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The Advantages and Disadvantages of Online Banking

Years ago, banking could only be done in person by visiting a brick-and-mortar branch. Most of the time, the opening and closing times of these branches weren’t designed for customer convenience, as anyone familiar with the term ‘banker’s hours’ can attest.

Times have changed, technology has evolved, and, thanks to the internet, modern banking now happens wherever and whenever it suits the account holder, even from the palm of our hand through smartphone apps.

Whether you want to pay a bill, transfer funds, purchase an investment, or deposit a cheque, online banking offers a flexibility and convenience that could never have been dreamed of just a few generations ago.

However, while online banking is undoubtedly easier and better for the clients of financial institutions, there are still a few potential pitfalls worth keeping in mind. Here’s what you should keep in mind when online banking.

Advantage – Bank when and where you want

Online banking apps and websites don’t have opening and closing hours, and are accessible from anywhere there’s an internet connection, meaning clients can get their banking done from home, at work, or even in another country. Whether you’re at your desk, or on the back deck, you can get your banking done at your convenience.

Disadvantage – Service outages could leave you without access

Anyone who’s ever used the internet knows service outages happen from time to time, whether it’s because an internet service provider experiences difficulties, or because a website or app goes down for a while. If you’re using a desktop computer to do your banking, you might even lose access because of a power failure. While these issues are only temporary, they may still last for several hours and can be extremely disruptive if your banking needs are urgent or time sensitive in any way.

Some online banking services allow clients to set up payments and transactions in advance. If you’re concerned about spotty access to the internet or a suspect power supply disrupting your banking, find out whether you can set your transactions to happen automatically.

Advantage – Most transactions and services are simple and easy

Want to send money to a friend or loved one, pay a bill, deposit a cheque, or open a new account? Online banking services make all these things simple and straightforward. Save time and effort by streamlining your banking and take advantage of features that offer advice and tips on handling your money, all without setting foot inside a branch.

Disadvantage – Online banking tends to be impersonal and rigid

With some financial matters, as with many things in life, it can be easier to get things done by talking to an actual human being. Relationships are important, and problems can often be resolved by explaining your issue to a bank employee, who may be able to handle requests that a banking app can’t, such as approving a credit card application or waiving an overdraft fee.

Banks don’t like losing clients, especially ones who’ve been loyal customers for many years, and will often work with you to solve problems. While online banking services are great for taking care of basic needs, they aren’t built for tackling more complicated concerns.

Advantage – Save with lower fees and earn more with higher rates

In some cases, banking online can help save you money by eliminating or reducing the fees many institutions charge for various in-person services. In some cases, online banks help you earn more by providing access to superior interest rates on savings accounts or investment products such as GICs. No one likes paying fees to access banking services, so keeping more money in your account by handling transactions online is a big win.

Disadvantage – Online banking means being vigilant about security concerns

When you connect to your financial institution over the internet, you run the risk of being targeted by hackers and fraudsters. To minimize this risk, make sure to keep your browser software up to date so you’ve always got the latest security tools installed, and check for the secure lock icon next to the link in the address bar when signing on.

It’s also important to maintain security around login information and use strong passwords, changing them regularly and never sharing them with others. Setting up two-factor authentication adds a valuable additional layer of security for your accounts. Finally, remember to be cautious about clicking on links in emails or text messages that look to be from your bank demanding you log in immediately to solve an issue or claim a prize—these are often scam attempts and should be ignored and deleted.

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