What Are the Advantages and Disadvantages of Online Banking?

Got bills to pay? Or maybe you want to send money to someone or check the account balance? To do these and other tasks, you don’t need to go to the bank anymore. The evolution of technology and easy internet access allows people to take care of bank-related business without going to the bank.

Online banking is the real deal, and its popularity keeps growing. Although a common service that most people have, it’s still useful to learn more about online banking. Scroll down to learn more about the advantages and disadvantages of this service.

What is online banking, and what is its purpose?

Online banking, also known as e-banking, internet banking, and web banking, is a type of service that allows users to carry out financial transactions via the internet. Clients don’t need to visit a bank to send money or check account balance. They just need a good internet connection and a laptop or desktop computer. Many banks also allow mobile banking, which is performed via phone or tablet app.

The primary purpose of online banking is to simplify the way we use various services associated with our bank account. The banks strive to enhance the overall customer experience, and the best way to do it is to make it easy to do basic things such as sending money to eliminate the need to go to the bank.

What are the types of online banking?

When the term online banking comes to mind, we immediately think of accessing our bank account from the laptop or desktop computer. Online banking is one category that consists of several subcategories or different types. These include:

  • Communicative online banking – allows for some communication between the bank and the client. The interaction is limited to the basics, such as general inquiries about the account, the latest updates, and similar.
  • Transactional online banking – the most popular type of internet banking as it offers all the benefits that “traditional” banking does. Clients have full control over their accounts, deposits, withdrawals, updates, transfers, and payments.


When it comes to online transactions, internet banking usually supports:

  • National Electronic Fund Transfer (NEFT) – a payment system that enables one-to-one fund transfer
  • Real-Time Gross Settlement (RTGS) – fund transfer system wherein the money transfer takes place from one bank to another on a “real-time” and “gross” basis.
  • Electronic Clearing System (ECS) – paying bills and utilities
  • Immediate Payment Service (IMPS) – fund transfer service carried out on mobile phones.

Advantages of online banking

The most prominent advantage of online banking is its convenience. Fund transactions and payments of bills are easy to complete regardless of where you are or what time of the day it is. You don’t need to plan when to go to the bank or think about how long you have to wait for your turn.

Additionally, online banking is fast and efficient. Funds are transferred from one account to another almost instantly, particularly if both parties have the account in the same bank.

Opening an online banking account is incredibly easy; you don’t have to be a tech nerd to do so. In the same way, it’s easy to use online banking and get the most out of it.

Low overhead usually means lower fees and high-interest rates on deposit accounts.

You can access your account 24/7, unlike “traditional” banking, which requires you to personally go to the bank during working hours.

Versatility is also an important aspect of online banking. Internet banking supports various services, but the exact list of the options depends from one bank to another. Generally, clients can view credit card statements, request new checkbooks, activate or reset the PIN, update personal details, perform automatic bill payments, view investment portfolios, carry out instant charitable donations, and more.

Online banking also happens to be safe and secure. Banks employ various mechanisms and methods to protect the information, privacy, and safety of their clients.

Disadvantages of online banking

Despite a wide range of benefits, online banking has some shortcomings too. The biggest downsides of online banking include technology issues and inconvenience to make deposits.

Performing complex transactions can be tricky with online banking. Also, internet banking eliminates the relationship with a professional banker. For many people, this is definitely a good thing, but some men and women rely on guidance and information they get from actual people in the bank. In their case, online banking is not the most practical service.

When it comes to technology issues and safety concerns, the way you use the internet plays a huge role. Opening suspicious websites, clicking on various links, using public WiFi, problems with the device are some of many factors that may impair your online banking experience.

This means that almost all the disadvantages of online banking are entirely preventable and easy to solve once you encounter them. It all stems from adopting better habits when using your computer or laptop. Follow the bank’s instructions to remain safe when using online banking.


The main purpose of online banking is to make it easy and convenient to maintain your account, conduct payments, and so much more. The advantages of internet banking are numerous, but some shortcomings are also present. The drawbacks have a lot to do with our own habits online. The wiser you are, the easier it is to remain safe and protected online.