Over the years, banking has drastically changed and has affected the lives of millions of individuals around the globe. E-banking or virtual banking, or net banking or internet banking is an electronic payment system wherein customers of a given bank can perform all their banking transactions.

In other words, e-banking refers to all the financial transactions undertaken by any financial institution over the internet. From paying bills and transferring money into accounts to applying for loans, you can take advantage of all the facilities that a traditional bank offers – without even having to leave the comfort of your home.

Everything has its pros and cons and e-banking isn’t an exception. Let us look at the advantages and disadvantages of e-banking.

• Advantages and Disadvantages of e-banking
• What is the Objective of e-banking?
• What are the Different Methods of E-Banking?
• What are the Disadvantages of ATM?
• What is the Advantage of Banking?
• What are the Advantages and Disadvantages of E-commerce?

Advantages and Disadvantages of e-banking

Advantages

1. Benefits and Rewards

A lot of online banks offer more benefits and rewards to their customers that not only benefit the bank but also benefit their customers. Online banks are willing to offer higher interest rates and better transfer services to their customers who regularly use online banking.

Read Also: Here is how Internet Banking will Look in 10 years

This happens partly due to the fact that the banks have to bear reduced costs when serving online customers. Therefore, the overall banking experience is obviously better than that of visiting a physical bank branch and handling the same transaction.

2. Notifications and Alerts

Customers are instantly alerted or notified about new changes in the system. From changes in the policy to logins from new devices, customers get instant notifications and alerts.

However, if you’re associated with a real bank, you would probably get a text alert or a customer service agent will call you to notify about major changes. Chances are, you’re missing out on a lot of changes.

Banks also endorse new products, services and schemes like new investment options, changes in the loan policies, etc. to online customers first.

3. Faster Transactions

You don’t have to wait for your turn to transfer funds – you can do that with a single tap of your finger or a single click of your mouse.

Funds from one account will be transferred to another in a matter of a few seconds. Anything that requires quick payments can be done with the help of e-banking.

For instance, you are required to immediately pay your child’s school fees. You can do it via the bank’s app or website or you can physically go to the bank to withdraw cash and then going to the school to deposit the fees.

You’ll probably end up wasting half the day to perform this transaction which with the app’s help could’ve been performed in a matter of minutes.

4. Convenience

You can conveniently handle your account transactions without all the hassle of being in the queue on a sultry afternoon. E-banking is extremely convenient if you have a decent internet connection (wifi or 3G/4G data).

You can access the website from anywhere without actually having to visit the bank. If your banking needs don’t involve the assistance of any staff member or a manager, online banking is the best option for you.  

5. Security

With internet banking, you can always monitor your account activities. This not only serves as a history of all the transactions but also helps you identify threats and suspicious activities before any severe damage can be done to your account.

Online accounts are protected with encryption software that ensures complete safety to the user. Alerts related to passwords and digital signatures are sent periodically to maintain the security of the account.

6. Easy Access

Customers can enjoy easy access with online accounts by simply typing in the log-in credentials. In addition to that, customers can also handle several accounts at a time.

Since the internet remains the medium of connection, users can also access different accounts in different banks from a single device.

7. Speed and Efficiency

In a hurry to apply for an educational loan? Or quickly need to pay bills? Or perform any banking transaction without having to waste half your day? Do it via the internet.

There’s no waiting nor do you have to rush through anything – you can take your time and perform all banking transactions with patience and it will be done in nearly 1/10th the time spent on actually driving down to the bank and getting it done.

8. Lesser Limitations

Traditional banks have several constraints like operating hours, the physical location of the bank branch, holidays, etc. You don’t have to wonder if it’s a holiday with online banking, or what time is it to perform a transaction.

Be it Sunday or the middle of the night and you will still be able to do everything (and even more) through their app or website as it’s available twenty-four hours a day, throughout the year.

9. More Features

Apart from being flexible, some banks go out of their way to satisfy their customers by not penalizing on withdrawals on the certificate of deposits, letting customers maintain accounts with no minimum balance, etc.

Moreover, banks generally offer more offers and discounts on credit and debit cards used by customers who have online accounts.

