Why Banks Encourage Online Banking


Online banking has enjoyed increased popularity, and some banks actually require it. From standard, brick-and-mortar institutions to cloud managed institutions, online banking offers flexibility and convenience for all involved.

Bank Advantages

Each visit to a bank costs the institution money, whether in bank teller wages and benefits to security costs to maintenance costs. Online banking reduces those costs and increases the bank’s profit margin.

Online banking reduce the need for the number of physical locations and services offered within each. Because Customer Service Departments are united into fewer locations, asset sharing within those locations further reduce bank costs.

Customer Advantages

Online security of financial data has evolved tremendously since the early days of online banking, and often transactions can be even more secure than those conducted in a drive thru lane.

Online banking transactions require not only a secure login but also require secured password entry. In-person transactions are based on account information and a photo ID, both of which can be obtained “under the radar.”

Online banking transactions also track the Internet Protocol (IP) address of the computer used in the transaction. The IP can be traced to the method or mode of Internet access, often through an Internet Service Provider who always notes activity, computer, and actions performed under that IP address assigned to the ISP account holder. Whether a dynamic or changing IP address or a static or unchanging IP address is used, the ISP always records what IP address is assigned to what ISP account at any time.

Comprehensive Help sections on banks’ websites often reduce on-location inquiries, further reducing overhead costs for banking institutions. Additional service enrollment or dis-enrollment, address updates, and account status and verification are all time saving activities for both the bank and the banking customer.

Online Bill Pay processes reduce stolen or counterfeit checks which cost banks billions of dollars every month. Each online bill pay transaction allows for a grace period from the payment order date to the actual check delivery date, which also allows the account holder additional time to preview activity and account status.


Online banking saves not only the banking institution overhead expenses and lost revenue but also the customer time and effort and considerable account protection. Online banking can certainly be a win-win situation.

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