E-Banking? advantage and traditional banking vs E- banking?

E-BANKING

Electronic banking has many names like e-banking, virtual banking, online banking, or internet banking. It is simply the use of electronic and telecommunications networks for delivering various banking products and services. Through e-banking, a customer can access his account and conduct many transactions using his computer or mobile phone.

Electronic banking, Use of computers and telecommunications to enable banking transactions to be done by telephone or computer rather than through human interaction. Its features include electronic funds transfer for retail purchases, automatic teller machines (ATMs), and automatic payroll deposits and bill payments. Some banks offer home banking, whereby a person with a personal computer can make transactions, either via a direct connection or by accessing a website. Electronic banking has vastly reduced the physical transfer of paper money and coinage from one place to another or even from one person to another.

Online banking also known as internet banking, e-banking, or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website. Internet banking is a term used to describe the process whereby a client executes banking transactions via electronic means. This type of banking uses the internet as the chief medium of delivery by which banking activities are executed. The activities clients can carry out are can be classified as transactional and non-transactional.

 

Advantages of E-banking or Internet banking :

1. Convenience: Banks that offer internet banking are open for business transactions anywhere a client might be as long as there is an internet connection. Apart from periods of website maintenance, services are available 24 hours a day and 365 days round the year. In a scenario where internet connection is unavailable, customer services are provided round the clock via telephone.

 2. Low-cost banking service: E-banking helps in reducing the operational costs of banking services. Better quality services can be ensured at a low cost.

 3. Higher interest rate: Lower operating cost results in higher interest rates on savings and lower rates on mortgages and loan offers from the banks. Some banks offer high yield certificates of deposits and don’t penalize withdrawals on certificates of deposits, the opening of accounts without minimum deposits, and no minimum balance.

 4. Transfer services: Online banking allows automatic funding of accounts from long-established bank accounts via electronic funds transfers.

 5. Ease of monitoring: A client can monitor his/her spending via a virtual wallet through certain banks and applications and enable payments.

 6. Ease of transaction: The speed of transaction is faster relative to the use of ATMs or customary banking.

 7. Discounts: Credit cards and debit cards enable Customers to obtain discounts from retail outlets.

 8. Quality service: E-Banking helps the bank to provide efficient, economic, and quality service to the customers. It helps the bank to create new customers and retain the old ones successfully.

 9. Any time cash facility: The customer can obtain funds at any time from ATM machines.

 Disadvantages of E-banking Internet banking

1. High start-up cost: E-banking requires a high initial start-up cost. It includes internet installation cost, cost of advanced hardware and software, modem, computers, and cost of maintenance of all computers.

 2. Security Concerns: One of the biggest disadvantages of doing e-banking is the question of security. People worry that their bank accounts can be hacked and accessed without their knowledge or that the funds they transfer may not reach the intended recipients.

 3. Training and Maintenance: E-banking requires 24 hours supportive environment, support of qualified staff. Bank has to spend a lot on training its employees. Shortage of trained and qualified staff is a major obstacle in e-banking activities.

 4. Transaction problems: Face-to-face meeting is better in handling complex transactions and problems. Banks may call for meetings and seek expert advice to solve issues.

 5. Lack of personal contact between customer and banker: Customary banking allows the creation of personal touch between a bank and its clients.

DISADVANTAGES  OF E-BANKING

·        Difficult for Beginners

·        Trust and Responsibility

·        Inconvenience

·        Inability to Handle Complex Transactions

·        Financial Jargon

·        Security Issues

·        Technology Issues

·        Virtual Assistance

·        Complicated Websites

·        Other Limitations

TRADITIONAL BANKING

Transfer funds between accounts within the bank

— Order Travelers, cashiers, and regular cheques

 — Receive investment product and service information

 — Apply for Auto, Mortgage, Home, Equity, student, or personal loans

— Stop payment of a cheque

 — Request for a demand draft

 — Request for a chequebook

— Inquire about cheque status

— Inquire about tax deduction

 — Renew fixed deposits

 — Open or create fixed deposits

 — Open an account

ADVANTAGES OF TRADITIONAL BANKING

You can get any information related to the bank and still have any doubts,

you can immediately ask.

— If you are having any problem related to the bank, you can immediately go to the bank and solve your doubts.

 — In traditional Banking transactions, you do not need any type of security. The only matter that you have to keep your bank papers of bank book safe

 

DIFFERENCE BETWEEN TRADITIONAL BANKING & E-BANKING

Basis	Traditional Banking	E-Banking Practices
Global Coverage	Traditional Practice provides limited coverage.	E-Banking Practices involve global coverage while sitting at home/office.
Marketing Tool	Traditional Practice does not provide proper marketing tools.	E-Banking provides the facility of marketing products/ schemes online easily.
Prompt Services	Traditional Practices involve a process that requires more time.	E-Banking same lot of lines as there is no need to stand in long queues.
Reduction of errors/ Frauds	Traditional banking practices do not provide a complete check on banking transactions.	With the system of reconciliation of inter-branch transactions, frauds and errors could be reduced.
Paperwork	Bank executives have to perform a lot of paperwork which increases both time and cost.	Cost and time could be reduced or everything is to be through some interval and no need for huge paperwork.
Risk of carrying cash	In the case of traditional business, a person has to carry cash at each point in time.	E-banking provides banking without carrying cash as plastic money (ATMs, Credit cards are available)

 

ONLINE TRANSACTION

Also known as online banking or internet banking.

§ Provides 24 hours access to a bank account.

 § Allows to view recent transactions, print out statements, transfer funds between accounts,s and make payments.

 § Online transaction covers both computer and mobile transactions.

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