When online banking first became available in 1995, the inventors of the process predicted it would eventually replace the traditional banking which had previously been the only available option. While the prediction has yet to come to fruition, online banking has indeed changed the way people manage their money. With millions of people currently using online banking either for full time banking needs or for savings or bill paying, it has indeed proven itself as a useful tool in money management. There is no immediate threat that traditional banks will become obsolete however, as many people are still leery about trusting their finances with virtual banks or the technology that makes online banking possible. The following are reasons that have prevented many people from making the switch to online banking.

• Security- Despite advances in technology and improved security methods, one of the major reasons people are afraid to bank online is the fear of identity theft, credit card fraud or security breaches which would make their banking information vulnerable to hackers. Virtual banks or other financial institutions which provide online banking services go to great lengths to ensure personal and financial information is secure at all times and are also required to comply with federal regulations in respect to privacy and security. Unfortunately just as experts continue to develop technology to make online transactions secure, there is always the chance a technologically savvy hacker could find a way to penetrate these protective measures. That being said, the biggest danger of banking online generally is found on the end of the account holder versus the bank. Before banking online or performing any financial transaction for that matter, make sure you understand what precautions to take to ensure your information is protected.

• Availability of funds- While online banking offers many conveniences not found with traditional banking, one of the biggest complaints many people have with virtual banks is the availability of funds. Depositing, transferring or withdrawing money from some online banks takes longer than going to your local branch and making a withdrawal. This means that if you use on online bank for your day-to-day banking, you may find a delay of up to 5 business days for deposits to post to your account. Certain online banks do offer a credit or debit card that you can use for purchases or the ability to pay bills directly from your online account. Even so many people find the inability to “instantly” access their money a deterrent to banking online.

• Technical difficulties- Power outages, problems with your Internet or down websites can turn the convenience of online banking into a headache. While these occurrences are the exception, not the rule- if you are in a hurry and have to make a transaction, view an account or perform other actions, technical difficulties can be inconvenient. A bigger worry is of course that transactions may be posted incorrectly which could cause real financial problems that could take days to resolve. Of course these issues could arise at your local bank, however when you bank online, you do not have the option of simply dropping by the local branch to correct the problem. With virtual banks you will have to call the bank for all issues which could become frustrating if you get involved in a game of phone tag or have a bank with less that exceptional customer service.

As you can see there are some downfalls to online banking, however there are downfalls to traditional banks as well. If you have not yet jumped on board the online banking wagon, you should take the time to compare the pros and cons before making a decision. There are after all millions of people currently banking online, so the chances are you will find the benefits outweigh the potential downfalls.

The banking industry has evolved over the years and online banking is becoming more and more popular for busy consumers. Whether you decide to work with a large, well known brick and mortar bank that offers online services or a virtual bank which operates entirely via the Internet, you should compare certain features to ensure you are getting the maximum benefits possible.

• Convenient- Most people do not relish the thought of spending hours tracking, managing and balancing their finances. A good online bank will offer a website that is easy to navigate and tools that are convenient to use. Top banks offer tools which help users manage their budget, view recent transactions and warn account holders of possible security threats. The easier it is to use these tools the more likely users are to stay on top of their finances.

• Fees- Know and understand what the fee structure is for transferring money, online bill pay and minimum balance requirements. Remember if you are using an online bank as your primary financial institution you will be moving money in and out frequently to pay bills or contribute to various savings accounts. Compare the fees from each bank you review and look for a bank that offers low or ideally no fees for frequent transactions.

• Accounts- A real benefit of using online banking services is having all of your accounts in one place. Your bank should offer the option of opening different accounts beyond checking and savings such as IRA’s, money market accounts or health savings accounts and allow easy fund transfers between the accounts. If you have to use several different banks to manage all of your accounts, it becomes more time consuming and difficult to manage.

• Access- One of the disadvantages of online banking may present itself when accessing or depositing your money. When considering banks, ask yourself how will I deposit money into my account and where can I access ATM’s for easy withdrawal? You do not want to pay ATM fees each time you access your cash or wait several days (weeks) for money to appear once deposited.

• Communication- You should always have the option to talk to a “real” person about your accounts. Who do you contact if you have questions, problems or need other assistance with your accounts? Does the bank have knowledgeable customer service representatives who can assist you 24 hours a day? You don’t want to find yourself in need of an immediate answer only to discover you have to wait days for a reply.

Using online banking services can streamline your finances and make the task of managing your finances less stressful and time consuming. Compare features and services to ensure you select the best bank for your financial needs.