Last Updated on April 12, 2023 by Guest
Over the past few decades, the finance and technology industries have experienced remarkable growth and advancements, resulting in increased productivity, efficiency, and competitiveness in delivering financial products. The Covid-19 pandemic has further accelerated digitalization across various industries, including a significant surge in the use of digital payment platforms. While traditional banks have been striving to digitize their services, online-only or digital banks are attempting to capture the Indian financial market.
Online banks are a new concept in India but offer various benefits such as round-the-clock accessibility, real-time assistance, lower transaction costs, quicker turnaround times, personalized services, and customized products. This may result in a high adoption rate. However, many people are still uncertain about the safety and security of online banks and whether they can replace traditional banks. This article aims to provide a comprehensive understanding of online banks to help clear any confusion.
What are Online Banks?
Online banks, also known as digital banks or online-only banks, are financial institutions that exist solely in the digital space. They allow customers to conduct all banking transactions online, from opening an account to loan disbursement. Online banks can provide customers with higher interest rates on deposits, such as online savings accounts, fixed deposits, and recurring deposits, compared to traditional banks.
These banks are licensed under the Banking Regulation Act and must comply with the Reserve Bank of India’s norms, much like other scheduled commercial banks. Their primary focus is on accepting deposits and issuing loans. Due to their digital nature, online banks have a lower operational cost since they don’t have a physical presence.
However, acquiring new customers and cross-selling to existing ones is more challenging in online banking since there is a lack of personal interaction. Despite this, digital banks offer a range of new and customized solutions that address issues in traditional banking.
Are Online Banks Safe to Use?
Today, we’re all too familiar with stories of hackers and data breaches. Every day we hear about another high-profile cyberattack, and it’s enough to make anyone worried about the safety and security of their online banking transactions. However, despite the alarming headlines, online banking is just as safe as traditional banking methods – if not safer.
Online banking doesn’t necessarily increase your financial risk, as it is backed by cutting-edge technologies such as automatic fraud detection, AI-driven security, and digital encryption. The truth is that hackers do indeed target online banking websites, whether they are full-service online banks or traditional brick-and-mortar banks that offer online services. But these attacks have also forced banks to up their game and implement the latest advanced technology to combat fraud and scammers on a whole new level.
Of course, your participation is also crucial in avoiding financial fraud. By being vigilant and thoughtful about how you communicate with your bank and protect your personal information, you can significantly reduce the risk in your digital banking experience. Simple steps like regularly checking your account activity, setting up alerts for unusual transactions, and using strong and unique passwords can go a long way in keeping your financial information secure.
How to Stay Safe While Banking Online?
1. Choose an Online Bank with top-of-the-line security
When choosing an online bank, security should be your number one priority. Look for the “https” in the web address, which means the site is secure, and check if the bank has two-step verification. With this method, you’ll have to provide additional information to access your account, such as a passcode sent to your phone or the answer to a security question. This extra layer of protection makes it more difficult for hackers to steal your information, so you can rest assured that your money is safe. If an online bank doesn’t take security seriously, it’s time to find one that does – you have plenty of options.
2. Don’t do Your Banking on Public Wi-Fi
Regarding online banking, it’s essential to be mindful of the security risks of using public Wi-Fi. Hackers can easily exploit vulnerabilities on these networks, leaving your sensitive information at risk. To avoid this, it’s best to avoid conducting any online banking or diplomatic activity while connected to a public Wi-Fi network. Instead, consider using your cellular network, which is typically more secure, when accessing your online banking account while on the go. While it’s not foolproof, it’s much safer than public Wi-Fi.
3. Be Careful With Your Debit Card
Con artists and swindlers might steal your debit card info to use it for their benefit. Hence, here are some tips to keep in mind to prevent fraud.
- Make sure you keep your debit card PIN private. Don’t say it publicly or keep it in your wallet since it could result in a fraudulent transaction if stolen.
- Do not post pictures of your Debit Card on social media since doing it can result in hackers trying to break into your account.
4. Change Passwords Regularly
One of the key ways to protect yourself and your finances is by changing your passwords regularly. Here are some tips on how you can stay safe with regular password updates:
First, try making sure that you create unique passwords for each account. That way, if one of them is hacked, all the other accounts won’t be affected. Strong passwords should include numbers, upper and lowercase letters, and special characters like !@#$%. It’s also helpful if they don’t contain actual words or personal information so they can’t be easily guessed. Additionally, try to avoid using the same password across multiple accounts; this will reduce the risk of someone gaining access to all your accounts simultaneously!
Our guest contributor:
Naina Rajgopalan has a thing for numbers and a deep fascination with learning about finance. She’s been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo Save, a digital savings account that offers up to 7% interest rate on savings along with benefits such as insurance on balance, safe & secure banking, and so on. Naina stays updated with the latest trends in the banking and fintech industries. She has taken it upon herself to share her knowledge with readers across all walks of life to help them better manage their finances and budgets, so they can make better decisions while spending, borrowing, investing, and saving.