Thanks to modern technology, Internet access is almost everywhere. This means that it is possible for you to access your bank accounts from anywhere there is a connection if you choose to do so. However, all of the options around online banking also give rise to a number of questions. Here are the top three questions and answers about online banking, to help you make better decisions about your available options and choose the online banking applications that work best with your life.
Is it safe?
There is now doubt that the question of whether or not online banking is safe is the top question about the service. Thanks to identity theft on the news, hackers on the Internet, and the quirks of secure networks, safety is a top concern for consumers. Even though online access to your bank account sounds great from a convenience stand point, no one wants to jeopardize their financial security.
Fortunately, financial institutions of all stripes share your concern about account security, especially online. The push for more online banking applications has also been accompanied by a push for more intensive security solutions for account access paths. Some of these security features are obvious, while others are more subtle.
Obvious security features include the requirement for a unique user name, passwords that contain a mixture of symbols, photo matching, and security questions. You are probably familiar with having to modify online handles to include capital letters, symbols, or numbers to meet security criteria. Each layer of information applied is a visible layer of security on the account.
Less visible means of security include IP tracking, transaction keys, and encrypted signatures. IP tracking helps financial institutions monitor where you are logging into the account, and can prompt additional security questions if you are logging in from an unfamiliar locations or security alerts if foreign IP address are trying to access your account. Transaction keys, known as TANs, are one-time use codes that grant permission for a transaction based on a secured login. Finally, encrypted signatures are tied to user keys and phone smart cards, adding additional barriers.
How can I get human help?
The next question for many online banking users is how to access human help. Technology isn’t always perfect, and online errors can be particularly frustrating. This is compounded if the system goes down while you are trying to resolve the issue on your own.
For most online banking applications, there is a clear statement of contact options. Phone contacts are the most common, with calls returned during banking hours. Some larger financial institutions also maintain a 24 hour hotline that links to a remote help desk to rectify errors.
A more recent development that is proving popular with end users is real time chat applications. For real time chat, you have a chat box on the screen where you can type questions and get immediate responses. Sometimes these responses are telephone calls to a designated number, and in other cases you may have a chat conversation with a remote helpdesk to resolve your issue.
Why doesn’t my online banking do . . . ?
Online banking can do a lot of things, and each financial institution is in a different place in terms of what they’ve implemented for their customers. Still, there is nothing more frustrating than thinking you can take care of something online and then discovering that your online banking application doesn’t do that.
To get more features for your online banking accounts, it is important to let your financial institution know that you are interested in that service. Most of the new features being added to online banking applications are customer demand driven.
One example of this is remote bill pay abilities. The concept of paying third party bills online was initially offered only to business customers. Now, thanks to strong demand from individual users, it is a popular feature of many online banking applications. Thus, if you are wondering why your online banking program doesn’t do something that you like, you have it in your power to see that the situation changes by taking the time to contact your financial institution and let them know that you want that service.
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Online banking is a continually changing product. Even when it was first introduced, there was no standard operating platform or basket of features. As it has developed further, it is hardly surprising that it has continued to be an evolving addition to the financial services world.
Some of the changes that are underway are technical, while others are aimed at improving the end user experience. By keeping on top of some of the latest changes, news, and development, you can enjoy the best of what’s available to you and be better informed so that you can seek out accounts that meet your needs most completely.
Changes in security
With online banking, security changes are almost constant. It’s not just to meet paranoid consumer’s needs to feel protected from identity theft and fraud online. The online networks of financial institutions are some of the most popularly targets sites for hackers, phishers, and scammers.
As a result, most account holders will see security updates every year, if not more often. Banks are eager to inform customers about all of the things that they are doing to address security risks and to verify identities before making transactions. Consumers, on the other hand, are often less eager to jump through multiple hoops just to check their balances.
It’s an interesting tango between enough security to be truly protected and a minimum of hassle when using accounts. Some security updates are also mandated by state and local authorities, such as the add-ons to the Patriot Act. As a consumer, you should read all security announcements from your online banking provider carefully, but also respond honestly to surveys about your wants and needs when it comes to security vs. access.
