Question- What are the benefits of e-banking online banking?

Ans.

Benefits of E-banking Online Banking

Online banking or e-banking offers ease of access, secure transactions and 24-hour banking options. From small start-up companies to more established entities, small businesses rely on e-banking to eliminate runs to the bank and to make financial decisions with updated information. Business firms rely on efficient and rapid access to banking information for cash flow reviews, auditing and daily financial transaction processing.

Benefits of online banking can be understood as under-

1. Routine Banking Activities : Owners, managers, accounting staff and other approved employees can access routine banking activity such as deposits, cleared checks and wired funds quickly through an online banking interface. It ensures smooth processing of all banking transactions on a daily basis, rather than waiting for monthly statements. Errors or delays can be noted and resolved quicker. Almost all banking services are provided online like online account information, payment, transactions, application for loan, etc.

2. Leads to Productivity Gain : Online banking leads to productivity gains. Automating routine bill payments, minimizing the need to physically visit the bank and the ability to work as needed rather than on banking hours may decrease the time involved in performing routine banking activities. Online search tools, banking actions and other programs can allow staff members to research transactions and resolve banking problems on their own, without interacting with hank employees. In some cases, month-end reconciliations for credit card transactions and bank accounts are automated. As online banking facilitates customers to get information and make transactions themselves, it reduces the work load on staff. Bank staff now only needs to handle those customers who are not using online banking.

3. Easy handling of Customers : Online banking makes it possible to provide service to numerous bank customers at same time simply by using their online banking user ID and password.

4. Lower Banking Costs : Firms that place more demands on banking employees and need more physical assistance with wire transfers, deposits, research requests and other banking activities often incur higher banking fees. Opting for e-banking minimizes business overhead and banking expenses. It reduces set up and operational costs as people make their transaction online, so paper cost e.g. cheques are not involved. No set up cost is involved because all the services are provided online.

5. Saves Time : Online banking saves time of bank customers as they do. not need to spend their time in long queues. Transactions can be done in real time.

6. No Charges : Online banking is free for customers. Some involve very low charges.

7. High Interest Rates : Online banking services are offered with high interest rates because it reduces other operational charges.

8. Reduced Errors : It reduces banking errors. Automation of payments, or other consistent financial activities ensure payments on time and may prevent errors caused by keyboard slips or user error. Opting for electronic banking eliminates errors due to poor handwriting or mistaken information. In many cases, electronic files and daily reviews of banking data can be used to double or triple check vital accounting data.

9. Faster Banking : E-banking is a faster way of performing banking functions.

10. Eco-friendly : E-banking is an eco-friendly process as it does not consume volumes of paper and hence helps protect the environment.

11. Ease of Monitoring : A client can monitor his / spending via a virtual wallet through certain banks and applications.

12. Reduced Fraud : Increased scrutiny through audits and anti-fraud measures requires a high level of visibility for all transactions. Relying on online banking provides an electronic footprint for all accounting personnel, managers and owners who modify banking activities. It offers visibility into banking activities, which makes it harder for fraudulent activities to occur.

Benefits of e-banking can also be discussed by classifying in the following categories:

(I) Benefits to Banks : Banks get some specific benefits after starting the e-banking services.

1. Increased Services Quality : E-banking services include less time, complete transaction, no human conflict and presence etc. Thus, the quality of services is increasing.

2. Increased Customer Rate : Customers are accepting e-banking beside a traditional account.

3. Branding : Banks offering e-banking services has better branding and better responsiveness to the market.

4. Profit Maximization : The main goal of every banking company is to maximize profits for its owners. Banks are increasing its profit by reducing the cost of paper, time etc. by using e-banking. Thus, automated e-banking services offered a perfect opportunity to maximize profits.

(II) Benefits to Customer : The main benefit to customers is saving of time by the automation of banking services processing and introduction of an easy maintenance tools for managing customer's money. The benefits of e-banking are as under-

(i) Increased comfort and time saving-transactions made without requiring the physical interaction with the bank.

(ii) E-banking facilities speed up cash cycle and increases efficiency of business processes as large variety of cash management instruments is available on Internet sites.

(iii) E-banking offers continuous access to information.

(iv) Customers looked for slightly different kind of benefits from e-banking.

(v) All the banking transactions performed from the comfort of the home or office or from the place a customer wants to.

(vi) The response of the medium is very fast; therefore customers actually waited till the last minute before concluding a fund transfer.

(vii) Customers download their history of different accounts and do a "what-if" analysis.

(III) Benefits to National Point of View : The investment in e-banking by banks can make some long-term benefits for our country. The benefits that our country is getting from e-banking are as under-

1. The issue of computers eliminating jobs was quite painful. But it has two sides that automation eliminates certain types of job like record keeper and also created jobs like administrator, system analyst, programmer, operator etc. and helped to reduce unemployment.

2. Banks work towards building national capital, increasing national savings and mobilizing investments.

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