Ways-of-Banking

Editor’s Note : This post was originally published in [January, 2019] and has been updated for freshness, accuracy and comprehensiveness.

What is Online Banking

  1. Accessing Banking services via internet
  2. Also Called Internet Banking or Web Banking
  3. Conducting financial and non-financial transactions via web interface or a smartphone
  4. Ability to access all financial information of your bank on your computer or mobile

What is Digital Banking

  1. Banking services delivered over internet
  2. Digitization of traditional banking activities and programs
  3. In technical terms, full digital transformation of front-end, back-end , data collection and everything

What is Internet Banking

  1. Facility to a customer to transact/access financial data via a net banking account
  2. Internet banking is same as Online banking
  3. Manage your money online via internet.

What is Mobile Banking

  1. Accessing banking services via Mobile phone
  2. Using of online banking from smartphone or cellphone

What is Neo Banking

  1. Digital Only
  2. Digital Offers on the go
  3. Banking beyond walls
digital banking

“Financial Institutions must be able to deliver and easy to navigate, a seamless digital platform that goes beyond a miniaturized online banking platform.”

-Jim Marous, Publisher –  Digital Banking Report

How many of you have actually visited a bank in recent times?

Do you remember the last time you visited a bank to transact money?

Not sure, right?

The reason for this can be understood better if you acknowledge the fact that you live in an era of digital banking. Your buying behavior and modes of payment have changed drastically over the last decade. Cheque and cash are old schools now, and it is more about online bankingmobile banking, and Internet banking.

This cashless economy has not only made things easier for you but has also made it all instant and quick. You no longer have to carry wads of cash or wait for banking hours to receive and transact money. 

While you do have quite an options when it comes to virtual banking, here, we would focus majorly on digital bankingmobile banking, open banking, and online banking.

So here is the primer on different ways to bank.

What is ONLINE BANKING | Define Online Banking

You are using online banking service every time you log in to your online bank account. In other words, transactions conducted electronically using the internet as a gateway are called online banking. 

“Online banking refers to banking services where depositors can manage more aspects of their accounts over the Internet, rather than visiting a branch or using the telephone. Online banking typically is comprised of a secure connection to banking information through the depositor’s home computer or another device.” – Techopedia.

So Online Banking is –

  • Accessing Banking services via internet
  • Also Called Internet Banking or Web Banking
  • Conducting financial and non-financial transactions via web interface or a smartphone
  • Ability to access all financial information of your bank on your computer or mobile
Online Banking

What are the Pros of Online Banking | Advantages of Online Banking

  • HASSLE FREE BANKINGAlmost every financial institution nowadays gives this facility to its customer to reduce the hassle of visiting their physical branch.
  • EASY AND CONVENIENT FEATURESSome banks even allow you to deposit cheque by simply taking a picture of it.
  • BANKING ANYWHERENo more tedious process of banking with the long queue with restricted working hours and unpredictable weather conditions with equally unpredictable mood swings in hot, sweaty and humid conditions.
  • BANKING ANYTIMEWith the advent of online banking, a person can virtually monitor and transact money 24/7 without having to wait for the banking hours.
  • REAL-TIME ALERTS/NOTIFICATIONSAlso, the alert messages and emails allow you tomonitor your account anytime and detect any fraudulence well in advance.

What are the Cons of Online Banking| Disadvantages of Online Banking

  • COMPUTER/MOBILE CANNOT DISPENSE/DEPOSIT MONEYThe biggest drawback of this mode of banking is that it can’t be used to deposit and withdraw money.
  • NO OFFLINE MODEAlso, your online banking experience is dependent on your internet connectivity.

What is DIGITAL BANKING? | Define Digital Banking

While there is a tendency among people to confuse this term with online bankingdigital banking is definitely not the same as the former. While online banking literally limits you to the services provided by your banks like NEFT transfers, automatic payment reminders, and the likes, digital banking goes beyond this.

Online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers.

Digital Banking is –

  • Banking services delivered over internet
  • Digitization of traditional banking activities and programs
  • In technical terms, full digital transformation of front-end, back-end , data collection and everything

What are the Pros of Digital Banking? | Advantages of Digital Banking

  • ACCESS HIGH-END FEATURES VIA INTEGRATION WITH THIRD PARTY API’SWhen you talk about digital transactions, you think of mobility, feature-laden transactions, predictive and profile-oriented banking with functions like booking tickets online and purchasing a product/service online.
  • SHOP FROM OFFICE, HOME, BUS OR ANYWHEREIt is also about using e-commerce businesses for doing your day-to-day transactions and your regular online banking without any hassle on-the-go.
  • AVAIL INSTANT DISCOUNTS AND CASHBACKSDigital banking also means attractive cash-backs, discounts, and vouchers while transacting digitally.

What are the Cons of Digital Banking? | Disadvantages of Digital Banking

While the advantages outweigh the disadvantages, there are a few drawbacks involved in digital banking as well.

  • RELUCTANCE TO CHANGEYou may not be very comfortable making large payments digitally.
  • EXCESS SPENDING’SAlso, you may tend to get lured into unnecessary online shopping just to use the cash back and vouchers that you get whiletransacting digitally. 

But who considers shopping a drawback ever, right?

What is INTERNET BANKING? Define Internet Banking | What is e-banking?

You may say that online banking and internet banking are the same. 

Yes, agreed! 

However, there is a new facet of online banking that goes over and beyond the understanding and scope of online banking. 

