Online banking services have become a part of everyday life for most bank customers, with more than 15 million Britons now using the net to manage their financial affairs.

The reasons for the growth of internet banking are obvious. Using the internet is quick and easy and avoids the need to visit a branch. Net banking also offers many services that are not available with a traditional, branch-based account.

There are two types of internet banking. You can either opt to operate your usual high street bank account online, or you can choose a “virtual bank,” such as Smile, Cahoot or First Direct, all of which have no branches and conduct all their business over the internet or, for some transactions, on the telephone.

Reasons to bank online:

Convenience

You can use your account 24 hours a day, seven days a week, wherever you have access to a computer – at work, at home, or even abroad on holiday. An internet account lets you check your balance, pay bills and move money around between accounts. Information can be stored within your account – for instance, the account details of people you pay regularly – so that you don’t need to remember them or write them down elsewhere.

Better rates

An internet account typically costs the bank about a twentieth of running a branch-based account. Banks are happy to pass on some of these savings in the form of better terms for accounts managed over the internet. Best-buy savings rates are usually dominated by internet accounts.

Security

Despite the scares about online banking, you are probably less at risk of fraud on the net than with many aspects of traditional banking. As long as you ensure that your computer has adequate anti-virus and firewall protection, you are no more likely to suffer fraud than you are – for instance – from handing your card to a waiter in a restaurant, who takes it away from your table to carry out a transaction, or putting a cheque in the post. Follow the advice at http://www.banksafeonline.org.uk/ to make sure your computer is fully protected.

Many banks now use “two factor authentication” – which means that you will not only need a password to access your account,  you will also need a piece of hardware, such as a keyfob device that generates a security number each time you use it.

If the worst does come to the worst, banks guarantee that they will fully reimburse customers who have fallen victim to online fraud

Other services

Online banking service users can also get access to other services, such as speedy loan, mortgage and credit card applications. Among the most sophisticated services is account aggregation, whereby customers can view and manage their bank, savings, credit card and investment accounts, including those held with other companies, using a single password. Banks to offer this service include Cahoot, Egg and First Direct.

Banks are now also offering customers services such as balance checks by text message to their mobile phones, making the most of integrated modern technology.

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