Online banking is essentially the same system of money management as traditional banking, but lets consumers conduct transactions remotely from their own computers. In online banking, also called Internet banking, customers may conduct standard personal financial tasks, such as paying bills, making money transfers, checking account balances and making deposits. Customers may also monitor their personal bank accounts, view transactions and credits and download statements, and they communicate with bankers through phone or email, say authors at Investopedia.
Typically, customers establish online banking accounts through their local banks. Customers complete a brief initiation process, which usually involves setting up user authentication for verifying identity online. Banks generally accomplish this by issuing customers unique passwords and login information.
With online banking, like traditional banking, banks take steps to ensure customers enjoy secure transactions. Electronic security on the issuing bank's end includes establishing multiple layers of identifying customers. This system, called the PIN/TAN system, uses a long-term and one-time password combination to keep customers identities safe. The TAN password expires after just one use, requiring customers to regularly change and refresh their credentials.
The history of electronic banking dates back to the 1980s. Today, it proves popular and convenient for banks and customers. Some banks operate almost exclusively as online banks, although traditional branches still exist. Some services, such as ATM withdrawals, only exist at physical branches, notes Investopedia, making them valuable assets.