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Online Banking Explained

Understand how online banking works and how to keep safe and secure while accessing your accounts.
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Online Banking Explained
Online Banking Explained

Online banking, also known as internet banking, gives you online access to your money whenever you want from either a computer, a tablet or an app on your mobile phone. This could be your current account, savings account or credit card account.

Here is how to find the best internet current account for you.

Internet current accounts

Compare online current accounts from different providers and find a bank that works for you.

What are the advantages of online banking?

For many people, online banking is a convenient and flexible way to manage your finances and your money. It is increasingly the standard account offered by modern banks.

Internet accounts enable you to perform a range of banking services, such as setting up standing orders, paying bills, checking statements and transferring money online. This happens either through the bank’s website or using an app on your phone.

All the services, such as transferring money or paying bills, checking your account balance and sending or responding to messages are available 24/7. That means you can bank at a time that is convenient to you.

How to use online banking

Man with mobile phone

Quick payments:

Internet banking enables you to pay for goods and services quickly and simply, by transferring money electronically. If you pay a friend, family member or supplier, they will receive the payment very soon after you send it, often instantly.

online banking log in screen on table

Security:

When you sign up for online banking you're given a secure login and password, which you use to access your online bank account information.

If you're using an app on your phone you can log in using facial recognition or touch ID from your thumb or fingerprint. This ensures that only you can access your personal financial details.

If you use a debit card - or a credit card supplied by the same bank - you can use your banking app to verify car payments made to online retailers.

Woman checking bank balance on her laptop and writing it on a notebook

Checking bank balances:

You can see your financial affairs in real time, and check whether payments, direct debits or standing orders have been paid, and whether your salary or other payments have been credited to your account.

If you have a mortgage or savings account with the same bank, you will also be able to see how much you owe or have saved using the same online login or banking app.

Unhappy woman looking at phone alert

Avoid going overdrawn:

You can ask your bank to notify you by text, email or in-app message if you're about to go overdrawn on your internet current account. This way you can potentially save on bank charges.

These alerts may also give you an early warning if your card has been stolen and used, or if a retailer has mistakenly overcharged you.

What are the benefits of accessing your account online?

For customers the benefits are:

  • It's easy - as long as you have access to the internet you can manage your banking in the click of a mouse or an app on your phone

  • It's quick - no standing in long queues, no trying to find time between your lunch and work to visit the branch

  • It's always open - you can do your banking in your time, not when your provider dictates

  • Offers may be better - the reduced costs of running an internet banking service means a provider can pass the benefits onto customers. You may get better deals on linked savings accounts as well

The main benefit of online banking for providers are:

  • Cheaper overheads - with no physical building to maintain and expensive leaseholds for offices, running an internet banking service is cheaper than a more traditional set up

  • Lower staffing costs - as staff are in remote rather than multiple high-street locations

Are there any drawbacks to an online bank account?

Most people find online banking more convenient and easy to use, and like the fact that an internet current account gives them more insight and control over their finances.

However, before taking out an internet current account you should consider the drawbacks:

  • No face-to-face service - you will normally only communicate by email, text or telephone. If you prefer in-branch service and face-to-face communication this banking may not work for you. If you pay in a lot of cheques from customers you may prefer to have a physical branch nearby where you can deposit cheques.

  • Technical issues - while providers work very hard to keep their sites up and running 24/7, sometimes they suffer from an outage, which means you may not be able to view your bank details for several hours.

Online Banking Explained (body)

Online banking security checklist

Dos

  • Keep your passwords and account information safe. Never leave your password with your account details or write them down - you can use secure password apps that work across computers and phones.

  • Change your password regularly and do not use something personal like your birthday or pet's name. Never use the same password for multiple accounts.

  • If possible, use face recognition or touch ID to log into your phone app, so that the logon process is personal to you.

  • If you're worried about entering your details into a website, check that the web address begins with 'https://' rather than the standard 'http://'. This suggests that the website is secure. The security of an SSL certificate protects the sensitive information being entered into a website. An SSL certificate is a type of digital certificate that provides authentication for a website and enables an encrypted connection.

Don’ts

  • Access your account from a shared computer, if you can avoid it. If you have to, never opt for the computer to save your login details. This is because it may be possible for other people on the network to snoop.

  • Reply or click any links if you receive an email claiming to be from your bank requesting you confirm personal bank account information. Your provider will never email you to ask for personal account details.

  • Reply to unsolicited emails, texts or other messages asking for account details and be careful not to click on any suspicious links. There are many millions of so-called “phishing” emails sent out every day by fraudsters who hope you will click on a false link and give your personal details. Most of these scam emails will be picked up and quarantined by your email spam filter but you still need to be vigilant. If in doubt, get in touch with your bank using the contact details on their official website.

How to set up online banking

Prepare your personal information


Like opening an account in a branch, you'll need to verify that you are who you say you are. This will usually be in the form of ID and possibly proof of address with a utility bill. Some banks will request video proof, so might set up video verification also.

Decide which bank account best suits your needs

Whether it be current account, savings account or credit card, banks and building societies offer different interest rates and different incentives. So take your time to choose the right one for you.

Consider what you will need to do to maintain or open the account. Do you need to fund the account straight away?

Complete the online application process

This is usually in a short form asking you your personal details. Some banks will need to run a credit check for current account applications, as well as for credit card applications. Approval times vary from bank to bank, and person to person unless you are doing the Current Account Switch Guarantee, which takes seven days.

After approval

Once you have been approved for an account, you'll likely need to fund it to open it. Sometimes this is as little as £1, but make sure you find this out before applying to make sure you have the money to fund it.

Are all accounts available over the internet?

SSome current accounts are only available from virtual banks, which means that there's no bank branch for you to visit. Others have high street branches, telephone support and a mobile app, which you may find more useful if you don’t want to do all of your banking online.

Some online banks without branches have got round the problem of depositing cheques by allowing you to post them or to take a photo of them and download them to your account.

Some internet current accounts have linked savings accounts, while others give you an incentive to switch to them by providing a cash boost.

The best option for online banking for you might be a bank branch service combined with an online savings account – it really is important to think through what best suits your lifestyle and financial requirements. 

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