In the world of online banking and mobile banking, eBanking may sound relatively new. But the reality is that it has been around for decades, and you have probably been using it for some time. eBanking simply means electronic banking, and it is a form of banking in which the transfer of funds is done electronically versus with cash, checks or other paper.
eBanking – not online banking
eBanking transactions happen anytime funds are transferred between financial institutions or commercial institutions like stores, restaurants, and businesses – wherever payments are accepted. Electronic banking happens whenever you withdraw cash from an ATM or pay for something using your debit card. All these transactions rely on electronic interactions.
Recognizing that eBanking refers to all electronic transactions can help you better evaluate a bank’s services and convenience. There are other terms that can add confusion to the mix, including online bill pay, online banking, or mobile banking. Online bill pay is a form of eBanking in that it is a secure electronic service that allows you to pay bills without having to write checks and mail them. You can send individual payments electronically from your checking account, or you can arrange for payments to be regularly directed to a service provider, such as a credit card or utilities company. This eliminates the need to go to the post office. This transfer is set up to go automatically and allows you to make timely payments and avoid late fees or missed payments.
Online banking refers to the ability to perform account activity remotely via a website. By logging onto the bank’s online interface with an user name and password you can check account balances, transfer funds, apply for a credit card, order checks, or put a stop payment on a check. Online banking can happen from anywhere you have an Internet connection.
To add to the offerings, mobile banking can be a form of online banking in that you can access a website remotely on your smart phone. Mobile banking can also be done via banking mobile apps, which are available through Android or iPhone. A mobile app provides much of the functionality of online banking but in a format that is more conducive for phone access. Also with a mobile app, you can take photos of the front and back of checks using your phone’s camera and make mobile deposits.
The bottom line: While all these services do involve electronic banking, a bank’s use of eBanking does not mean it necessarily has the online convenience or mobile access to your accounts as the name suggests. Instead, eBanking laid the groundwork for these services. In some cases, it has paved the way for banks that are completely electronic. They have no storefront or physical location, and all account activity and all transactions are done entirely online.
How does eBanking work?
Most electronic banking is done with electronic funds transfer or EFT. This involves any fund transfers that are done from a phone, electronic terminal, computer, or magnetic tape. EBanking systems range in size. A larger system is the Federal Reserve Wire Network or Fed Wire, which is equipped to handle large transactions among multiple entities. Fed Wire, which links together the Federal Reserve, the US Treasury and other government agencies and institutions, can be used if you are transferring money internationally or there are large sums involved. A small system may be an ATM network, in which the actual ATM machine is connected to a financial institution via its own computer system.
The case for paper
eBanking has been around a long time, and new technology will only drive new advancements in user experience, transactions, and security. Yet, as much as electronic banking is here to stay, there are areas where paper is needed and desired. There are people who may not have access to high-speed internet at home. Also, people prefer the face-to-face, personal aspect of banking and having a relationship with an actual teller.
At the same time, by law, banks are required to provide paper statements as an available option, which many people still prefer when it comes to reviewing their accounts, checking balances and finding errors. Having a paper statement is also helpful for sharing account information with family members or financial planners. A stack of statements is often easier to go through and act on rather than figuring out passwords and logging on to bank websites. Also, with so much happening online these days, estatements can easily be overlooked. Having an actual document sometimes makes people more inclined to review them.
Despie eBanking being here to stay, customers still have plenty of options as to how they bank. The trick is to understand those options and choose the services that are important to you.