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Pros And Cons Of Internet Banking

Pros And Cons Of Internet Banking; Internet banking is a technology that allows consumers to conduct financial transactions with the bank and transfer monies to other accounts using an internet connection from home or any different location, at any time, including after banking hours.

Data from the Nigeria Interbank Settlement System  (NIBSS) showed that between January and July of 2022, electronic transaction totaling  N204.5 trillion were carried out in Nigeria through the NIBSS rapid payment platform (NIP). The NIP volume increased to 2.7 billion in seven months, representing a percent rise over the 1.9 billion registered during the same per the period the previous year.

Through their numerous channels, including mobile apps, bank branches, internet banking, supplemental service data (USSD), point of sale (PoS), and ATMs, Nigerian banks have exposed NIP to their clients over the years.

The bank account holder accesses the bank’s portal with their unique customer ID and password and performs actions such as deposits, fund transfers, balance checking, and other procedures. Customers can use internet banking to conduct financial transactions without the intervention of bank personnel. Customers access the internet banking site via a steady internet connection, log in with their customer ID and password, and then complete the tasks prescribed by internet banking.

With internet banking, various banking tasks can be carried out by the account holder by connecting to the bank’s internet banking portal using any acceptable device with a secure internet connection. A customer can check the amount of his account, download earlier statements, request a chequebook, and—most importantly—transfer funds from one account to another as needed. When ordering meals from restaurants or other businesses online, it also permits payment.

The portal verifies the user’s information after they login using their customer ID and password, and if it matches, access is granted for additional processing and transactions. The user can choose a suitable activity from the available options, and the portal supports electronic fund transfers between bank accounts. The entire process only takes a few minutes, saving the customer and the banking staff a great deal of time and effort.

Online banks don’t have physical premises; you can manage your bank account information using a computer or mobile device. Online banking services are available to customers, who can use them to carry out various financial transactions, such as  electronic bill payments,  check deposits, and money transfers.

While online banks focus more on mobile access, customers can frequently see their account statements (or e-statements) online through traditional banks and credit unions with physical locations. A computer or mobile device can access your account whenever you want, but you won’t interact with a banker. Today, most commercial banks in Nigeria provide Internet banking services to capture a broader customer base in the Nigerian market.

In the following, we will discuss the pros and cons of Internet banking as it affects people’s banking experience.

Pros Of Internet Banking

1. Convenience

Customers can conduct financial transactions via internet banking at their convenience and without visiting the bank physically. The owner of a bank account can use any of the available banking services online from any convenient place and on their terms, including outside of regular business hours. Certain financial operations can be completed by customers via internet banking, saving them time and travel to the bank.

2. Higher Rates

Online banks frequently have higher interest rates than traditional banks. Because they do not have to spend money on maintaining physical locations, internet banks can offer the best interest rates on checking and savings accounts.

For example, the best online savings accounts offer APYs of around 1.50%. Compared to the national average savings rate of 0.05%, some of the largest commercial banks offer savings accounts with only 0.01% APY. This disparity can quickly develop when an account balance is significant.

The vast majority of internet banks now provide certificates of deposits (CDs), many of which have no early withdrawal penalty.

3. Lower Fees

Another advantage of not worrying about branch maintenance is that online banks frequently charge minimal or no fees. This suggests that you will be less likely to suffer monthly service costs, overdraft fees, or penalties associated with using a debit card or check as a form of payment, to mention a few. In comparison, physical central banks occasionally impose monthly service fees for accounts, but they may waive them if you meet specific requirements, such as maintaining a necessary minimum balance.

4. Reduce Bank Workload

Customers can avoid going to the bank by using the services offered by internet banking, which shows the amenities found there. The burden on banks has significantly decreased due to people using financial services online rather than in person. Customers are not required to monitor their balances, deposit checks, or update their passbooks. Thus, internet banking becomes a valuable tool for easing the workload on banks and giving employees freedom.

5. Instant Transactions

Through internet banking services, customers can make quick money transfers to other accounts that would often take a bank a few days to process if they were using checks. It guarantees the instantaneous transfer of funds to anyone worldwide. Additionally, online banking enables rapid payments to purchase goods and services.

6. Accessibility

Traditional banking hours are not always convenient, but online banking allows you to access your bank accounts and services whenever you want, from any computer or mobile device and any location with an internet connection. Customer service is frequently accessible via phone seven days a week, around-the-clock.

Cons Of Internet Banking

1. Transactions Are Less Flexible

Meeting in person allows a banker to learn more about you than just your finances. Visiting a bank branch can be quite helpful for specific transactions and problems. Think about the most basic financial process: making a deposit.

Using its banking app, a direct bank can deposit a check by taking a photo of the cheque’s front and back. On the other side, many online banks make it quite challenging to deposit money.

If this is something you’ll frequently be doing, it is worthwhile to study the bank’s policies. Some direct banks may make international transactions payments more challenging, if not impossible.

2. Limited Services

Some online banks may not offer all traditional financial services, such as insurance and brokerage accounts. Traditional banks may offer special perks to loyal customers, such as preferred rates and free financial guidance.

Furthermore, essential services such as notarization and bank signature assurance are unavailable online. Many financial and legal transactions necessitate the usage of these services.

3. Identity Theft And Security Concerns

Due to the typical installation of new security measures by banks, internet banking platforms and mobile applications should be generally secure. However, neither system is safe, and accounts that have been compromised may have had login information stolen, leading to identity theft.

Therefore, even while you can use mobile or online banking confidently, you should still exercise caution by avoiding unsecured networks, changing passwords frequently, and protecting your login credentials.

4. Possibility Of Overspending

The ability to check account balances on the spur of the moment could lead to some people exceeding their checking account limits. Unless you carefully verify your chequebook or a record of debit transactions that were not cleared, the account balance may not accurately reflect the exact amount of money you have available. Overdrafts and charges could occur if you don’t keep a tight check on all of your transactions.

5. Deposit Restrictions

The limitations on daily or monthly mobile deposits may make it difficult for people, especially businesses, to make sizable online deposits. You must travel to a bank to deposit once you have used your allowed amount. Not all check types can be easily read by computer scanning software, which is another factor. For instance, the online deposit system would not accept handwritten business checks that included a black line on the back to make a carbon copy in an account register, necessitating an in-person deposit.

When using computers or an internet connection, we depend on the system’s dependability and efficiency. Your ability to access accounts online will be hampered if your internet service is delayed or unavailable for an extended period. Similarly, if the bank’s servers collapse or are briefly unavailable due to scheduled site maintenance, you won’t be able to access your banking information online or through a mobile device.


Internet banking is a buzzword in the financial world because it makes transactions fast and seamless. Still, it is important to put the cons of internet banking into reasonable consideration before going for a preferred internet bank of choice.







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