Adding devices
Other developments for online banking include adding devices to the list of ways for customers to get online access to their accounts. Initially, online banking was only possible through certain networks. Later, any home computer could be used to access accounts. Now, banks are debating whether to pursue iPhone applications, allow access via Facebook, or enable GPS units for banking purposes.
At the heart of the debate is the question of “Can we . . .?” vs. the issue of “Should we?” Consumers have a great deal of power in this area, and no financial institution wants to lose customers to a rival over access issues. However, the expense and security risk of continually adding devices is a problem. At the moment, the trend to offer more, more, more in terms of devices is winning, but expect to see a re-evaluation and possible rollback in future years as more statistics are gathered about what really works and what’s truly profitable for the bank.
Adding Billpay capabilities
Billpay capabilities are another area of major development for online banking applications. Consumers have shown a strong interest in being able to pay bills online, but the interfaces for doing so are not consistent, meaning that some bills can be paid online while other can’t. These barriers are expected to continue to shrink.
Also expect to shrink are the fees associated with online bill pay capabilities. Banks are finding that online bill pay is a very sticky service that helps with customer retention, so they are lowering the cost of the services. They are also making it possible for mobile devices and mobile banking systems to provide bill pay, instead of insisting that this be done through the main portals or through a home connection.
Linking to non-bank accounts
A final development for online banking applications is the ability to link to non-bank accounts within a single platform. Though still in its early stages, this would allow you to have access to all of your online accounts through a single portal. Early tests have shown that this is popular with consumers if banks can overcome security worries and the chunkiness of some of the features of the applications.
A particular driver in this area is consumer desire to have financial analysis tools at their disposal for all of their accounts. They want to be able to do spending analysis and have fraud alert tools. Banks that can offer a complete package are more likely to win customers than those who limit analytical tools’ capabilities.
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Online banking is designed to be a customer convenience feature. However, just like any other financial services product, some online banking programs are better than others. You don’t have to settle for second best. Here’s how to looking at your online banking options and determine which online banking applications are best for you.
Tip #1: Prioritize Features
Online banking providers like to wow consumers by creating dozens of features. It’s definitely easy for you to get sucked in by a long list of product offerings. Unfortunately, just because there’s a long list of potential features doesn’t mean that the online banking application will do anything to help you manage your money comfortably.
As you prepare to choose an online banking partner, think about which features are the most important to you. Do you want to be able to transfer money between checking and savings accounts? Are you more interested in being able to check your balances from your phone than on your home computer? Do you want spending analysis software built into the system, or do you have your own programs that you like to use?
All of these things are important points to consider. After all, you want your online banking access to do exactly what you need it to do efficiently, instead of being slowed down by additional applications you don’t even want. Thus, instead of simply going with the account that has the most features, give yourself the best online banking experience possible by focusing in on the features you want most.
Tip #2: Choose Your Devices
Building from the features that are most important to you in online banking, you may also want to consider which devices are most important to you. With this tip, you focus in on specifically how you want to be able to access your account. Many, but not all, banks offer account access through multiple devices.
A prime example of a device choice is your phone. Do you have a smart phone? Are mobile banking applications important to you? If you prefer to access your online banking accounts from your home computer only, then you don’t really care what other devices are enabled for system access. However, if you want to be able to do your banking from your smart phone, then the way the online banking system looks and works on your particular phone is of critical importance to ensure you get the best system.
Tip #3: Evaluate Security
Not all banks offer equal levels of security for online banking platforms. This will be of greatest concern to you if you plan on doing a lot of traveling and accessing of your online bank accounts from multiple connections. Many banks have cookie programs or passwords systems that work well if you access your accounts from the same connection all the time, but they don’t work as well when you need alternative access points.
To evaluate the security of your online banking platform, you can look at the existing security features and assess your feelings toward them. Do you get annoyed when you have to answer multiple questions every time you log in from a new connection? If so, then an account that has a different security platform may be a better fit for your personality.
Finding information about account security isn’t difficult. Most banks explain their security measures in an information handout or a special section on their website. Alternatively, a personal banker at a physical location should be able to explain what security features impact usability of online banking.
