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What is online banking?

Over the past few decades, an increasing number of traditional banks have expanded their primary
services from physical bank branches to online spaces.

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Simply put, online banking is the digital platform on which individuals and businesses can access their bank accounts and essential banking services from anywhere, at any time.

Rather than speaking to a representative or visiting a local bank branch, all that's necessary to access your current accounts is an internet connection on a digital device (e.g. mobile phone, tablet, laptop, or computer).

How does online banking work?

The digitalization of financial institutions has fundamentally changed the ways we manage our financial transactions in personal and professional environments.

Also known as internet banking, online banking services are facilitated via mobile banking apps downloaded from your device's app store, or the bank's website.

You can perform the same actions than you would at a physical bank branch, including:

  • View account information and bank statements

  • View current account balance 

  • Transfer money to internal or external bank accounts

  • Pay bills, manage direct debits

  • Send money internationally

  • Deposit checks

For those who travel frequently or live abroad, there are exclusively online banks with benefits like international flexibility, no fees on currency conversion or ATM withdrawals, and 24/7 online customer service.

As with traditional banks, most American online banks offer FDIC-insured checking accounts and savings accounts some with incentives like higher interest rates.

That being said, it's still important to practice standard safety precautions when using online banking services to prevent phishing, scamming, and fraud. Always keep your password private and avoid logging into mobile banking apps over public wi-fi connection sensitive personal details are vulnerable to theft when accessed through an insecure network.

In addition to physical debit cards and credit cards, many banks also offer virtual cards that are generated online for one-time or recurring use. With a unique credit card number for every transaction, you can make purchases with increased security against scams and fraudulent activity.

Key benefits of online banking

Increased accessibility

Whether you're at home or at the office, on the road, or even abroad you can complete banking tasks at the swipe of your phone. If your business has virtual debit cards set up with a spend management solution like Spendesk, you can make secure online purchases without ever needing a physical credit card. 

Online banking services can be accessed from anywhere 24/7, as long as you have an active account and reliable internet connection on a mobile device or computer.

Faster & safer banking transactions

No need to wait the weekend for bank branches to reopen or opening hours to call the customer service hotline. Online banking allows you to execute banking transactions and react to fraudulent activity instantly. With your mobile banking app or mobile browser, you can:

  • View account balance and avoid overdraft penalties

  • Verify online purchases instantly

  • Block your card in case of fraudulent activity or abuse

  • Set travel alerts

  • Transfer money domestically or internationally, and more

Easy account management

One of the greatest benefits to online banking is the ability to manage everything in one place. Whether it's making a transfer between your own accounts, requesting a specific bank document, or even applying for a new credit card you can do it all from your own device.

Most banks now offer paperless bank statements, eliminating confusing and tedious paperwork to shuffle through and pile up for admin documentation. 

For those who travel frequently or live abroad, there are exclusively online banks with benefits like international flexibility, no fees on currency conversion or ATM withdrawals, and 24/7 online customer service.

Benefits for finance teams

Business owners can see immediate benefits when implementing online banking into their operations. With comprehensive online banking features, finance teams can approve and transfer funds, manage company budgets, and scale teams more securely and efficiently.

Finance teams also benefit from boosted productivity and less time wasted on admin tasks like collecting bank statements, invoices, and expense reports thanks to the consolidation of these actions on a singular internet banking platform.

Benefits for employees

Online accounts give employees more independence and accountability when making company purchase decisions. Many online banks feature monthly spend analysis, which gives account holders a simple overview of their overall spending behaviours during the year.

Employees can also set up security measures like two-factor authentication of all their company card transactions with a phone number. For employees who travel frequently or make many purchases for work, this proves especially useful.

Using an all-in-one spend management tool like Spendesk facilitates greater control and transparency over company finances in day-to-day and ongoing operations.

Curious to learn more? Try out Spendesk's Spending Reports today, or book a demo with one of our specialists!

Learn how Spendesk works with your online bank for safer spending

Give your finance team the right tools to manage employee spending.

Empower every budget owner to make faster decisions

See spending, approvals, and payments in one place, and track each budget as it's used.

Last update: August 16, 2021