What are The Benefits of Online Banking?

Introduction

Once upon a time, in a land far, far away, people took care of their financial matters in a building called a bank. They would come from all across the land to stand in line waiting for a bank teller to invite them to a window. There they would hand over pieces of paper along with a paper passbook to print out a record of the transaction. Or they would ask to retrieve some paper bills and subtract the total from their bank balance.

It was a much slower world back then, with lots of waiting and lots of paper. Things needed to be manually recorded (on paper), manually requested (through paper), or manually retrieved (as … yes, paper).

These days, technology allows us to do a lot of things that we could only dream of in the past. Or, well, we probably didn’t dream about it much, because we didn’t know it would be possible in the future.

But now it is possible, and many people work at jobs, get paid regularly, manage their savings, and pay their bills without ever setting foot inside a physical bank. How? Through the power of online banking.

What Is Online Banking?

Online banking is the act of using a website or mobile app to conduct financial transactions or view account activity over the internet. This advancement in technology allows people to do almost every type of service that’s available at the local branch of a brick-and-mortar bank. You can pay bills remotely, monitor your balances, send and receive money electronically, make transfers, and even deposit a check.

The only exceptions are opening certain types of accounts or changing important information, like your name. These things sometimes (but not always) require you to go in and meet with a banker. Oh, and withdrawing cash, of course. Technology still doesn’t allow us to send paper money over the internet. Hey, we’re still waiting for flying cars too, so that’s OK!

Nearly all financial institutions offer some type of online banking, whether it’s account access through a website, a mobile app, or both. Most mobile banking apps even let you deposit a physical paper check by taking photos of the front and back with your smartphone. If you still have a “dumb” phone (like a flip phone from 2005), you probably can’t use mobile banking services. But you may be able to retrieve your balances through text messaging or by dialing the bank’s phone system and keying in your account info.

Beyond the online banking services available from physical banks, there’s also a growing number of virtual banks that don’t have any branches. You can set up checking or savings accounts at these online banks in just a few minutes by submitting all your paperwork digitally. Some of them even have more desirable terms — like higher annual percentage yields (APYs) on savings accounts — since they have a lower overhead than brick-and-mortar outlets.

Benefits of Online Banking

There are many benefits to online banking, with the most obvious being convenience. If you can manage your finances from the palm of your hand, anywhere you are, any time of day, that clearly beats having to go to a physical place during a certain time frame. Traditionally, banks have kept relatively short hours, although they’re open slightly longer now than they used to be.

Generally speaking, online banking is also faster and more accurate because there’s no human error involved, and funds can be transmitted instantly (sometimes). Think of peer-to-peer (P2P) payment platforms like Venmo, PayPal or Cash App. And even Zelle, which works through your bank account for instant online P2P transactions. These applications are designed to let you send money to other people in real time, whether to split a lunch bill, leave a tip … or for any reason at all, really.

Other processes you initiate online still take several days, like automated clearing house (ACH) and wire transfers, as well as direct deposit from your job. That’s why your credit card or utility bill payment takes some time to get posted to your account. But those are bank network processing times, and have nothing to do with the actual online banking services.

Some transactions even offer you a choice between an instant transfer for a fee, or a free transfer that takes a few days. So you can decide which is more important that day — your money or your time. Almost everything in life makes you decide between one or the other, so it’s nice to know that online banking often puts that power in your own hands.

Bottom Line

You can use physical brick-and-mortar financial institutions for your banking needs if you want to. Chances are these well-established businesses won’t be going away any time soon. But you can also try a new virtual bank if you prefer, or if the services better fit your needs and financial goals.

Either way, online banking services are undoubtedly available through your chosen financial institutions. These can range from mobile apps to online logins and automatic bill pay. And they include viewing and monitoring your account activity anytime, anywhere. Once you get used to internet banking, you’ll likely find that online access and digital transactions make life easier and, sometimes, much faster.