Online banks- What are they all about and how do they function?

In the foreign developed countries, physical banks have become once upon a time stories. The banking experience has done fully digital around the world. Online bank refers to the virtual bank which provides all its services through internet. Investors rarely need to visit banks to deposit cash or cheques, withdraw cash or transfer money. 

So how do customers use online banks?

Firstly, a customer should register through his/her financial institute’s website. The customers can then log in through Home Banking or Online Banking option. The customers need to provide account name, account number and social security card number. The customers can then setup a username, enter email address and a password. The customers can regularly log in and use the tools that the bank offers.

What benefits do online banks offer?

The benefits of online bank are considered comparatively more significant than the benefits offered by physical banks. Some of these benefits are:

Real time information: Customers can remain updated regarding their balance, pending balance, transactions on real time basis.

24/7 access to information: Physical banks might not be open during weekends. However, through online banks once can access their accounts and balance at anytime from anywhere.

Automatic savings plan: The best part about online banks are one can easily set up automatic saving plans that can transfer money from checking account to saving accounts automatically each month. This helps customers to keep track of their saving and spending.

Minimize fraud: Online bank gives access to bank accounts 24/7 so, customers can inform banks immediately if any transaction that isn’t familiar to them occurs.

Financial incentives: A lot of online banks provide several kind of bonuses. The online banks can also have comparatively better interest rates. These banks can cut a lot of costs due to lack of physical presence. Thus, customers can benefit from financial incentives provided by these banks.

Despite banks around the world going online, Nepal’s banks do not seem to be taking such steps any soon. A lot of cyber-attacks in banks that have recently happened prove that Nepali banks still have inefficient IT personnel along with ineffective software system.  Even if Nepali banks start offering customers with online banks at the present, it will be very difficult for the banks to prevent the banking system from hackers. Finally, targeted customer segment of Nepali banks might not be very comfortable with online banks. A significant portion of banks consist of those who do not have access to internet, who do not know to use internet and who are comfortable visiting banks rather than using online services. Online banks, therefore, look like a far milestone for Nepali banks.