You are the prize

Banks share a mutual relationship with its customers in that when a bank’s customer deposits their money, the bank use that money to offer mortgages, personal loans and auto loans with interest to other bank customers needing those services. The bank makes money from the interest rates charged. The customer who made the deposit benefits from the relationship by having the assurance that his or her money is in safe hands and will be available when they need it. The emergence of online banking is another way banks continue to boost their relationship with their members. With online banking, the account holder gain access to their account via secure login on the bank’s website.

A 2013 report by the Pew Research Center states that 51% of United States (US) adults participate in online banking. The result of this report reflects the wide acceptance of online banking in the US. Online banking is gaining in popularity because of the many benefits it offers. Overhead is reduced for the bank because of reduced number of staff, lower rent, lower cost for advertising and lower utility bills.

These benefits are passed on to the customer in the form of higher interest rates with a savings account and lower interest rates for borrowers. Reduced banking fees are another benefit not found with traditional banking. Added benefits of online banking compared to traditional banking at a local branch include 24-hour access to the online account, the ease of monitoring transactions, ability to make online deposits and standing in long lines is a thing of the past. Furthermore, banks offer incentives such as financial planning tools, investment tools, loan calculators and platforms for conducting trading.

Besides the absence of a personal one-on-one relationship with the bank such as one would have with a local bank, online banking has a few downsides such as security and the possibility of identity theft as well as other issues that are prevalent on the internet such as presence of virus and attack by hackers. With this in mind, understanding how to protect oneself online has become an acute necessity.

Vast majorities of banks take security breach very seriously and have strict security policies in place to guard against security breach. The customer also has a role to play in guarding against a security breach of their bank account. Actions such as choosing a strong password or pin number make it difficult for a potential hacker or Internet thief to gain access to the online bank account. Most banks also provide scanned copies of deposited checks so that the account holder is aware of unauthorized transactions. Of course with 24-hour access to the bank account, customers are aware if there have been any unauthorized access to their account.

When participating in online banking, account access is achieved through the bank website where the customer can sign-in to gain access to the "my account" feature. However, due to the security concerns of using the Internet, several steps have to be followed before the account holder can have access to his or her account.

Sign in or login to my account

This is usually the first step to accessing the online bank account. This account feature allows the customer provide verifiable credentials such as a user name and password in order to gain access to "my account".

Secure Login

This step provides further authentication or verification of the account holder. In this case, a security question is asked, to which only the account holder knows the answer. In addition, a pin number might be required before the account holder can gain full access to his or her account.

My account

The account holder can access the product and services they have with their bank from the "my account" portal. Within this portal, the checking and saving accounts, trade/investment accounts, insurance and loan accounts are listed. The customer can conveniently perform their own banking such as bill payments, bank transfers and deposits from the "my account" portal of their bank website.

Why do banks compete for customers both online and offline? Without customers, banks cannot make money. The more customers a bank can attract, the more money they can make. This single role prompts banks to offer the best services; traditional banks offer personalized services especially in smaller banks where the teller or loan officer might be familiar with a customer and his or her unique banking needs. Online banking provide attractive benefits such as lower fees, secure login for account access, higher interest rates for deposits and lower interest rates for loans. Although customers of traditional banks have access to ATMs without incurring ATM fees, online banks are beginning to provide the same benefit through an alliance of fee-free ATMs for its customers.

Banks remain competitive by attracting new customers with great benefits and maintaining loyal customers by offering incentives for loyalty in the form of rewards and in turn reap the benefit of having cash reserve to continue to do business and generate more revenue.


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