Benefits And Challenges Of Internet Banking

Benefits And Challenges Of Internet BankingInternet banking has emerged as preferred choice for simple banking transactions. Consumers are increasingly adapting this form of banking for paying utility bills, checking balance and transferring money from one account to another.

Financial transactions have become organized, systematic and convenient with online banking. Spread of internet, introduction of internet enabled mobile devices have fuelled this growth. Banks are increasingly encouraging their customers to go for net banking facilities.

While internet banking is good for common transactions it is not a substitute of brick-and-mortar banks. Let us focus on some of the prime benefits and challenges of internet banking.

Benefits of internet banking

Internet banking can be done round the clock. Unless the concerned site is closed for maintenance or there are problems related to connectivity, net banking is always available. In case of connectivity problems you can seek information from customer care over phone about account balance.

With advent of smart devices, real time transactions can be done with few touches. Maintaining and updating accounts has become easier. It takes few seconds to check the interest rate, order checks and change mailing address.

Internet banking allows the bank to minimize overhead and infrastructure related costs. Some Direct banks pass these benefits to customers by offering higher interest rates for net banking customers. While some offer high yielding checking account others may be happy to offer accounts without minimum balance and service fees.

Banks offering internet banking facilities offer wide range of sophisticated services to its customers. They have robust websites with advanced and comprehensive features.

Some useful features include functional tools for forecasting and budgeting, loan calculators, equity trading platforms and investment analysis tools. Some of them also offer free bill paying facilities, online tax preparation and tax forms.

Advanced mobile phones and smartphones are increasingly used by customers for mobile banking. Mobile banking is an extended form of internet banking. People on the move are using it for simple banking transactions like payment of bills and checking balance of their account. With creation of new applications and updating of features and devices mobile banking is set to grow at an amazing pace.

Easy fund transfer from traditional bank accounts to internet banking account is possible via electronic transfer. Most net bankers offer free fund transfer facilities. Direct deposits and automatic withdrawals are also allowed according to given instruction. Deposits like receipt of pay and withdrawals like bill payment are carried out after authorization

Online bank accounts are easy to set up and operate. Some accounts can be set up by filling up forms online. Other banks require downloading forms and sending them after filling up and attaching required documents. In case of a problem there are options like emails and phone numbers to get in touch with customer care

Online banking is hailed as environment friendly option. There is no need of paper as the deals are completed electronically. There is no need to travel from one place, reducing vehicle traffic and pollution.

Challenges of internet banking

There are several challenges or drawbacks of internet banking. Most of them are revealed during business operations and some are realized at personal level.

Personal relation between the banker and consumer is not as developed with net banking as in case of traditional banking. Such personal relation is helpful in getting loans, mortgages or special services that are reserved for valued clients.

Bank managers can exercise discretionary powers to get you out of trouble or provide extra facilities. Similarly bankers miss the opportunity to know about unique needs of the customers. This may result in loss of business for the bank. If you are a business person then good personal relation with a bank may be useful in getting soft loans or borrow capital.

There are few transactional issues involved with net banking. While transferring the fund from a traditional account is simple, depositing cash is a bit complicated. If your business involves regular cash transactions then this cash should be deposited in your traditional banking account through the deposit counter.

Another potential disadvantage of net banking account is- it usually doesn’t offer ATM facility unless it has a network alliance with another bank. In such case you may be charged for ATM usage. International transactions may not be possible through a dedicated net banking account.

Security issues of internet banking are major concern for most aspiring customers. They are worried about security of their fund and classified information. Direct banks are governed by same regulations and laws like traditional banks. Sophisticated encryption is used for protecting classified information.

However, there are instances where hackers manage to find glitches in the system and launch phishing attacks. If you are habituated in tracking account balance often then you may spot such attack quickly. In extreme cases such unauthorized activities may wipe out your account balance.

Several measures have been taken by banks to stop forgery and illegal activities arising out of online banking system. Scanned copies of cleared checks are made available for verification of amount. Any discrepancies or change in amount should be immediately notified.

Identity theft is another major issue with online banking. However, policies regarding safeguard of identity may vary from bank to bank. It is desirable to check security policies and measures adopted by an online bank before opening an account.

Connectivity issue is another major challenge for online banking. Imagine a situation where you are in middle of a transaction and internet connectivity goes out. This may happen due to technical problems from the part of your service provider or absence of service in certain area through which you are traveling.

In addition to your irritation these cases are ripe for hackers. As such, it is desirable to verify the status of connection before login. Make sure that signals are stable. Try avoiding transactions while traveling through remote places.


Internet banking has opened up new possibilities and convenience to banking experience. Several advanced devices and safety measures have helped it to grow. However, traditional banking still remains a necessity.

It is desirable to split personal banking between online and traditional banking. This allows enjoying opportunities and facilities offered by both. Internet banking is set to grow and it is time for you to get accustomed with it.

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