Online Banking

Topics: Online banking, Bank, Credit union Pages: 9 (2749 words) Published: April 30, 2006
Online Banking


The World Wide Web has changed our culture in so many ways. People are able to do so many activities over the World Wide Web, it is unbelievable. You can pursue a degree through online universities, communicate with users around the world, purchase goods and services online, and yes, you can bank and pay your bills online. This new technology has enabled us to make payments, maintain a checking/debit card account, balance transfers, all via the web. You can maintain your entire financial portfolio through online banks that provide this feature. There are online banks that can provide interactivity between popular financial management software programs, such as Quicken and Microsoft Money. When using online BillPay, in most cases, you even have the option to stop receiving your bills through the mail altogether.

Of course, as there always are with any new technology, there are "strings attached", if you will. When placing information of such high value on the Internet, hackers, phishers, and other con artists can be expected to attempt to retrieve it. Identity theft, fraud, and security breaches are a few of the issues that surround this new technology. There are organizations dedicated to overseeing the developments of online banking. These organizations provide guidances and regulations to assist in resolving the issues outlined above. History of Online Banking

The first online banking service was offered by Presidential Savings Bank beginning October 6, 1995. Security First Network Bank followed suit, as an Internet-only bank. Soon "real-space" banks began to offer services online. These "real-space" banks who also offer services online are known as "brick and click" banks. Among the first brick and click banks to offer these services were Wells Fargo, Chase Manhattan Bank, and Bank One. The increase in the growth of online banking has nearly tripled from 2000 to 2005. According to research done by David Hallerman, Senior Analyst at eMarketer, the estimated amount of households banking online in 2000 was 12.5 million. His research shows that in 2005, there are 35 million households banking online. This is approximately thirty-four percent of the U.S. Internet-using population. The projected amount of households banking online in 2007 is 45 million. EMarketer is a New York-based research company.

Among the most prominent and popular brick-and-click banks are Wells Fargo, Bank of America, and CitiBank. Bank of America has 13.2 million online banking customers. Advantages and Disadvantages of Online Banking

Although for the most part, the advantages and disadvantages of online banking are pretty cut and dry, I found a great summary at, a site dedicated to educating new e-bankers about online banking. The most obvious advantage is convenience. If you do not have the time to make a trip to the bank, or to the ATM, your transactions can be handled online from the convenience of your very own PC. Not only does this mean convenience, but convenience from anywhere with a working Internet connection. Another advantage is the speed at which transactions take place. If you submit a payment via the U.S. Postal Service, you have to account for the time it will physically take for your payment to travel, and how long it takes for the recipient to process the payment. An online transaction is much faster and more efficient for both parties. Most online banking transactions are processed in a matter of hours. Another advantage of online banking is how inexpensive transaction processing is. Of course, there is the cost of implementing your online banking service, but the actual cost of each online transaction is a mere one cent. Compared to other methods of transaction, this is by far the cheapest. ABC News' Mellody Hobson describes the differences in cost between the most popular methods of transaction. At a full-service bank branch, a transaction...

References: (continued)
McGann, Rob. ClickZ Network: Solution for e-Marketers. Online Banking Increased 47 Percent Since 2002. 20 September 2005.
Messmer, Ellen. Computer World. Advisory Body Calls For More Secure Internet Banking. 17 September 2005.
Ponemon, Larry. Computer World. Trust in Online Banking: Hard to Earn, Easy to Lose. 20 September 2005.
Presidential Bank. Press Kit: Online Banking Marketspace and Trends. 15 September 2005.
U.S. Code Collection. Title 18 Part I Chapter 47 Sec 1030. Fraud and Related Activity in Connection with Computers. September 23 2005.
Vijayan, Jaikumar & Lai, Eric. Computer World. Banks Get New Online Authentication Guidelines . 20 October 2005.
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