Electronic banking is a form of new banking by which budgets are transmitted through alternative digital indicators than coins, checks or paper documents etc. Budget transfers occur between economic institutions, banks and credit-scoring unions. They also appear in economic and industrial establishments, including shops. Every time a person withdraws coins from an automated teller machine (ATM) or pay for groceries with a debit card (drawing the amount owed to the store from a savings or checking account), the budget is transferred through the digital bank.
The Features of Electronic Banking
In the last two decades, the banking sector has undergone significant changes, which have transformed the way we interact with financial entities. At the forefront of this transformation is electronic banking. Also referred to as online banking, e-banking, or digital banking, this innovation has redefined how banking services are delivered to customers.
Electronic banking, defined as the use of electronic means to deliver banking services, primarily via the internet, has features that offer convenience, speed, and functionality, revolutionizing both personal and business banking. This article aims to delve into the salient features of electronic banking.
Online Transactions:
Perhaps the most obvious feature of electronic banking is the ability to make transactions online. These include fund transfers between accounts (within the same bank or different banks), bill payments, loan applications, and repayments, to name a few. All these transactions can be performed anywhere and anytime without visiting the bank physically.
Mobile Banking:
Mobile banking, a subset of electronic banking, enables customers to use their smartphones for banking transactions. With the advent of mobile apps developed by banks, users can now check account balances, transfer funds, pay bills, apply for loans, and even deposit checks using their mobile devices. Some apps offer budgeting tools, loan calculators, and investment platforms.
Internet Banking:
Internet banking is another significant feature of e-banking, which enables customers to conduct their banking transactions over the internet using a computer or similar device. Unlike traditional banking, which is limited by bank hours, Internet banking is available 24/7. Customers can complete all types of transactions, from viewing account balances to making payments and transferring funds.
ATMs and Debit Cards:
While these may not be considered part of electronic banking in the strictest sense, the advent of ATMs (Automatic Teller Machines) and debit cards has dramatically enhanced the e-banking experience. They provide customers with easy access to their money outside of traditional banking hours and locations, furthering the convenience offered by electronic banking.
Electronic Fund Transfers:
Electronic Fund Transfers (EFT) are an integral part of electronic banking. EFT allows customers to transfer funds electronically between accounts, either within the same bank or different banks. This feature also covers wire transfers, direct deposits, or electronic bill payments.
Electronic Statements:
E-banking has made it possible for customers to receive their bank statements electronically. E-statements are secure, convenient, and environmentally friendly. They can be viewed at any time, and transactions can be tracked in real-time, allowing customers to monitor their accounts closely.
Cybersecurity Measures:
Given the nature of transactions involved, electronic banking necessitates robust security measures. Features such as encryption, two-factor authentication, secure socket layers (SSL), and firewalls are used to protect customer data and prevent unauthorized access. These security measures are continually evolving to counter increasing cybersecurity threats.
Customer Service:
Electronic banking incorporates customer service features like live chat, AI-based chatbots, and email support, allowing users to get help or clarification immediately without needing to visit a branch. These services often operate 24/7, providing customers with help whenever they need it.
Personal Finance Management:
Electronic banking has made managing personal finances much easier. Many online banking platforms offer tools for budgeting, tax calculation, setting saving goals, investment tracking, and more. These tools allow users to have full control of their financial health at their fingertips.
E-checks and Online Check Deposits:
E-checks offer another method for customers to make payments online, while online check deposits allow customers to deposit checks using their mobile devices, without having to visit a physical location.
When Did It Begin
Economic institutions have long used efficient PC networks to automate tens of thousands of daily transactions. In the 1950s, Bank of America was one of the first to increase digital computer systems that might want to take over the banking obligations of managing to test and balancing accounts, which became very labour-intensive at the time.
Other institutions have steadily joined the effort and have far improved the use of paper-based exams and moved towards a fully digital bank. The discovery of data processing machines, classification of robotic reports, and optical man or woman recognition (a PC utility that interprets handwritten or typed phrases as text content that machines can edit) are among the many features that have contributed to this evolution.
The first electronic banking machine capable of maintaining deposit and withdrawal statistics for each customer, instantly producing account stability records, showing overdrafts, preventing payments and retaining funds. Today, the machine responsible for the painting is as authentic and reliable as the banking establishment demands.
Future of Electronic Banking:
The future of electronic banking is projected to be filled with even more dynamic features and broader functionalities. Here are some likely directions for electronic banking:
Artificial Intelligence (AI) and Machine Learning (ML):
AI and ML technologies are set to redefine the e-banking landscape further. These technologies will be utilized to offer personalized banking services based on a customer’s financial behavior, spending patterns, and preferences. Moreover, AI-powered chatbots will continue to improve, offering more accurate and relevant responses to customer inquiries.
Blockchain Technology:
Blockchain technology is predicted to revolutionize the banking sector. It has the potential to provide faster and more secure transactions, enhance the process of identity verification, and mitigate the risk of fraud.
Digital Currencies and Cryptocurrencies:
The rise of digital currencies, including cryptocurrencies, presents another avenue for the evolution of electronic banking. Banks are increasingly considering the incorporation of digital currency transactions within their e-banking services.
Open Banking:
Open banking, which involves sharing customer data securely between financial institutions, will likely become more widespread. This would enable customers to access better financial products and services based on their individual needs.
Voice-Activated Transactions:
The advancement in voice recognition technology may soon enable customers to conduct banking transactions via voice commands. This would offer customers an even more convenient, hands-free banking experience.
Impact of Electronic Banking on the Banking Sector:
Electronic banking has already had a transformative impact on the banking sector, and it continues to do so. It has reshaped the way banks operate, from customer interaction to internal operations, and even competition. Here’s a deeper look at how e-banking is impacting the banking sector:
Increased Customer Expectations:
The convenience and ease of use offered by e-banking have raised customer expectations. Customers now demand 24/7 service and real-time solutions, which has prompted banks to invest more heavily in their digital platforms.
Enhanced Competition:
With the barrier to entry lowered by digital technology, traditional banks now face increased competition from online-only banks and fintech companies. This situation has forced banks to continually innovate and improve their services.
Improved Operational Efficiency:
E-banking has enabled banks to automate many of their processes, leading to increased efficiency and reduced costs. For instance, the use of AI for customer inquiries can free up human resources for more complex tasks.
Data-Driven Decision Making:
The use of electronic banking has resulted in banks having access to a wealth of customer data. Banks can use this data to better understand their customers, make informed decisions, and offer personalized services.
Sustainability:
Electronic banking has made banking more sustainable by reducing the need for physical infrastructure and paper-based processes, thus contributing to environmental conservation efforts.
The future of electronic banking is looking more exciting than ever. One trend that is gaining momentum is mobile banking, which allows customers to access their accounts and perform transactions from their smartphones or tablets. With the rise of mobile devices, this trend is expected to continue to grow in popularity.
Another emerging trend is biometric authentication, which uses unique physical characteristics such as fingerprints or facial recognition to verify a customer’s identity. This technology is already being used by some banks, and it is expected to become more widespread in the coming years. It offers a higher level of security and convenience for customers, making it an attractive option for many.