An Introduction On Pros and Cons of Online Banking

Across the world, online banking has served a great role. Online banking has allowed banking to be much more quick and efficient. Unlike with banks in the past, many online banks do not have physical branches and only operate from a headquarter. With the advent of online banking many banks began to offer services that they could not previously offer customers. These additional services have made banks much more competitive with one another and have given customers more options when it comes to choosing a bank that is right for them.

Pros of Online Banking

Flexibility

The key trait of online banking is the flexibility that it has created for people. Customers can now bank and pay bills from the convenience of their homes, through the use of a computer, or while outside, through the use of a cellphone. When it comes to bills, customers can even set up automatic payments to eliminate late payments and late fees. Mobile banking allows customers to do things such as make account transfers, pay bills, and check their balances all from their phones. Visiting a physical bank branch is no longer the necessity that it used to be.

Interest Rates

Many online banks offer customers competitive interest rates that far surpass the interest rates paid by larger national banks. Whereas many large banks still pay their customers a small fraction of 1%, numerous online banks pay around 1% or more for customers who choose to save money at their banks. With changing interest rates and the creation of new online banks, many online banks are continually raising the interest rates that they are willing to pay in order to attract new customers and remain competitive.

Customer Service

Customer service, along with the banking industry, has been changing as time has gone by. Many larger national banks have been struggling to keep their customers happy due to poor customer service. Many online banks, on the other hand, understand what their customers need and have made customer service easily accessible to their customers. Through telephone service, email service, and online chats, online banks offer customers multiple mediums in which they can receive assistance. Additionally, several online banks offer 24-hour customer service so that customers can contact the bank whenever their schedules allow for it.

Cons of Online Banking

Security

The biggest worry that most people have about online banking is the nature of its security. Due to the very real threat of computer hacking many have become afraid that they will become victims of identity theft. Though banks spend large sums of money to ensure that their sites and apps are very safe, there have been many instances where lists of people's identities have been created and sold to third parties. The banking industry is continually improving and new features are continuously being added to ensure that customers have a safe experience with their chosen banks. Though there will always be risks with online banking, and banking in general, these risks are quickly being assessed and mitigated.

Liquidity

Though physical banks can experience service disruptions, online banks are more susceptible to experiencing technical difficulties. These difficulties, when they do happen, can make it very difficult for customers to complete their transactions. To make matters worse, when most customers face these difficulties they begin to call customer service which can make it difficult for other customers to receive help. Phenomenon such as glitches, lagging, and power outages can make it harder for customers especially when doing international business where time may be of the essence. Additionally, unlike in a traditional bank where you walk into the branch and can immediately complete a transaction, many online banks require some sort of wait period before a transaction is successfully completed; this wait period can be a matter of hours, days, or even weeks.

Customer Service

Many newer and smaller banks are praised for their excellent customer service capabilities but larger banks still struggle in this realm. Several large banks do not offer quick customer service like their smaller counterparts, which can make it very difficult for customers who have issues that need to be solved immediately. In fact, some banks have increased the amount of steps required before a customer can talk to a bank representative, favoring automation over live customer service. This increase in automation has in turn made it more difficult for many customers who need to be guided through certain steps or who help from a real person.