Home banking is the process of conducting banking transactions at home rather than at a branch location. The customer can access these services through an internet connection or mobile phone. So home banking refers to mobile banking, web banking, banking over the telephone, or banking by mail or through bank apps. And it includes viewing account balances, reviewing transactions, making payments, and transferring money.
Most banks offer digital services. But an internet bank often has limited or no physical presence. In addition to more traditional bank branches, home banking services form one part of a bank’s overall system. Several banks began experimenting with online banking in the early 1980s. However, it did not gain widespread popularity until the rise of the internet in the mid-1990s.
Recently, many banks have been operating as virtual banks, offering services directly through the internet. Home Banking benefits both the customers and the bank through greater cost-effectiveness by maintaining fewer physical locations.
Home banking has become increasingly popular, causing significant changes in the banking industry. People are arranging their affairs in such a way so that they can visit a physical branch as few times as possible. Online banks have significantly profited due to this shift. In addition, the absence of brick and mortar locations allows many online banks to offer favourable rates and other incentives for customers who are willing to do their banking online.
A customer can access online banking by registering with their financial institution and setting up credentials for online verification. After a customer has set up their account, they can log into it, using their credentials and access all the banking services provided.
These home banking services get linked to a customer’s accounts within the bank. They include checking accounts, savings accounts, or credit cards. Once connected, customers can conduct all transactions with the help of the internet on their smartphones or laptops.
Home banking is a great way to market new products to existing customers and allows for more integration of services at one platform, which helps retain customers.
In terms of providing services through home banking, each bank might differ in functionality. Banks offer their customers a basic level of online and phone banking services at a minimum. There are two categories of online banking: transactional functions and non-transactional functions.
Transactional functions of banking include online bill pay. Transferring funds between accounts, depositing checks, buying and selling investments, applying for loans and credit cards. In addition, users can view account balances, review recent transactions, view bank statements, order checks, and update addresses and other personal information, among other non-transactional functions.
In contrast to more traditional banks, direct banks are banks that operate solely through online and phone services, without any physical branches. These banks are also known as virtual banks and provide home banking services.
To provide their customers with consistent service, direct banks often connect with interbank networks to access ATMs. At the same time, all the other transactions are performed over the internet or via a smartphone. In operating as a direct bank, an institution can save significant amounts of money by removing the costs of maintaining a branch network.
