Online banking (or) Internet banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website. This allows customers to do their banking outside of bank hours and from anywhere where Internet access is available. In most cases a web browser is utilized and with any type of Internet connection.
Features of online banking:
Bank statements, with the possibility to import data in a personal finance program such as Quicken or Microsoft Money.
Electronic bill payment.
Funds transfer between a customer's own checking and savings accounts, or to another customer's account. Investment purchase or sale.
Loan applications and transactions
Repayments of loan.
It allows customers to maintain all of their accounts in one place whether they are with their main bank or with other institutions.
There are a growing number of so-called virtual banks that operate exclusively online.
Online banks provides higher interest rates due to low costs compared to traditional banks.
Security : Single password authentication, as is the case in most secure Internet shopping sites, is not considered secure enough for personal online banking applications in some countries.
Online banking user interfaces are secure sites and traffic of all information - including the password - is encrypted, making it next to impossible for a third party to obtain or modify information after it is sent. However, encryption alone does not rule out the possibility of hackers gaining access to vulnerable home PCs and intercepting the password as it is typed in (keystroke logging). There is also the danger of password cracking and physical theft of passwords written down by careless users. ,
Fraud: Some customers avoid online banking as they perceive it as being too vulnerable to fraud. The security measures employed by most banks can never be completely safe, but in practice the number of fraud victims due to online banking is very small. This is probably due to the fact that a relatively small number of people use Internet banking compared with the total number of banking customers world wide. Indeed, conventional banking practices may be more prone to abuse by fraudsters than online banking. Credit card fraud, signature forgery and identity theft are far more widespread ""offline"" crimes than malicious hacking. Bank transactions are generally traceable and criminal penalties for bank fraud are high. Online banking becomes less secure if users are careless, gullible or computer illiterate. An increasingly popular criminal practice to gain access to a user's finances is phishing, whereby the user is in some way persuaded to hand over their password(s) to a fraudster.