Tip #4: Evaluate Costs
Finally, to ensure you are getting the best online banking possible, you will also want to consider the costs. Many financial institutions provide basic online banking free of charge, but will charge a fee for other online conveniences tied into the online banking platform, such as bill pay services. Depending on what you want to use your online banking system for these costs can really add up.
Get a fee sheet or a listing of charges from the main branch or the financial institution’s website for each account you are considering. This will help you do an apples to apples comparison of features. Using your prioritized list of features from Tip #1, you will be able to determine what the real costs of using online banking to do what you want will be for you and make an informed decision about which service providers are best for you.
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Online banking, once a novel concept, has now become a way of life for millions of American account holders. Also know as Internet banking, online banking allows account holders to have real-time access to their accounts from their computers. Learning more about the history of online banking, its basic features, the major types of online banking available, the means to evaluate online banking options, and developments around online banking will ensure that your personal online banking experience is informed and enriching.
The History of Online Banking
Online banking is a consumer innovation that actually grew out of another consumer innovation. Since the beginning of banking, it had always been necessary to go to the physical banking location to get things done. The legendary “bankers hours” didn’t always make this convenient for account holders, who pushed for more options.
Initially, options opened up slowly. There was bank by mail, and later there was banking by phone, popularly called telebanking. It wasn’t until the early 1980’s that the first elements of what would grow into modern online banking happened.
Like many other banking innovations, online banking was pioneered in London and New York. It initially faltered in the US, having more of a success in England. However, as the Internet caught on for consumer use, so did the possibilities, and the first US online Internet banking services for consumers were offered in 1994 by the Stanford Credit Union.
From there, online banking gradually expanded across the United States. Though most banking consumers associate technology innovations with large banks, smaller banks with a scattered customer base actually were faster adopters of the system. Since their customers had further to travel to reach a branch than urban consumers, the technology was more readily embraced.
Basic Features of Online Banking
Online banking mirrors much of the offline banking capabilities. However, consumers also have certain benefits of online banking that are only available on the web. The basic features of online banking are:
- Transactions: Online customers can move money between accounts, pay loans, and transfer money to others even if the physical bank is closed.
- Information: Online banking lets customers see their account statements at any time, check balances in real time, and research transactions or account benefits.
Some institutions offer additional features, such as spending analysis tools, syncing with personal finance management programs, and account monitoring, but these are not always standard.
Major Types of Online Banking Available
While online banking mirrors offline banking, there are differences in the types of online banking relationships available to consumers. The core differences lie in the initiation of the relationship.
Most online banking relationship types start as an offline banking relationship. Consumers opened the account at the physical branch office, and may still do a portion of their banking offline. To open or close accounts, or to apply for loans, account holders still traffic the brick and mortar location.
The other major type of online banking is a more recent development. These online banking relationships exist exclusively online. There are no brick and mortar locations, and consumers take care of all account details online.
Evaluating Online Banking Options
Evaluating online banking options begins and ends with its convenience to you as a consumer. While you can access your account online and do most of your banking business online, there may be cases where you would prefer to deal with an actual human. Whatever options available to you by your financial institution of choice, you need to look at them in terms of what they do for you, not what they do for the bank.
Banks may save costs by pushing consumers online as this reduces the need for human staff, but service compromises just aren’t acceptable. Don’t be afraid to express a preference for a one on one interaction if the online applications aren’t working for you.
Modern Developments Around Online Banking
Online banking continues to evolve as technology improves. The most recent leap has been the rise of mobile banking, which is online banking applications tailored for cellular phone access. Many banks have stripped down their graphics and simplified their interfaces to accommodate this trend. They have also worked to improve transfer times and provide applications for all cellular networks.
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The number of online banking users has grown significantly in the past year reaching a new record. Since the beginning of this kind of service, 12 years ago, more than half of the internet users have come to use it. Only in the first half of last year approximately 22 million people have checked their main account online, while the number of people that are making banking transactions like payments or transferring money over the phone decreased to 14.5 million.
The UK Payments Administration research shows that the most often operations that people make online are checking balances and statements. This means that people are more and more interested in keeping a close eye on their finances.
Even if this is a much faster and convenient way to administrate your bank account there are some risks attached to it. This is why, as more of us use online banking, we have to make sure to keep our Passwords and Pins secure so that any fraud attempt is prevented.
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