When you speak about electronic banking, it
has many names such as e-banking, virtual banking, online banking, and internet
banking. It is the use of electric and telecommunication network for
delivering different financial products and services. Through e-banking, the
customer can access their account and conduct several transactions using their
computer or smartphone.
The different types of e-banking are as
follows –
Level 1: It is the basic service which
banks and financial institutes offer through their website. Here, one can find
all the essential financial products and services information. Further, some
banks also receive and respond to consumer queries through e-mail.
Level 2: In this phase, banks allow
customers to send instructions and applications for varied services such as
checking account balance, etc. However, banks do not let them do any financial
transactions on their account.
Level 3: Under this level, customers can use
their account to do fund transfer, make bill payments, and purchase as well as
redeem securities.
Importance of e-banking:
Electronic banking is useful to banks,
consumers, and businesses in the following manner –
Banks:
Lesser transaction costs
The minimal margin for human error
Minimal documentation
Reduced fixed costs
Increased loyal consumers
Consumers:
They can use and transact from anywhere,
anytime
The price is lower per transaction
No geographical barriers
Businesses:
Entrepreneurs and designated staff members
can access their accounts using the online interface
Electronic banking improves productivity
Generally, costs in banking relationships depend
on the resources utilised
Electronic banking reduces errors in
regular banking transaction
It also offers digital footprint for all
employees who can modify the banking activities
The services popular under e-banking are –
ATM
Telephone banking
Smart cards
Electronic Funds Transfer System
Electronic Clearing Services
Mobile banking
Telebanking
Door-step banking
Internet banking offers maximum services
under them –
Bill payment: Every bank has a tie-up with different
utility companies, service providers, insurance companies, etc. all over the
country. The banks use their tie-ups for offering online bill payment such as
credit card, utility bills, etc. Also, many banks charge a one-time
registration fee for such a service. Furthermore, consumers can set up a
standing instruction for paying recurring bills automatically monthly.
Fund transfer: Internet banking allows fund
transfer from one account to another, either within the same bank or different
banks. You need to log in to your account, mention the payee’s name, account
number, their bank, and branch along with the transfer amount. The transfer
reflects within a day or so.
Investing: Online banking allows you to open
fixed deposits with the bank via fund transfer process. If you have a Demat
Account linked to your bank and trading account, you can purchase or sell
shares as well. Some banks allow consumers to purchase and redeem mutual fund
units through online platforms as well.
