Online Banking Flashcards
Opening and maintaining bank accounts
Many customers are using online banking because of the convenience of banking at any time of the day and the reduced amount of time and fuel costs incurred when travelling to and from the bank.
Features of online banking
Online banking offers features such as:
Up-to-date bank statements
Bill payments
Transfer of funds between the customer’s different accounts
Loan applications
Higher interest rates for savers due to lower costs
The steps that customers undertake when banking online are as follows
1)
2) Security information
3) Account information and services available
4) Account details
Customers have to log on
In order to log on to some banks, customers go to the website’s online banking page. They are asked to type in their user ID or username. After this they may be taken to another page before being asked for security information.
Security information
All sites require customers to type in a password. Some will ask for additional information such as a favorite place, their mother’s maiden name or even their date of birth. Alternatively, they may ask for a number of characters from a character string specified by the customer.
Account information and services available
The next page will have a list of the customer’s accounts and account numbers, together with links to the customer’s personal details. There is also a list of the different services that the customer can apply for.
Account details
When the customer selects a particular account, all the recent transactions are listed. A number of services are now available, although these differ from bank to bank.
The customer can: Order a bank statement Go to a summary of the customer’s bank charges Pay a bill Transfer money between accounts Get account details Change or create standing orders and direct debits Stop a cheque Get a new PIN sent to them
Security issues
An example of a possible identity fraud runs like this:
Bradley gets a loan from the bank by pretending to be somebody else, say Estella. Bradley uses personal information about Estella, such as address, birth date and bank account number that he has obtained by hacking into a database. He manages to convince the bank that he is Estella. Bradley does not pay back the loan and the bank thinks Estella had taken out the loan. They expect Estella to pay the loan back. When she can’t or won’t, this causes her to have a poor credit rating so that she cannot borrow money herself.
Advantages to banks using online banking
They don’t have to rent several premises, which can be very expensive.
They can employ fewer staff which means that they pay less in staff wages; they also have lower costs overall as pay less running costs for electricity, heating and lighting.
With lower costs, they can offer higher interest rates for savers and lower interest rates for borrowers, which in turn attracts more customers.
There are less chances of bank robbery.
Less money is spent on security staff.
Advantages to customers using online banking
There is no need to spend money on transport going to and from the local branch.
People with disabilities find it easier than going to the local branch.
Customers can bank at any time of the day or night.
They can apply for loans without being embarrassed about asking a cashier.
Interest rates on savings accounts are higher.
They do not have to worry about whether the mail will get their bill payments to companies on time.
There are less chances of robbery and violence.
Disadvantages to banks using online banking
There is a less personal touch and so it is harder to sell other services that may be available.
There is potential for fraud and interception of account information by hackers, resulting in the banks losing money.
There are initial costs, such as buying the hardware when starting up.
They need to retrain staff, which is costly.
Disadvantages to customers using online banking
They may lose contact with their friends as they may not go out of the house much.
Customers must have a computer, Internet access, basic computer skills and a reliable electricity supply.
There is a small risk that hackers may intercept data and take money from the customer’s account.
Customers may prefer ‘personal touch’ with their banks.
Customers may mismanage accounts now that it is so easy to transfer money from one account to another.
Customers’ phone bills can increase as they would be using the phone line to carry out online banking.
If customer’s don’t have broadband, other family members will not be able to use the phone at the same time as one person is using online banking.
Customers are unable to make cash deposits or withdraw cash without going to the bank or an ATM.
Customers may receive e-mails that claim to be from the bank but are fraudulent, asking them to give bank details, including passwords (phishing).
