What is Electronic Banking? Definition of Electronic Banking, Electronic Banking Meaning and Concept
Electronic banking is a virtual platform that financial institutions implement for their clients.
The idea is that people use their electronic devices (cell phones, tablets, computers, among others) instead of physically approaching agencies. That is, the objective is that they can perform various operations remotely and automatically.
Among the most common operations that are available under this modality we have: Balance check, money transfers, payment of services, among others.
Three concepts related to electronic banking
It is important to differentiate between three concepts related to electronic banking:
- Electronic banking: Refers to all kinds of services by electronic means. This includes, in a broader sense, ATMs. Some even consider the care provided over the phone.
- Online or Internet banking : Includes all transactions that can be carried out from a computer or mobile device using an Internet connection.
- Virtual banking: A virtual bank is one that does not have an office. It is confused with electronic banking, but it is not the appropriate term if we want to refer, for example, to bank transfers that can be sent from the smartphone.
Advantages and disadvantages of electronic banking
Among the advantages of electronic banking are:
- Allows customers to complete transactions quickly. Thus, you save time and travel costs.
- There is the convenience of being able to operate from anywhere.
- Fewer people are expected to approach the bank as the use of electronic banking increases. Consequently, the attention in the face-to-face modality should be more agile.
- Avoid the risk of using cash (theft, loss, among others). Which implies greater security.
- In addition, it allows customers to have more comprehensive control over their accounts.
However, there are also some disadvantages:
- The barriers to entry are high in certain market segments such as the elderly or without access to the web. This is especially relevant in developing countries where Internet penetration is relatively low.
- There is always a certain distrust of some users regarding the security of their information when they share it online.
- Many personalized services, for example in terms of financial advice, cannot yet be provided electronically.
- The same security that prevents theft generates the possibility of hacks.
- In line with the first disadvantage, there is greater misinformation regarding the possibilities offered by electronic banking.