Banking and E Banking - Meaning, Types
The word "e-banking" is broad as it covers everything from NEFT and IMPS transactions to online and mobile banking. Continue Reading to learn more!
Izhar Ahmad27 Nov, 2023
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Banking and E-Banking: Electronic banking, known by various terms such as e-banking, virtual banking, online banking, or internet banking, includes using electronic and data networks to provide a range of banking goods and services. E-banking allows users to view their funds and do numerous activities using their computer or cell phone.
For most basic banking tasks, one does not need to visit a real bank with online banking. On the contrary, you can easily manage your finances from your chosen location—whether at home, office or while travelling. Online banking utilizes a computer or mobile phone, an Internet connection, and a bank card.What is Banking?
Banking refers to the business activity of accepting and protecting money owned by people and organizations, as well as offering various financial services. Banks play a crucial part in the economy by allowing the flow of funds and capital, supporting economic activities, and promoting monetary security. Banks play an important part in the economic system by supporting economic growth, easing trades, and adding to general financial security.What is E-Banking?
E-banking, short for electronic banking, forms a relationship between a bank or financial institution and its clients, enabling safe operations via the internet. This broad term includes diverse types of electronic banking designed to meet the varied needs of customers, all of which can be easily handled online. Moreover, E-banking goes beyond financial transactions, covering non-monetary activities such as changing your ATM PIN, viewing a mini statement, updating personal information, checking amounts, or creating an account statement. In essence, it includes any activity that doesn't entail the real moving of funds to or from your account.Types of E-banking
E-banking encompasses several key forms, namely online internet banking, mobile banking, automated teller machines (ATMs), and debit and credit cards. While you may already be familiar with these, it's essential to grasp each type and how they cater to diverse customer needs.Mobile and Internet Banking
Online internet banking and E-banking are closely related, with the latter serving as a broader term that includes the former. Any transaction, whether financial or non-financial, conducted through a web page (typically the bank's site) or a web application falls under the category of internet banking.Credit and Debit Cards
Credit and debit cards also fall under the umbrella of E-banking. Debit cards facilitate easy cash withdrawals from ATMs and Point of Sale (POS) machines. Conversely, credit cards empower customers to borrow funds within a predetermined limit and avail themselves of various offers.ATMs
ATMs were first in the digital banking evolution. They simplify the process of withdrawing and depositing money, contributing to enhanced convenience.Electronic Data Interchange (EDI)
EDI technology is mostly meant for business transactions, it has also streamlined operations and transaction costs have reduced in a supply chain including manufacturers, suppliers, logistics providers, retailers, and wholesalers. With its paperless and smooth business transactions, EDI has revolutionized the way in which transactions are carried out.Electronic Fund Transfer (EFT)
EFT facilitates the electronic transfer of funds between bank accounts. Examples include National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS), and Real-Time Gross Settlement (RTGS). Consequently, E-banking encompasses a diverse array of online transaction mediums.Looking for the Best Commerce Coaching?
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Advantages of E Banking
Online banking offers several benefits, including: Availability: Banking services are accessible 24/7, allowing users to check account balances and transfer funds at any time, without being constrained by banking hours. User-Friendly: The online banking services are straightforward and user-friendly. Many individuals find online transactions more convenient than visiting a physical branch for the same services. Convenience: Online banking eliminates the need to visit a bank branch, enabling users to complete transactions from any location. Tasks such as paying utility bills and managing recurring deposit accounts can be effortlessly accomplished through online platforms. Time Efficiency: Internet banking allows for swift transactions, with the capability to transfer funds or open a fixed deposit account within minutes. Activity Tracking: Unlike traditional banking transactions that may rely on physical receipts, online banking records all transactions. This serves as a digital proof, including details like payee information, account numbers, transaction amounts, and timestamps.Disadvantages of E Banking
However, internet banking comes with its drawbacks: Internet Dependency: Uninterrupted internet access is essential for utilizing online banking services. Lack of internet connectivity or technical issues on the bank's servers can restrict access to online facilities. Transaction Security: The transactions in online banking are even encrypted, yet the system is still vulnerable to hacking, which may result in security breaches for user data. Challenging for Beginners: Those who are not familiar with the internet, they can find it difficult to understand the workings of online banking. However, inexperienced users can find it hard to navigate through the online banking process when there is no guidance or support. Password Security: Accessing online banking requires password authentication, and the security of this password is crucial. If compromised, it can lead to fraudulent activities. Regularly changing passwords is advised, adding a layer of protection but potentially causing inconvenience for users in remembering them.Banking and E Banking FAQs
What is the full form of KYC?
This is referred to as “Know Your Customer,” and it is conducted by organizations to ascertain that their customers are real and that all the details they are providing them are correct.
What is the difference between e-commerce and banking?
E-commerce is the online buying and selling of goods and services while banking encompasses monetary transactions, deposits, loans, and other financial aspects.
Which is the first e-banking in India?
ICICI Bank is considered the first bank to introduce internet banking in India, starting in 1996.
What is the main role of a bank?
The main role of a bank is to facilitate financial transactions, provide a safe place for deposits, offer loans, and contribute to economic stability.
What are the 7 functions of banks?
Banks perform functions such as accepting deposits, providing loans, facilitating payments, offering investment products, currency exchange, safekeeping, and financial advice.
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