Open Banking Ever wonder what that means to you? 

Through this concept, people can share their transaction data with third parties to boost competition in the financial market. Sounds interesting, right?

So, Internet Banking or e-banking is –

  • Facility to a customer to transact/access financial data via a net banking account
  • Internet banking is same as Online banking
  • Manage your money online via internet.

What are the Pros of Internet Banking? | Advantages of Internet Banking

  • SINGLE ACCOUNT FOR ALL BANKING SERVICESIt allows you to initiate and make payments directly from your account as a bank transfer. It also enable you to keep a check on your finances in a better way.
  • SEAMLESS INTEGRATION WITH OPEN BANKING API’SThrough open banking, you are not only transacting, but you are also streamlining your finances andmanaging it more effectively.
  • GET PERSONALIZED BANKING SERVICESWith this, you can also get more customized services as per your spending behavior, leading to a more responsible and systematic lending process.

What are the Cons of Internet Banking? | Disadvantages of Internet Banking

  • EMERGING CONCEPTThis concept is relatively new, and that literally translates to many trial-and-error instances and a general mistrust related to its security and authenticity.
  • RESERVATION WITH TECHNOLOGYPeople who are not adept at digital technology might not be able to reap its full benefits.

What is Mobile BANKING?| Define Mobile Banking

You all have used this at some time or the other. Every financial transaction you undertake using your Smartphone applications is termed as mobile banking. Apart from the commercial apps, your financial service provider would also have a mobile app with which you can transfer cash and make bill payments conveniently on your mobile.

So, Mobile Banking is –

  • Accessing banking services via Mobile phone
  • Using of online banking from smartphone or cellphone

This is by far the most trending among all the banking types, and the onus is that you would only need your Smartphone and an internet connection for this kind of banking!

What are the Pros of Mobile Banking? | Advantages of Mobile Banking

  • EASE OF USE AND CONVENIENCEMobile banking has a lot of scope in the virtual banking space and encompasses transactions through mobile wallets, digital payment modes, UPI transfers (like the BHIM app), etc.
  • A BOUQUET OF BANKING BENEFITS IN YOUR POCKETThere are many mobile apps which offer you safe and secure transactions and much more, ‘anywhere – anytime’ with just a click. For example, SBI has SBI Yono, SBI Anywhere; ICICI Bank has iMobile. HDFC has HDFC Mobile and Pay Zapp. Kotak Mahindra’s Banking app is Kotak 811, while Axis Mobile provides Axis Mobile.
  • EXPANSION OF SERVICESWe also have Payment Banks committed to the inclusion and service to the last mile like PayTM, Vodafone m Pesa, Airtel, Fino and so on.

This banking mode is very fast and convenient and hence the most preferred one among the younger and older generation alike.

You don’t have to physically carry your cash or your card as your mobile wallets function as virtual money which can be transferred in an instant.

Transactions that are done on your mobile apps also get irresistible cash back, vouchers, and coupons that can be redeemed on your future transactions or purchases.

You can not only spend easily but also keep track of all your spending in a month. 

What are the Cons of Mobile Banking? | Disadvantages of Mobile Banking

  • DATA ENCRYPTION NEEDEDWhile there are so many positives in mobile banking, there are certain points to ponder and be wary of in this mode of banking as well. Unlike websites, the mobile apps that you use for digital transactions have to be great at data encryption.
  • FEAR OF PHONE GETTING STOLENDid you even consider the fact that your mobile wallets and apps may get into wrong hands in case you don’t lock your phone?
  • ACCESS TO UNSECURED WI-FI EXPOSE DATA TO HACKERSYou may fall prey to hackers if you use them on an unsecured or public Wi-Fi connection. Then again, when your service reception is poor, you have the possibility of getting intercepted by hackers and unauthorized parties. 

What is Neo BANKING?| Define Neo Banking

Neo Banking is –

  • DIGITAL ONLYThese are still nascent, but filled with potential, No ‘brick and mortar’,  completely ‘Digital Only’ banks. 
  • DIGITAL OFFERS ON THE GOBuilt from scratch, digitally,  to provide customers with seamless user experience, these are the banks which add ‘digital offers’ to basic banking products and services, regardless of the banking license.
  • BANKING BEYOND WALLSThey compete independently and on equal terms with traditional banks or digitally manifested traditional banks. 

What are the Pros of Neo Banking? | Advantages of Neo Banking

Neo banks offer –

  • BANKING SERVICES AT REDUCED COSTWith banks not investing in opening a branch can save a lot on CAPEX, thereby offering banking services to its customer at reasonable cost.
  • ADVANCED FEATURES WITH CUSTOMIZATIONWith an emerging concept and newer technology, neo bank offers full customization and integration with legacy systems.
  • A WIDE ARRAY OF BANKING SERVICES FULLY SECURED AND COMPLIANTOpen a bank account in 3-10 minutes or initiating a multi-currency payments, access to customized reports , spend analytics or 24/7 support all that is possible with Neo banks

Few of the examples of Neo Banks are Atom Bank, Fidor, GoBank, mBank, Moven, N26, Open and WeBank.

With the advent of digitization, you sure have a lot of options when it comes to financial transactions. Growing customer demand for digital access, convenience, with a focus on ease in operation, security and seamless transactions across different platforms and channels, it is yet to be seen whether the banks are investing in digital services rightly? Are they doing enough? and are they doing the right way? only the time will tell. But then, in this world of fast-evolving digitization, we are just the click NEAR!

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