E-Banking or Internet banking
Online
banking also known as internet banking, e-banking,
or virtual banking, is an electronic payment system that enables
customers of a bank or other financial institution to
conduct a range of financial transactions through the financial
institution's website. Internet banking is a term used to describe the process
whereby a client executes banking transactions via electronic means. This type
of banking uses the internet as the chief medium of delivery by which banking
activities are executed. The activities clients are able to carry out are can
be classified to as transactional and non transactional.
Advantages of E-banking or Internet banking
1) Convenience:
Banks that offer internet banking are open for business transactions anywhere a
client might be as long as there is internet connection. Apart from periods of
website maintenance, services are available 24 hours a day and 365 days round
the year. In a scenario where internet connection is unavailable, customer
services are provided round the clock via telephone.
2) Low cost
banking service: E-banking helps in reducing the operational costs of banking
services. Better quality services can be ensured at low cost.
3) Higher
interest rate: Lower operating cost results in higher interest rates on savings
and lower rates on mortgages and loans offers from the banks. Some banks offer high yield certificate of deposits and don’t
penalize withdrawals on certificate of deposits, opening of accounts without
minimum deposits and no minimum balance.
4) Transfer
services: Online banking allows automatic funding of accounts from long
established bank accounts via electronic funds transfers.
5) Ease of
monitoring: A client can monitor his/her spending via a virtual wallet through
certain banks and applications and enable payments.
6) Ease of
transaction: The speed of transaction is faster relative to use of ATM’s or
customary banking.
7) Discounts:
The credit cards and debit cards enables the Customers to obtain discounts from
retail outlets.
8) Quality
service: E-Banking helps the bank to provide efficient, economic and quality
service to the customers. It helps the bank to create new customer and
retaining the old ones successfully.
9) Any time
cash facility: The customer can obtain funds at any time from ATM machines.
Disadvantages of E-banking Internet banking
1) High start-up cost: E-banking requires high
initial start up cost. It includes internet installation cost, cost of advanced
hardware and software, modem, computers and cost of maintenance of all
computers.
2) Security Concerns: One of the biggest
disadvantages of doing e-banking is the question of security. People worry that
their bank accounts can be hacked and accessed without their knowledge or that
the funds they transfer may not reach the intended recipients.
3) Training and Maintenance: E-banking requires
24 hours supportive environment, support of qualified staff. Bank has to spend
a lot on training to its employees. Shortage of trained and qualified staff is
a major obstacle in e-banking activities.
4) Transaction problems: Face to face meeting is
better in handling complex transactions and problems. Banks may call for
meetings and seek expert advice to solve issues.
5) Lack of personal contact between customer and
banker: Customary banking allows creation of a personal touch between a bank
and its clients. A personal touch with a bank manager can enable the manager to
change terms in our account since he/she has some discretion in case of any
personal circumstantial change. It can include reversal of an undeserved
service charge.