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Dec 6, 2019

How Online Banking Works: A Beginner’s Guide

Banking/Personal Finance, Digital Banking, General Information

A Beginner’s Guide to Online Banking: Back to Basics

Online banking may seem daunting or unnecessary, woman smiling at phonebut the benefits far outweigh the minimal drawbacks. Simply put, online banking, or internet banking, allows you to do almost anything you could do at a bank through a computer or mobile device.

It might be surprising to learn that online banking has been around since the ‘80s. The rise of e-commerce in the mid-to-late ‘90s led to the mass adoption of internet banking first by financial institutions and then by individuals. With the growing popularity of online banking, there has been intense competition over the last ten years to make online banking become more secure, accessible, and more convenient.

Getting Started with Online Banking

Every bank and credit union is different, each offers a wide range of services. Over the past few years, it has become easier and more straightforward to open a credit union or bank account online. Today, most financial institutions allow you to open an online account from the comfort of your own home, without ever needing to go to a physical location.

Setting up a Credit Union or Bank Account

There are a variety of financial institutions that allow online banking, each with their pros and cons. Make sure to follow the instructions on their websites, but this is the general process you can expect.

  • Check if your bank or credit union offers personal online banking.
  • Visit their website and find the online banking section.
  • Fill in your banking account details to ensure that you have an account with the institution.
  • Register by choosing an account name and password.
  • Answer some questions as part of the verification process.
  • Confirm your information, and voilà; enter the world of online banking.

Initially, some verification processes may require you to be physically present at a location, while others will simply mail your online banking login information to you.

How Online Banking Works

Armed with your banking account information and password, you can access your credit union’s secure website through a computer or an app where you can manage your financial transactions instantly – any time. Some of the essential actions you can take are:

  • Quickly review your balances, transactions, and account details
  • Transfer money between accounts
  • Pay bills online
  • Manage loans and mortgages
  • Gain secure access to banking documents
  • Change personal details like addresses and phone numbers
  • et up customized alerts and notifications

The Benefits of Online Banking

Make sure you explore your credit union’s website to familiarize yourself with all the features they offer. Some advantages that are common across all personal online banking platforms include:

  • Convenience – You can access your account from any place at any time with online banking services. The long and often frustrating process of going to a bank during work hours, waiting in line, speaking with a teller, processing; has now become easy, with a few simple clicks.
  • Control – You have access to more of your financial information than ever before. Setting up payments to pay bills, updating personal details, monitoring account activity, canceling transactions — everything is in your control.
  • Conservation – By getting your account statements electronically, not only do you have instant access to your transaction history, but you also don&rsquot have paper cluttering up your home.

The Drawbacks of Online Banking

In an ideal world, everything is perfect; this being the real world means that there are some drawbacks with online banking, these include:

  • Security – The most important issue is about data security; as compared to traditional banks. Some of the major data breaches in the past — the Equifax breach of 2017 for example, exposed millions of users’ information. So, protecting your data should be a top priority. When it comes to online banking, mitigate your risk by having suspicious activity tracked and automatic notifications sent to your email or phone.
  • Human contact – Though online banking is convenient, there are times when it is better to just talk to a person, as you would in a traditional bank. Some people prefer the in-person banking experience, which can’t be done with online-only banks. As a credit union, Mission Fed constantly considers how best to serve its members. We are always happy to meet you, face to face and have a conversation. If you enjoy that personal touch, then make sure your online bank also has physical offices.
  • Tech Savvy – You do need to know some web basics like navigating a website, setting up accounts, and downloading an application. Usually, these processes are designed to be as intuitive as possible, and often there are video tutorials to help if you run into problems.

Why You Should Try Online Banking

This guide to online banking intends to ease some of your reservations about internet transactions. Online banking has existed for decades because of the convenience it offers and security is always a top priority. More than 30 years of innovation and competition have ensured that your money and data are treated with the utmost respect and care.

To get more information about online banking for beginners, talk to the experts at Mission Fed because we are a credit union (versus a for- profit bank) member service is always our number one priority.

The content provided consists of opinions and ideas and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article does not constitute endorsement, control or warranty by Mission Federal Credit Union.

 

Sources:

Money.co.uk. How does online banking work? https://www.money.co.uk/current-accounts/how-does-online-banking-work.htm

Thefinancialbrand.com. Infographic: The History of Internet Banking (1983-2012). https://thefinancialbrand.com/25380/yodlee-history-of-internet-banking/

FTC. Equifax Data Breach Settlement. https://www.ftc.gov/enforcement/cases-proceedings/refunds/equifax-data-breach-settlement

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