10. Better Customer Service

Banking websites and apps come with customized web pages to solve customer queries and often have a dedicated ‘Frequently Asked Question’ (FAQs) section that helps in answering common customer queries.

You can chat with a customer service agent or call them if you need more help. This not only saves the time of the customers but also that of the bank employees who can shift their focus to more important things.

Disadvantages

1. Difficult for Beginners

Newbies often face difficulty in trying to get the hang of e-banking. Initially, customers are scared of losing their money and are often hesitant to explore all the options and features that are available on the website or on the app.

New users often give up and stick to traditional banking if timely assistance isn’t provided.

2. Trust and Responsibility

Fake websites and phishing sites are common in this age of technology. Can you really trust all websites? Is it wise to trust an online site with all your money? What if the website folds up and all your money is gone? This wouldn’t happen in a real bank.

There is trust between the bank and their customers – you know your money is safe with the bank – because they take responsibility for your money. Real banks are permanent and reliable while some websites are not.

3. Inconvenience

Sure, online banks are open throughout the year but they are a serious cause of inconvenience in certain instances. For example, if you get locked out of your account you will be unable to perform any banking transactions.

However, in a real bank, you establish relationships with the staff, who know you on a personal level and will be willing to assist you in such cases. You wouldn’t have to be on the phone explaining your situation to an unknown customer service agent which by the way, might also take several days.

Also, a few online banks don’t allow cash deposits. To deposit cash, you will be required to email a check and transfer money from another account or bank, or use their e-check deposit service.

4. Inability to Handle Complex Transactions

While you can easily pay bills and transfer funds, you can’t perform complex transactions online. When a large sum of money is involved, it is advisable to visit a real bank and sort it out in-person rather than doing it online.

Some financial transactions also need document verification (like buying a house) so it is better to submit them physically than digitally.

5. Financial Jargon

Financial jargon can often get between you and your money. Knowledge is power-or, in this case, knowledge is money. Though financial literacy can’t be achieved overnight, it can be helped along by a grasp of the basic terms that are commonly used by advisors, analysts, economists, and commentators.

6. Security Issues

Sure, most banks are well-reputed and established, there are times when you face security issues. There’s always a risk of actual and/or identity theft. It’s also possible to get unauthorized access to your account via a stolen or hacked log-in credentials.

7. Technology Issues

If you don’t have a decent connection or there are bugs in the software, or say, there is a power cut or maybe the servers have gone down –  websites are bound to crash and you will undoubtedly face a lot of technological issues.

While you may get various types of customer service at the moment but sooner or later, you will get frustrated. However, someone is always around to help you in a real bank.

8. Virtual Assistance

When you need assistance during e-banking, your concern is generally assigned to an anonymous customer service agent who is unlikely to know you. Wouldn’t you rather talk to a personal banker when you’re in a fix than an unknown agent?

A personal banker will also know your transaction history, your personal details and will be in a better position to assist you.

9. Complicated Websites

Some websites look like a page straight from a super complex scientific experiment. Written in a secret code language with bizarre fonts and colors. Sure some websites are simple and you can get all the things done in a jiffy.

But some websites are downright complicated and confusing. With pop-ups, errors, links, and interlinks, redirections to probably a million pages, it gets really difficult to understand.

10. Other Limitations

E-banking isn’t for everyone. Illiterate and the elderly cannot use online banking. Neither can individual access their accounts if they don’t have an internet connection.

What is the Objective of e banking?

The main aim of e- banking services is to provide the customers a much faster services with low cost. From the last twenty years, banking sector has chosen a new method of banking based on the progress of information technology. In addition to these customers, transaction and communication abilities are fastened based on information technology.

The progress of electronic banking started with use of automatic teller machines and afterwards it developed to online banking. In the future it will be done in mobile phones(wap-enabled).Anyway online banking continues to be the best for financial transactions.

E-banking provides many advantages for banks and customer’s like we have mentioned above .e-banking has made life much easier and banking much faster for both customers and banks.

Main advantages are as follows.

