What is online banking? In India a few years back, this term was unheard of ..I remember visiting banks with my grandfather when I was a child. Those days the banks were a depressing place to be with the ambience being nothing to talk about and queues of impatient people.
At a particular branch my grandfather was treated with a lot of deference (maybe he was an important or a loyal customer) which meant faster services. Well elsewhere we were just commoners waiting for our turn in lines!
Today everybody has that choice…not having to wait in lines; thanks to alternate banking channels like online banking or internet banking.
Almost all banks offer their customers the option of online banking; the number and variety of services may vary. The penetration level of online banking may also vary with each bank depending on the customer profile, when the bank started with the services, the banks’ promotion of this channel etc.
Citibank which is one of the oldest MNC banks in India claims that over 40% of its customers access internet banking and 60% receive only e-statements. This not only saves cost but is also an eco friendly way. Cost of a transaction online is estimated to be one-eighth of the cost through traditional channels.
What is Online Banking and How Does it Work?
When you want to make a transaction you visit the bank branch; in case you use the online banking services you visit the bank’s website with the help of your computer and an internet connection.
You are allowed to login to the site and access your account with the help of your user id and password only. These are provided by the bank and the password must be chosen with care. The user id cannot be changed and remains same; the password must be changed after the first login and thereafter regularly. After you login you can choose from the available services and conduct your banking activity.
What all Can You Do Online?
Each bank may have a different set of services which are likely to be:
- checking your statement
- account opening(saving/Fixed Deposit/RD)
- transferring funds to accounts in same bank
- transfer money to other bank accounts
- pay bills for utility services/insurance premium etc.
- set up standing instructions for bill payment
- request for a gift cards/demand drafts/cheque book
- pay school fees
- book railways tickets and many more options.
- Some banks also allow you to link multiple accounts and multiple products from one bank to the same internet user id.
Example 1: ICICI Online Banking
ICICI offers a unique service branded as the Money manager which lets you access multiple products with a single user id. No need to remember multiple user ids and passwords. You may have a credit card and a savings account with ICICI Bank along with a car loan and a demat account.
All these can be linked to a single user id; apart from this you could also access your fixed/recurring deposits and current account (personal).
Example 2: SBI Online Banking
SBI has a very wide range of services, it has options like paying E-Payment of Motor Vehicle Taxes, access to pension slips, you can view your tax credit statement etc.
These options are in addition to the normal banking services like account opening fund transfer etc. It also offers online banking for the visually challenged.
Online banking has turned your bank into a financial supermarket; you can perform multiple financial transactions beyond the realm of banking.
Mr. Sharma, a senior citizen has just discovered the convenience of online banking. He pays his credit card bills, electricity bill online (no queues and no going out). He recently opened a senior citizen FD and now accesses his pension details also online.
He also accesses his home loan account details and has just decided to link his account to his online trading account and try his hand at online investing. You can get further details at – How online trading works?
How Safe is Online Banking?
Banks try their best to provide a safe baking channel to their customers; they use various features to the secure their websites and customer accounts. Some of them are:
- Virtual Keyboard
- Digital Certificate
- Secure Login
- Password expires after a time period
- Auto Block (password is blocked after multiple attempts to login with a wrong password)
But after all these features also online banking is susceptible to frauds (like phishing*) and misuse. As a customer it is your responsibility to read instructions properly and follow them. All banks give a lot of information about how to be safe while using internet banking.
They send you regular updates through mails and fliers and the information is available on their websites too. Following simple rules and being an alert customer can go a long way in making your banking safe.
What is online banking – Conclusion
Online banking is a fast, easy and convenient way of banking; it removes the barrier of time and place so make sure you are an alert and informed customer.
*Phishing is a scamming trick to try and lure unsuspecting customers to reveal their passwords and user name. It is a very common and a potent threat.