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Why is internet banking the need of the hour?

With the current government policy focusing on promoting a cashless economy, internet banking has naturally picked up pace. A McKinsey report stated that 7% of the total 200 million bank account holders in India transact online, which is around 14 million people.

So what is Internet banking?

Internet banking is an umbrella term which includes all the banking services that are available online. Some of the services that banks offer online include money transfer, scheduled bill payments and viewing account information. You can avail the benefits of internet banking from a smartphone or a computer which is connected to the internet. Mobile banking, which involves availing banking services via a smartphone is also a part of internet banking.

One of the main advantages that internet banking offers is transfer of funds. Transactions through electronic payment systems like Electronic Clearing Service (ECS) credit & debit and National Electronic Fund Transfer (NEFT) have provided a boost to financial arrangements across and around the country in terms of speed of transactions.

Current Scenario

India has seen a spurt in the number of e-commerce websites, where a good amount of transactions are processed online. A cash intensive economy is difficult to monitor as it provides a conducive environment for unscrupulous transactions. The current dispensation has taken major steps in curbing a cash intensive economy and facilitating a move to a more cashless economy instead.

In order to move to a more cashless economy, internet banking is emphasized. Transactions carried by internet banking are easier to monitor. The other two factors are internet propagation in India and a surge of smartphone users.

With more people having access to internet, internet banking in India is the need of the hour. The increase in the number of smartphone users is another factor that has helped internet banking grow.

Some of the benefits proffered by Internet banking

1. Customers are no longer bound by geographical boundaries. One can access their accounts from any place at any time.
2. Internet based banking services take up little time. You can thus spend less time on banking activities.
3. You can schedule online bill payments like electricity, gas and mobile bills.
4. Transfer funds instantaneously with internet banking. You no longer have to go to the bank to send money to another person.
5. Track the activities in your account simply by the click of a mouse.

While the benefits are there, it is not entirely a rosy picture. Internet banking has its share of problems. The major problem being the security of the backend infrastructure. A robust mechanism and a stronger infrastructure is needed to help internet banking grow to its desired standards.

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