• It saves time spent in banks
• It provides ways for international banking.
• It provides banking throughout the year 24/7 days from any place have internet access.
• It provides well-organized cash management for internet optimization
• It provides convenience in terms of capital, labour, time all the resources needed to make a transaction.
• Taking advantage of integrated banking services, banks may compete in new markets, can get new customers and grow their market share.
• It provides some security and privacy to customers, by using state-of-the-art encryption and security technologies.

What are the Different Methods of E Banking?

Electronic funds transfer means computer systems are used to perform financial transactions electronically. The EFT is used for electronic payments and customer initiated transactions where the cardholder pays using credit or debit card.

The transaction types are, Withdrawal,deposit,interaccount transfer ,inquiry, administrative transactions that covers non financial transactions including PIN change. Electronic Fund Transfer transactions needs authorisation and a means to match the card and card holder.

EFT transactions require the cardholder’s PIN to sent online in encrypted form for validation by the issuer of the card. Other information may include the cardholders address or the CVV2 security value printed on the card.

Electronic funds transfer transactions are activated during e-banking procedures. The different methods of e-banking are

Online banking

Online banking also called as internet banking, allows the customers to use all the banking services from a computer which has internet acess.The customer can perform financial transactions on a secure website operated by the bank. Online banking offers features such as bank statements, loan applications, funds transfer, e-bill payments and account aggregation allows customers to monitor all their accounts in one place.

Telephone Banking

Telephone banking is a service provided by the banks which provides customers to perform transactions on phone.All the telephone banking systems uses automated answering system with keypad response or voice recognition capability.

To prove their identity customers must provide a numeric or verbal password or answering the questions asked by the call center representative. In telephone banking customers can’t withdraw and deposits cash but can do all the other transactions.

Mostly there will be a coustomer care representative to which the customers speak ,although this feature is not guaranteed.The coustomer care representatives are trained to do what are available at the branch like chequebook orders,address change,debit card replacements.

SMS Banking

SMS banking is a service permitting banks to do selected banking services from the user’s mobile by SMS messaging.SMS banking services have push and pull messages. Push messages are sent by the banks for alerting customer about new offers, marketing messages, alerts to events happening in customers account such as a large number of withdrawals from ATM or credit card, etc.

Pull messages are those that are sent by the coustomer to bank for having some information or to perform a transaction in their account.Examples include account balance enquiry,requesting for current exchange rates and for new offers that are launched.

The customer has a choice to select the list of services he needs to be informed. This can be done by integrating to internet banking or speaking to the customer care representative of the bank call center.

What are the Disadvantages of ATM?

The world’s first automated teller machine was installed in a branch of Barclays Bank in London back in 1967. Since then, ATMs have made it quick, easy and convenient for consumers to quickly get cash in their hands. There is a price to pay for this convenience.

Naturally, ATMs don’t have the human element you’ll encounter with a teller. If there’s a problem, you can’t talk it out with the machine. Beyond that, ATM use can be costly, and can leave cardholders vulnerable to fraud and theft.

Fraud

Criminals can fit skimming devices and small cameras to ATMs. These machines record account details and personal identification numbers, which the crook uses to withdraw money from those accounts.

ATM skimming costs the U.S. banking system around $1 billion each year, or $350,000 a day, according to the Secret Service. In January 2012, Mike Urban, director of product management for Fiserv’s Financial Crimes division, told “Bank Info Security” ATM skimming had reached “epidemic” levels and continued to grow.

Fees

Banks and machine owners draw a huge source of revenue from ATM fees. Cardholders can usually withdraw cash for free from ATMs owned by their bank, but typically have to pay to use machines owned by other companies. In 2011, the average fee was $2.40 according to Bankrate.com’s Checking Survey.

Theft Risk

If you go to a bank, you’re likely walking into a secured area watched by multiple cameras or a life guard. Those elements encourage crooks to keep their distance from the bank. You’ll find no such security blankets with an ATM.

It also takes a little time to take a card out, insert it in the machine, access your account and get your cash. That can be enough time for a crook to attack, which is why some people won’t use an ATM after dark or in secluded locations.

