Question- What are online financial services? Discuss in detail.

Ans.

Online Financial Services

Although the term 'online financial services' seems complex or opaque, it's really not. Online financial services are financial services that are used and delivered via computerized networks, devices, and telecommunications. It means that everything from computers to smartphones to the internet can be used to render or use a financial service. In essence, it's like good old physical-world financial services but with a virtual twist, Online financial service sector, dramatically changed the cost and capabilities for marketing, distributing and- servicing financial products and enabling new types of products and services to be developed. This is especially true for retail financial services.

The growth and de-facto standardization of Internet-enabled personal financial management software have also contributed to an increasing array of low cost and potentially richer ways to provide information and transaction services to customers.

For hundreds of years, financial services were rendered and used physically. In other words, you had to go in to the bank in order to move money around. This is how it was for a very long time. Not very long ago, something known as online financial services came into existence and changed everything.

1. Loan Service : A business owner can go online to apply for a loan. He can get approved in 30 seconds and the funds are transferred to his bank account. The online application, the approval that book place over the internet, the funds he got delivered virtually, and his access to his online bank account are all individual electronic financial services.

2. Fund Transfer Service : But how did a businessman gets those funds transferred to him? He simply got an ACH deposit. ACH stands for automated clearing house. This refers to a network where financial transactions going from one bank account to another are transmitted electronically.

3. Debit Card : After businessman gets the funds transferred to his bank account, he can use his debit card to electronically access his bank account from an ATM to withdraw 10,000. The use of an ATM or automated teller machine is an electronic financial service. That's because the ATM must electronically confirm businessman has enough funds in his bank account to withdraw the 10,000. It then electronically records that he withdrew 10,000 from his account.

4. Pick-up Some Supplies for Business : Businessman goes to the store to pick up some supplies for his business. He realizes however, that it's much cheaper to buy tham online. So, he uses his credit card to purchase the supplies.

5. Online Banking : To access a bank and online banking facility, a customer with internet access will need to register with the bank for the service, and set up a password and other, credentials for customer verification. The credentials for online banking is normally not the same as for telephone or mobile banking. Financial institutions now routinely allocate customers numbers, whether or not customers have indicated an intention to access their online banking facility. Customer numbers are normally not the same as account numbers, because a number of customer accounts can be linked to the one customer number. Technically, the customer number can be linked to any account with the financial institution that the customer controls, though the financial institution may limit the range of accounts. The customer visits the financial institution's secure website, and enters the online banking facility using the customer number and credentials.

Each financial institution can determine the types of financial transactions which a customer may transact through online banking, but usually includes obtaining account balances. Most banks set limits on the amounts that may be transacted, and other restrictions. Most banks also enable customers to download copies of bank statements, which can be printed at the customer's premises. Some banks enable customers to download transactions directly into the customer's accounting software. The facility may also enable the customer to order a cheque book, statements, report loss of credit cards, stop payment on a cheque, advise change of address etc.

6. Personal Financial Management Support : Personal financial management support, such as importing data into personal accounting software. Some online banking platform support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

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