Online Banking
What is the History of Online Banking?
In 1990 the Wells Fargo Bank, based in California USA, introduced the world's first online banking service. It was not until 1997 that a similar service was launched in the UK by the Nationwide Building Society. Since the introduction of the first services many banks have started their electronic banking services with access available via your PC, mobile phone or an interactive TV.
Many banks now offer Internet based services alongside their traditional banking facilities, whilst other organisations have established new breeds of 'Internet' or 'Telenet' banks. Telenet banks are those that allow their customers to communicate by telephone as well as the Internet. Most of the UK's new 'Internet or 'Telenet' offerings have the backing of large and well known financial institutions.
What is an Internet Banking Service?
Internet banking normally offers you all the main banking services with the added flexibility of being able to manage your banking needs online.
Internet banking services normally allow you to view balances and statements, transfer funds between accounts, pay bills and set up standing orders and other such services. If you have additional products such as credit cards, you will also be able to check and repay outstanding balances.
Some Internet banking facilities are designed to complement the services provided by traditional high street banks. These services are now available from nearly all the well known banks and offer you an alternative way of running your accounts. Other providers only provide their services to customers that wish to operate their bank account via the Internet.
What is "Telenet" Banking Service?
An alternative service to Internet only banking is 'Internet and telephone based' banks. These banks conduct all their business via the Internet, telephone (or by post) and like the Internet only banks have no branch network.
These new banks are frequently completely new businesses, set up to deal with customers solely by electronic means. These businesses sometimes describe themselves as 'Telenet' banks as opposed to Internet Banks because they offer customers a choice of how to deal with them. Good examples include Intelligent Finance (Halifax/Royal Bank of Scotland), Cahoot (Abbey National) and Smile (The Co-operative Bank).
What are the benefits?
Where the Internet service complements your traditional high street bank the benefits are generally measured by the ease of access to your money. These additional services mean do not need to visit a branch, phone a call center, or post any items to them. Any of your banking requirements can be dealt with online.
Another great advantage is the access to your bank accounts for 24 hours per day on almost everyday of the year. Bank Holidays or weekends will not be a barrier to you in the future. The access provided allows you to obtain up to date information, pay bills or transfer funds between accounts. By moving your money between current and savings accounts you might be able to improve the overall interest earned by your money.
The appeal to the banks of offering 'Internet only' or 'Telenet' banking services is the much-reduced overheads. These savings are often reflected in the competitive nature of the products they offer. Some offer higher rates of interest on savings and lower interest rates on credit cards, personal loans and even mortgages.
You still get the advantages of greater control over your finances but can also increase the interest paid on your accounts or perhaps reduce the cost of any borrowings. These benefits vary between providers and it pays to shop around for the best deal for you.
How do I apply?
Most Internet banking products allow you to apply online. In the case of 'Internet only' accounts, completely new accounts are created for you. The process is usually quick and simple. After your application is received, the bank normally conducts a credit check. This will be completed before giving you access to their services.
Once your application has been accepted, the bank will issue the details required to log in to the Internet Services. The bank will issue to you any Debit or Credit Cards, the appropriate pin numbers for use with Cash Machines and a cheque book.
How do I get access to my money?
Both Internet only and Telenet bank accounts offer customers all the usual banking facilities such as Debit cards, Credit Cards, cheque books and access to Cash Machines. Since many of the new banks are owned by long established financial organisations arrangements have been made for their customers to use the cash machines of other banking providers. This ensures there is wide choice for you on how you gain access to your money.
The security of the Internet - Should I be concerned?
Internet security is always an issue and is regularly commented upon in the media. The Internet is still a developing technology and accordingly is constantly changing and undergoing development. There are a number of steps you can take before using any Internet banking services to protect yourself from the risk of being a victim of fraud.
It is wise to make sure that you are using the latest version of a well known Internet browser. You should ideally use either Microsoft Internet Explorer or Netscape Navigator and always make sure you have the latest version with any released security updates installed (these are available free of charge from the Microsoft/Netscape websites).
Most data transferred over the Internet is normally unencrypted. This means that anyone intercepting that data can read it. This is normally not a problem as most internet data is not sensitive or private. To protect the secrecy of any data you transfer over the Internet sensitive information can be encrypted using Secure Sockets Layer (SSL).
This SSL technology means that the any data you send or receive over the Internet is encoded in a way that makes it almost impossible to read by anyone that is not supposed to receive it. All they will see is a meaningless stream of data if they try to listen in on your transactions. The effectiveness of SSL is measured in bits (binary digits). The latest web browsers support 128-bit encryption that provides a high level of security that should foil all but the most determined federal authorities in decoding its contents. Always ensure that your Internet banking service uses at least this level of encryption to protect your personal information.
As with all computer based security there are a number of steps you should take yourself to protect your security details:
- Never write down your ID, password or PIN number
- Never give them to anyone else
- Never send them via email (email is NOT secure or private)
- If given the option to set a password for your Internet banking service, never use an obvious password or a password that someone who knows you might guess
- When you have finished with your Internet banking session, always close your browser so that someone else can't access your account details after you leave your PC.
Overall, if you bear these guidelines in mind, then the likelihood of you being a victim of any Internet fraud is extremely low indeed.