Card Retention

ATMs give, but they can also take. They can malfunction and simply not be available when you need them. Some will also retain damaged cards, or any card if its owner fails to enter a correct PIN after three attempts. A cardholder can usually reclaim her card if it’s been retained by a machine owned by her bank. However, if the card is kept by another bank’s ATM, there’s no guarantee she’ll ever see it again.

What is the Advantage of Banking?

Before the introduction of the modernized banking system, people used to save their money in hard cash. They stored this cash in lockers, underground, with the grains, etc. There were so many instances when the money got stolen, eaten by the rats or simply rot through the years.

However, the modern banking system completely eliminated the need to store hard cash. It actually helps save a huge proportion of public wealth that used to get spoiled in storage.

Provision of Cheap Loans

Before modern banks were established, people would borrow money from local money lenders, landlords, merchants or other wealthy individuals.

These loans were given at exorbitant interest rates that most people couldn’t afford to pay, in the process the borrower would always remain in debt. It was a vicious cycle. Modern banks started providing cheaper loans to the underprivileged section of the society, breaking the whole expensive loans system.

Propellant of Economy

Banks create money with a system called credit creation. With the help of credit creation, banks can lend a lot more money than the deposits that it holds. When banks lend this money to agriculture, industries, small businesses, and service providers, they are actually helping the economy grow exponentially.

This, in turn, creates employment and spending power. Overall this one function of the bank is so powerful that the entire economy of any country relies on it.

Economies of Large Scale

An extremely important benefit of any bank is its deep and wide reach through the branch banking system and the benefits of large scale operations. The wider the bank can reach the better services it can provide. Now a day’s banks provide services of net banking, card payments, ATM’s, etc. at even the most far-fetched and backward areas. Due to these large scale operations, the services have become extremely cheap, or sometimes even free.

Development in Rural Areas

Banks aid rural development in more than one way. Firstly, the government makes it mandatory for the banks to lend to specialized sectors such as agriculture, rural infrastructure, etc. This leads to the development of modern infrastructure and methods in rural areas, thereby bringing in growth.

Secondly, with the banks opening their branches in the backward areas, the rural population has benefits of modern bank facilities such as check-in accounts, ATM’s, locker facility, etc. Furthermore, when a new bank branch opens in a village, it needs facilities such as 24-hour electricity supply, internet connection, new staff etc. This creates employment and the villagers can also benefit from the facilities of electricity and the internet.

Global Reach

Many banks operate at the multinational level, this has helped people and businesses in a way that was not possible before the establishment of modern banks. Multinational banks aids in remittance of cash, exchanging one currency for another; aids in export by transferring documents and payments; lend money to government, institutions and other world organizations. The reach of the banks is unlimited and it has helped in making the world a global village.

What are the Advantages and Disadvantages of E-commerce?

You don’t need to be a business expert to know that e-commerce has reshaped the modern marketplace in recent years. While it’s a dominant model, selling goods or services online comes with its own set of advantages and disadvantages compared to traditional brick-and-mortar businesses.

Therefore, businesses need to look beyond the hype and develop their own perspectives on the value of e-commerce. How does it help businesses and why do consumers love online shopping?

It’s important to explore both perspectives because advantages for consumers might end up becoming a disadvantage for e-commerce businesses. The most successful companies understand all the benefits and drawbacks well before they begin to see growing sales figures.

Advantages

he internet might be the single most important facet of modern society. It plays a primary role in everything from political discourse and higher education to the way we conduct ourselves and our businesses. It’s no wonder, then, that switching to an e-commerce model comes with significant advantages.

E-commerce eliminates the need for physical stores and allows businesses to expand their customer base. On top of eliminating the possibility of long lines, e-commerce sites offer a huge advantage to both shoppers and stores that aren’t located in major urban areas.

Even if you are located in a big city, e-commerce opens up new markets, allowing you to develop a new business model geared toward your expanding consumer base. Many businesses have found particular success in developing good e-commerce Search Engine Optimization, which drives more traffic to the site.

