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Internet Banking

More and more, American banks offer “online banking.” These banks may be the online divisions of conventional “brick and mortar” banks that actually have branches or, to a growing degree, Internet-only banks. Banks that have both kinds of presences often encourage customers to use their online services because they reduce personnel costs.

An online banking arrangement allows you to use the Internet to make transfers between accounts, make investments, arrange for loans, and, most conveniently, pay bills electronically without having to write checks or use the postal service. In many cases, you can arrange to receive bills for utilities, credit cards and other services electronically instead of on paper. Electronic banking also allows you to check your balances without visiting a bank, view images of your paid checks, and monitor your transactions.

The Internet does not yet have the technology to deliver cash to your computer, or to deposit a physical check into your bank through your computer (although remote-deposit is now possible at some banks using the imaging capabilities of cellular telephones). ATMs, however, allow most of these transactions to be made without human contact.

Online banking, as can be expected, brings concerns for data security. Online banks hence often have greater levels of security than conventional web sites, especially if the bank does not “recognize” the computer that is trying to log on to the system. Bear in mind that most fraudulent users do not actually “break into” the account from a standing start, but rather acquire log in, password, and authentication information through phishing (bogus e-mails) and pharming (redirecting traffic to a fake website). A good online bank will have procedures for protecting against these practices, such as e-mail notification to customers of transactions over a certain dollar amount, or if payees for electronic bill-paying services are changed or added.

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