agent may take a long time to reply to the email. The downside of this is that the customers may not get the assistance they need at the appropriate time and this can be frustrating.
Impossible to deposit money
As expected, it is impossible to deposit cash directly on an online platform. For cash deposit to be possible, we are required to go to the bank. We cannot automatically deposit funds online. This process is still dependent on traditional banks.
No ATMs for online bank
Even though it is possible to withdraw money from an online bank using an ATM, most of the online banks do not have specific ATMs where the users can withdraw or deposit funds. The ATMs that can be used are those that have been set up by the traditional banks.
Why online banking institutions need cyber security
The obvious advantage of cybersecurity is the protection of customer assets and transactions from fraudulent individuals and groups.
Since stolen PII can be redirected for so many malicious purposes, even banking institutions have trouble recovering data.
When cyber attackers take banking customers’ data hostage, they have no option but to pay hundreds of thousands of dollars to recover data. Even when the data gets released, a cyber attack shakes customers’ trust in the security systems of the bank.
The fastest growing and most expensive cybercrime segment is information theft.
At Cybolt, we aim to solve all problems related to digital risk management and cybersecurity through a one-stop-shop. We partner with different security niche leaders under a single umbrella that covers all your security concerns – whether you are considering transforming to the digital platform or already on it.
Just like every cloud, the online banking systems have a silver lining. Although online banking has many advantages over traditional banking, it cannot stand alone. The online banking system still depends on traditional banks in a number of areas like cash deposits and withdrawals. The good thing is that we can use these two banking systems at the same time.