Your business can also save money on rent, utilities, maintenance, and other costs associated with physical stores. Your e-commerce store can essentially remain open 24/7 without hiring employees to watch over the store and protect items. Since you aren’t confined to a set amount of shelf space, there is no limit to the number of items that can be sold online, and your store’s stock can expand exponentially.

Physical products will still have to be stored somewhere, but storage spaces are often cheaper than retail spaces, and you won’t have to worry about factors like foot traffic and parking spaces.

Digital products can be sold online with little-to-no overhead cost. Thanks to e-commerce, consumers can purchase music, videos, or books instantaneously. Stores can now sell unlimited copies of these digital items, without having to worry about where they’ll store the inventory.

E-commerce also allows your business to scale up easier than physical retailers. When a brick-and-mortar store grows, it needs to consider how it will serve more customers in the same small space. More employees are needed to expedite check-outs, more of the floor gets dedicated to forming lines, shoppers feel more crowded as customer base and inventory grows.

Of course, logistics always get tougher as a business grows, no matter how the business operates. With the right choice of a third-party logistics provider, however, e-commerce companies can manage this growth without worrying about the physical store aspects.

Keeping in contact with customers is often easier for e-commerce businesses. Since the e-commerce merchant captures contact information in the form of email, sending out both automated and customized emails is simple.

Let customers know about a sale, promote a new product, or just check in with customers for a personal touch—all with minimal effort. Additionally, web tools like cookies allow for superior store customization and consumer behavior analysis.

The benefits consumers enjoy are shared by e-commerce companies when it comes to the supply chain. Consumers like online shopping because they don’t have to deal with cash, worry about schedules, or wait in long lines.

Those benefits also apply to entire supply chains interlinked with business-to-business e-commerce systems. Procurement becomes faster, transparent, and there’s no need to handle currency notes or cash. The result is cheaper, easier transactions with fewer opportunities for accounting errors.

Finally, e-commerce allows your business to track logistics, which is key to a successful e-commerce company. Having everything digitized makes it easier to automatically collect data and crunch numbers. While you can benefit from knowing what’s selling best, you can also afford to take more risks on low-volume goods.

The conventional retail strategy focuses on stocking fast-moving goods, but the economics of e-commerce permits slow-moving and even obsolete products to be included in the catalog. Storage is less expensive, and displaying the product is as easy as adding another item page to your site.

Disadvantages

While it may initially seem like e-commerce will solve all your business problems, there are disadvantages to switching from a physical location to an online store.

Many consumers still prefer the personal touch and relationships formed at a brick-and-mortar shop. This can be especially valuable to customers shopping for specialized products, as they may want to consult an expert about the best product for their needs.

A solid customer service hotline can’t replace face-to-face interaction with a specialized sales rep. Additionally, many customers want to experience the product before purchase, like when shopping for clothes.

Security and credit card fraud are also huge risks when dealing with online shopping. Consumers run the risk of identity fraud and similar hazards every time they enter their details into a site. If your site doesn’t convince shoppers that the check-out process is secure, they could get scared out of buying.

Read Also: Five Ways the Banking Industry has been Transformed by IT 

On the other hand, businesses run the risk of phishing attacks and other forms of cyberattacks. If one of your employees opens just one malicious link, it could compromise your website functionality, financial information—or worst of all, your customers’ information.

If shopping is about instant gratification, then consumers are left empty-handed. They often have to either pay more for expedited shipping or wait for several days until the product arrives. The wait could drive away customers. For businesses, the shipping becomes extra complicated when a customer wants a refund.

Growing e-commerce businesses need to expand their reverse logistics functions, meaning the shipping back of goods and refunding of costs.

Speaking of costs, there’s a multiplicity of regulations and taxes that come with opening an e-commerce shop (and a fair amount of confusion, as well). On June 21, 2018, the U.S. Supreme Court ruled that states can charge sales tax on e-commerce transactions. But the Supreme Court left it up to states to decide what size of online retailers must pay sales tax, and what that tax rate will be.

That’s just one example of the regulatory confusion that has stemmed from e-commerce’s rapid growth, and it doesn’t even touch on international trade laws. The result is a regulatory patchwork that retailers are responsible for learning, no matter how complicated.