How Does Internet Banking Work?

Online banking allows banking, account management and purchases from the comfort of your home, laptop or office. Virtual banks, which are the banking interfaces of brick and mortar banks, have merged with IT technology to make this possible. Secure servers protect sensitive information that is submitted online.

• Internet banking is paperless banking. Everything that can be done with a brick and mortar bank can be done online. This saves the bank billions in redundant office document costs. Everything from receipts to deposit slips, internal documents are no longer needed with Internet banking thus greatly reducing overhead.


• Convenience is the attraction of Internet banking, especially the ability to save gas and time running to the bank to transfer money or to pay a bill.  Making deposits, however still requires a physical trip to the bank, or snail mail of checks for deposit, in many cases.  JP Morgan Chase offers wireless transfer directly to another bank account with their e-mail or cell phone number.


• Security is a major concern for the operations of Internet banking.  Most banks use a four number PIN for log-in security.  They may also ask for a password, usually your pet's name or your mother's maiden name or other piece of information that only you will  know.  TANS are one time passwords, often mailed to the customer.  They are used to gain initial access to the account then the customer changes the TAN to a password they choose.  Passwords are often a combination of letters, number and symbols for added security.