What is online banking? Definition and meaning
Online banking, also known as internet banking, e-banking or virtual banking, refers to carrying out banking operations such as paying bills, transferring money, checking one’s balance, and setting up regular payments online.
The service is offered by virtually all banks today so that customers can conduct their financial affairs through the internet rather than having to come into the branch or sending surface-mail letters and forms.
Online banking can be done from your computer, tablet or smartphone (mobile phone). According to banks and most customers, the main advantages online banking offers are permanent access to one’s account, lower costs, and access from virtually anywhere.
If you do not currently have an internet banking facility and want it, talk to your bank to get set up. Most financial institutions will give you the choice of having a telephoning or internet banking service, or both. You will be given a password and username, which in some cases may change regularly, in fact, with some accounts the customer has to enter a different code each time.
According to Oxford Dictionaries, e-banking is:
“A method of banking in which the customer conducts transactions electronically via the Internet.”
History of online banking
Online banking has been around for much longer than most people realize – since the early 1980s. At the time, it was very different to what we are used to today.
In the early 1980s, online banking referred to the use of a terminal, keyboard and TV (or computer monitor) to access one’s bank account via a landline telephone.
In the United States, online banking started in New York City in 1981. Citibank, Chase Manhattan, Manufacturers Hanover, and Chemical Bank started offering the service to their customers. However, it failed to catch on.
In the UK, a home online banking service called Homelink was set up by Bank of Scotland in 1983. The system was based on the British Prestel viewlink system.
With the growth of online banking and counter-free branches, are we seeing the end of the bank teller?
The first financial institution in the United States to offer internet banking to all its customers was Stanford Federal Credit Union in 1994. Other banks soon followed its lead.
At first there was a great deal of resistance from customers. Some wondered how secure it was, while others were put off by the time required to start up.
Since the turn of the millennium, online banking has expanded dramatically, first in the advanced economies and then across the whole planet.
Online banking fraud
Banks tell us that banking online is super safe. However, according to Financial Fraud Action (FFA) UK, an industry body, in the first half of 2014, detected online banking fraud in Britain reached ₤29.3 million ($47.6 million), which was a 71% increase compared to the same period in 2013.
The authors of the report suggested that despite more secure log-in processes, British banks and their customers appear to be losing the battle against internet fraudsters.
FFA says criminals have been successful at duping their victims into revealing their online log-in-details and other personal data by telephoning them, pretending to be fraud investigators calling from their bank.
Banks are continuously trying to be at least one step ahead of cyber criminals. In September 2014, Barclays Bank in the UK introduced a biometric reader that uses finger-vein authentication technology which allows customers to access their online bank accounts with no need for codes or passwords.
Video – Online banking safety tips
John Ahlberg, Communications Director for eBanking at software company Gemalto, gives some tips on how you can protect yourself online.