What did you feel like the last time you walked into a bank? Digitalization has become a big part of our everyday lives. We are constantly searching for easier ways to accomplish things with technology. This applies equally to our banking operations.
In the past, bank operations often required a considerable amount of time, including commutes to banking halls and waiting in long lines. All that changed with the introduction of Online banking that allows us to perform banking operations at our convenience.
Now then, what's online banking and what makes it way different from the traditional banking operation. In this article, we will discuss what online banking is, how it works, and what its pros and cons are.
Online banking is a form of banking that allows financial transactions to be conducted via the internet and can also be called web or internet banking. To further explain, online banking is the process of performing banking transactions such as payment and receiving of funds in the comfort of your space and online. It offers all forms of services provided by the traditional banking system.
These transactions can be performed at the convenience of your home, office and even at any time during the day.
A major difference between online and traditional banking will be the interface. While the Online banking interface is a web or app dashboard, traditional banking requires interaction with banking officials.
Mobile Banking refers to financial transactions carried out on mobile devices, such as phones, tablets, etc. Its functions include receiving text alerts, paying bills and other services as the banking institution may permit.
With mobile banking, you can complete certain financial transactions without an internet connection. This could be through the use of USSD or SMS. However, you may also use the internet with mobile banking by visiting a bank's website or downloading their mobile app.
Mobile banking also allows the bank to reach its customers through SMS or push notifications to share deals and notify them of transaction details. Chances are high that you already benefit from mobile banking.
Digital Banking, on the other hand, refers to the digitalization of all traditional banking products and services. It is the application or adoption of technology for banking activities such as cash withdrawal, deposit account payment, bill payments, and more.
What this means is that digital banking describes the move of all traditional banking services to a virtual location. This includes the use of online banking, mobile banking and ATMs. Digital banking ensures that a bank's customer can access all banking features and services either on their computer or on their mobile device.
Essentially, digital banking is the combination of online and mobile banking.
Virtual banking is often confused with online banking due to its similarities. However, virtual banking is somewhat different since it does not require physical branches. Rather, all services are provided over the internet via a smartphone or personal computer.
However, here are some similarities between virtual banking and online banking:
Just like every other aspect of our lives, online banking has its pros and what makes it stand out.
Availability: The availability of online banking is one of the reasons why people use it. That is because they have complete access to their accounts 24 hours a day, seven days a week, and they can send, receive and monitor their funds whenever they want and without the assistance of an account manager.
Features: There are features available on banking sites and apps that make life easier for businesses and consumers. Some of these features are not easily accessible at a physical branch. Among these features are Quick loans, bill payments including cable and utilities, airtime and data purchases.
Control: Online banking gives control over your accounts and funds. You can easily automate payments, cancel payments, check bank statements, and confirm payments while on the go.
Speed: Who doesn't love fast services? Online banking provides you with the privilege of fast banking services, rather than waiting in long lines and filling out long documents. With online banking, you can quickly access services like loans, repayment of loans and more.
In college, we learnt that "everything that has an advantage also has a disadvantage," and internet banking is no different. So two main cons of online banking are:
Security: You could be at risk of unauthorized users having access to your banking details, hacking your account and taking your money. For this reason, online banks take care to invest in security protocols that ensure their customers' funds are safe at all times
Network issues: As the name suggests, this type of banking is very dependent on network providers, meaning an outage of the network could make it impossible to complete transactions.
Now we know and understand the different types of banking, there’s one more banking we need to know and that’s NEO banking.
Neobanking is a bank that bridges the gap between traditional banking and the digital expectations of customers. Its mission is to offer mobile and online banking services to its customers at a discounted rate compared to traditional banking through the use of technology such as apps and software. One thing to keep in mind is that this type of bank usually doesn't have a banking licence, but relies on other banking partners.
An example of neo-banking is Grey.
Grey is a Neo banking system that allows you to own foreign virtual accounts from the comfort of your home. That way you can open global bank accounts and send money across the world without having to enter a banking hall.
You can open a Grey account to get started with your international banking.
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