Internet banking has expanded opportunities for consumers and businesses to conduct financial activity. Flexibility, simplicity, time-savings and cost-savings are other advantages. Security concerns, inability to handle cash and transaction limitations are among its primary drawbacks.
Some advantages of online banking go hand-in-hand with simply being online; others are competitive advantages provided by online banks taking advantage of their cost structure. The most prominent benefits provided by online banking include:
If you need to transfer money, apply for a new loan, or perform nearly any banking transaction, you’ll typically have to wait in line at a bricks-and-mortar banking location. With an online bank, there’s never any waiting. As long as you can log in, you can access your accounts, request a new credit card, or perform nearly any banking transaction you desire without driving down to a bank or waiting in line.
Online banks are accessible 24/7, as long as you have an internet connection. Some online banks, such as Ally Bank, take this perk one step further, giving you 24/7 phone access to a real-life customer service agent. This can be extremely helpful if you don’t have access to the internet, or if you feel you need the assistance of a human brain, rather than a computer algorithm.
No one type of bank can be the best at everything. In spite of their many advantages, there are some drawbacks to using online banks as well. Here are some of the downsides of working with an online bank:
In many ways, an online bank is only as good as your — or their — internet connection. If there’s a power outage, or if servers go down, you might not have any access to your account whatsoever. While some banks offer a phone number for customer service, it might be overwhelmed if online access is down. With a real bank, you can always find someone to talk to in the branch.
While many online banks are reputable and well-established, sometimes it can be hard to feel comfortable with a bank that doesn’t have a physical presence, particularly when large sums of money are involved.