The incorporation of new technologies has allowed banks to offer many online services to their customers, quickly and easily, and with outstanding security guarantees: this is what is known as electronic banking. Each time is gaining more weight in the financial market.
In addition, in these times of pandemic, where travel and personal procedures have been reduced to a minimum, it is essential to know how to use the telematic services offered by Banks to manage our finances correctly, both in the private and professional fields, and take advantage of the benefits of, for example, saving waiting times and travel.
If you still do not use electronic banking in your finances or manage your small business, I encourage you to continue reading to find out how to take advantage of it.
What Does It Mean To Use Electronic Banking?
Today, all banks have a platform on their website from which, previously identified with a secure username and password, we can carry out practically the same procedures as in a physical office: check the balances and movements of our accounts, make payments or transfers, pay our taxes, register new accounts, apply for credit cards or loans, make contributions to our pension plan …, but also with a series of advantages compared to traditional banking:
- 24/7 availability: forget about rigid banking hours and long waits at the windows. You will be able to carry out all your transactions calmly at any time and from anywhere, simply with your computer or mobile phone.
- Commission savings: many of the procedures that carry a commission if carried out in the physical branch are accessible in electronic banking.
- Greater transparency in the conditions of the contracts. All information should be available on the website, usually in more precise and more concise terms.
- They have online help or a personal manager who gives personalized support to each client.
What Are The Existing Means Of Payment?
In general, we can classify payment systems into three broad categories: immediate payment systems, deferred payment systems, and prepaid systems.
The immediate payment system is usually used in our daily operations when we pay in cash. But it must be borne in mind that bills and coins are considered cash and bank checks to the bearer or any other means, physical or electronic, presented as payment to the bearer.
There are legal limitations on payment in cash in those operations in which one of the intervening parties (or both) is a company or a professional. Currently, they are limited to € 2,500, but in the future, regulations are expected to limit the maximum amount to € 1,000.
Another immediate payment system would be transferred, which is managed through a supra-bank system.
Regarding deferred payment systems, a loan or a mortgage are examples of instruments of this type, in which the bank advances an amount of money to a client, who must return it in a more or less long period, in addition to the interests that have been generated in said interval. A credit card is also another example of a deferred payment method.
On the other hand, prepaid systems consist of anticipating and reserving a certain amount at a particular moment to proceed with the corresponding consumption at other later moments. This retention or loading of money is usually carried out through a prepaid card. It is a particular case of a debit card (the maximum amount to be spent in a considered period should be limited).
Regarding electronic payment systems, we can classify them into:
- Bank cards: either debit, credit, prepaid, or loyalty cards.
- Electronic money: money that does not have physical support can be transferred through telematic means, such as bitcoin, among other cyber currencies.
- Electronic payment orders: there is not yet a fully functional alternative to traditional checks or promissory notes, although, in some countries, options are being developed in this regard; for example, in some Latin American countries, the check is implemented, managed from virtual banking.
- Mobile payment: the new mobile phones support making payments through them, using NFC technology, which allows data to be transmitted between devices that are very close.
In addition, there are payment platforms on the internet that have achieved great acceptance. The world leader is PayPal, which allows payments to be made and the transfer of money between individuals or companies. The great advantage is that it is unnecessary to transmit confidential data such as account or card numbers, so its use is safe and straightforward. Some statistics say that there are more than 100 Million users in the world.
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Electronic Banking Operations
The set of services that can be provided through electronic banking is comprehensive, given that most of the operations carried out in the physical offices of financial institutions can be emulated, as long as the user can be correctly identified when required by current regulations. The usual thing, in any case, is that technology already offers all possible solutions to provide the necessary services. The operations that can be carried out in electronic banking can be classified, from the point of view of the entity, in:
- Asset operations: Credits, loans, financial leases, bank, financial and certification discount, overdraft cancellation, factoring, and confirming.
- Liability operations: Demand and term deposits, structured deposits, checking accounts, certificates of deposits.
- Financial intermediation operations: in this type of operation, the entities carry out a work of contact between people or entities requesting and offering funds, for example, acquisition of public debt, investments in private fixed income, investments in variable income, investment funds, and pension plans, life insurance and savings plans or derivative products.
Safety In The Use Of Electronic Banking
Financial institutions must guarantee maximum security in all their applications and, similarly, users must adopt the necessary measures to prevent cyber attacks. All of this requires the analysis of possible threats, vulnerabilities, probabilities of attacks, and their impact, detailed in a Security Plan that covers all the system’s weak points.
The main threats that can affect computer systems can be classified into:
- Physical threats: possible power failures (not due to direct human intervention), adverse weather conditions (droughts, extreme humidity conditions, etc.), or natural disasters (floods, earthquakes, fires, etc.). The systems should have prevention mechanisms against its effects.
- Threats of a rational nature: they refer to programming errors or information transmission systems that may be exposed and lead to illicit attacks against the computer system.
- Cybercrime: direct and programmed attacks directed at the system by people seeking personal gain or simply causing harm to the organization. In most cases, they will take advantage of the materialization of physical or logical threats.
The main security measures that electronic banking has implemented to combat these threats are the use of antivirus, choice of complex passwords, use of firewalls, use of encryption software, limitation of access to data depending on the types of profiles … also physical measures, such as making backup copies, redundancy of hardware and software or protection against physical risks, among others.
Despite these security measures, new crimes related to electronic banking continue to appear, such as the following:
- Phishing consists of sending messages to the clients of an entity impersonating its corporate image to get them to provide them with personal and sensitive information, either by SMS, by mail, through false web pages, or telephone calls.
- Smishing is a specific type of phishing based on fraudulent email messages (SMS or, for example, WhatsApp).
- Pharming, in which cybercrime exploits a web page so that traffic through it is intercepted, allows them to steal confidential information.
- Key loggers, elements that track and record the keys that a user is pressing on their computer to use for criminal purposes.
It is necessary for financial institutions to proactively anticipate to detect these practices, using statistical methods to detect suspicious patterns or, more recently, systems based on artificial intelligence, which learns from themselves, to be more and more effective in detecting them. Type of fraudulent behavior. This means that electronic banking increasingly offers greater security to its users.
If you have found this introduction to electronic banking interesting, we encourage you to enroll in our e-training course, Electronic banking and electronic payments. Strategy, operations, and security in which you can continue to delve into these and other topics. It will provide you with the knowledge and skills necessary to use electronic banking both in the personal sphere and in your company or business, and take advantage of all the advantages that its use brings.