First published 2015
The introduction of digital banking has revolutionized the banking sector and modified the whole procedure of simple bank transfers.
It has facilitated the customers assisting them to check their account details, pay online bills and transfer money from one account to the other in a faster way.
This has helped the end user to enjoy a methodical financial life.
Though the world has embraced the hassle free online banking, yet it cannot replace its brick and mortar counterparts. Let us pay attention to the pros and cons of the digital banking along with a brief overview on its evolution.
Growth of Internet Banking
The invention of ATMs and credit cards paved the way for the digitization of the banks.
The commercial evolution of the internet in the early 1990s completely overhauled the banking sector introducing the world to the online banking services.
This is when traditional street-side banks started considering ideas to deliver restricted online bank services to cut down the cost of operations. When these efforts proved beneficial and were acknowledged by all, numerous banks ideate to create their own cyber presence with newly designed website featuring the various services like opening new accounts online, necessary form download and processing loans.
This has equally affected the hiring process for the professionals in the banking sector. Apart from the banking examinations that one need to qualify, career in the banking for fresher’s requires technology experts.
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The concept of online banking has transformed more taking into its purview transfer of funds, bill payments, Income tax filing, opening recurring accounts, fixed deposits and many more.
Benefits of Online Banking
The digitization of banking has brought the joy of luxurious banking from anywhere, anytime. It has grace our lives with the following advantages:
- Banking made easier: If you have an internet connection, you can bank from anywhere anytime. Except when the website is down for maintenance, the online services are available round the clock throughout the year. Customer support team is there to take up your issue when the internet is not available. You will have the summary of your account displaying your account balances real-time. Banking is made easier, faster and more efficient through the internet. Consumers can always keep a check on their account balances through this mode of banking. Even if you need to change your contact details or your mailing address then you can do it through few clicks, making it effortless.
- High interest rates: When a bank is going full online with its services, then the reduction in infrastructure and overhead cost leads to an increase in the interest rates on your savings account and also lower loan and mortgage rates.
- Advanced websites: The banks that have chosen to go online with their services ( which comprises of all the banks- national and international, public and private) have well-developed sturdy services with added features that includes financial planning tools, loan calculators, premium calculators, tools for analyzing investments, budgeting and forecasting tools, tax preparation and tax paying platforms online.
- Mobility of services: Virtual banking is now available on mobile. Banks are developing responsive mobile websites so that it can be easily accessed via smartphones or tabs on the go. Money can be transferred and bills can be paid through these mobile websites.
- Eco-friendly: This can be categorized as the environment-friendly initiative. Digital banking saves paper discarding the need for office space, construction, and vehicular movement. Thus giving their customers a pollution free experience.
Drawbacks of Digital Banking
Though online banking has bestowed us with heaps of benefits but it has a flipside to it as well. They are as follows:
- Personal relationship with the Bank is not established: The traditional brick and mortar bank interacts with the customer developing a mutual bond. Acquainting with the professionals working in the bank in your area can be beneficial during the time you apply for a loan or if you require any special service. They might help you to deal with the issues of service charges or cutting down on the fees. In case of business loans, especially this bond will help you to get the required capital.
- Issues with transactions: When you have to deal with a complex transaction, it is better to sit and resolve it face to face. International transactions also have many concerns that need to be looked after. It is advisable that in these cases you should sit and consult with your bank official to resolve the issues. Making them online might lead to link failure hampering the mode of transfer.
- Security issues: Identity theft is an issue to consider these days. If robust encryption software is not in place then all your confidential account information will be available in the web posing serious threats to your finances.
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The banking sector has become competitive over the years due to the digitization of banks. Weighing the pros and cons, it will not be wise to depend only on one method of banking; be it the virtual one or the traditional one. The best approach would be to break up your banking needs between online and in-store services to enjoy the benefits of both.