Despite the constant increase in using internet services, the vast majority of people still pay bills by mail and deposit cheques at their bank, as they did in the pre-internet era. Whilst many people might shop online for financial services such as loans, life insurance or home mortgages, they actually prefer closing on the deal with a real person, in a real office!
- The benefit of short-cutting the red tape surrounding bank transactions with direct access to the management of personal finances online has a tremendous allure to expatriates. In reality it is a quick and efficient way of managing their assets, accounts and payments while abroad, in line with each individual's specific needs.
- To this equation, add any bank's eagerness to encourage e-services which reduces the expensive paper-handling and employee costs. Hence, the solution of online banking is perfect, and banks are investing and competing for every expatriate's commitment to their bank!
In reality, there is a strong move away from paper-based, traditional bank transactions, providing you feel comfortable to trust the bank and if it can offer you the e-services you need. How can you be sure?
- Before jumping onto the banking online wagon, and after having realistically faced up to the question whether you will have an internet connection wherever you will go, ask:
- Can I register from abroad?
- What services do I need to access online banking while abroad?
- Is the bank secure?
- Can I view all family/household and credit accounts at once?
- Can I combine virtual banking with online trading?
- Can I link my bank account to an affiliated brokerage account?
- Can I register from the brokerage account from abroad?
- Before you choose a bank, be sure to price the fees and services which are important to you.
Here, you will find a broad description of the common pros and cons of e-banking.
Brick-and-mortar banks, click-and-mortar banks, e-banks
- Nowadays, most large national banks, many regional banks and even smaller banks and credit unions offer some form of online service. Banks that offer e-services are referred to as click-and-mortar or "brick-to-click" banks, to distinguish them both from "brick-and-mortar" banks that do not offer online services yet. "Brick-to-click" includes online or "virtual" banks that have no physical branches or bank-tellers whatsoever.
- Brick-and-mortar banks allow you to talk to a teller at a branch, use the bank's ATMs, call a customer-service line, and visit the bank's website. Bank e-services most commonly include Internet banking activities such as viewing statements online, making payments on credit cards, mortgages and recurring bills, but can include also asset management, international wire transfers etc.
E-banks or virtual banks have no branches, so you can't visit a teller and usually you have to use another bank's ATM. Most of your dealings with the bank are online or by phone.
- The biggest challenge for the banking industry has been to guarantee the security of the service, as well as providing easy to learn and easy to use interfaces. Before you go ahead and set up your home banking account ask for their security records, make sure the bank is insured, look for security measures such as those provided by VeriSign and the internet address starts with http://. Verify also that your computer system is well protected from hackers.
Do not keep financial information on your computer and if you download anything from the site and need to store it on your computer, make sure to encrypt the document or to password-protect it.
If you use the internet and do banking online, it is strongly advisable to protect your system with a firewall and anti-virus program.
- A new breed of banks has emerged thanks to the internet. Virtual banks do not have any human interactions, so if you do not mind not having an office to visit periodically, to not being able to shake hands with, or voice your complaints to real people, then a "virtual" or e-bank may save you money in the long-term.
Virtual banks do not have physical offices, they exists solely on the internet but they follow the same regulations as your bank and they offer pretty much the same range of services as a traditional bank.
- The money saved from not having offices and tellers is translated to the customers in lower fees compared to the brick-banks and possibly higher interest rates.
- One major negative point is that since e-banks lack ATM machines, many would charge you when using other bank’s automated tellers and do not accept deposits via ATM. This means that to deposit a check you have to either send it by mail or you have to transfer money from another account. Virtual banks also offer business customers ATM cards, credit cards and direct-deposit services but, at present, they don't lend money over the internet as a rule, but that, too, might come with time.
Why E-banking is good?
- Availability: the convenience of online banking is that it is open 24/7, 365 days a year . The drawback is, if you have no connectivity you are stuck.
- Ubiquity: for an expatriate this is THE bonus. No matter where you are you can carry on your business as usual.
- Velocity: transactions online are executed and confirmed very quickly.
- Convenience: Even though it is not true of all e-banks, in many cases you can access and manage all of your bank accounts, including IRAs, CDs, even securities, from one secure site. Many online banking sites now offer, besides other services; portfolio managing programs, rate alerts, account aggregation, stock quotes, to help you manage your assets more effectively. Most are compatible with money managing programs such as Quicken and Microsoft Money.
Why E-banking is Bad?
- Set up: if you wish to have access to online banking you have to remember to sign up for the service prior to leaving your country of origin, because you will usually be asked to provide a document proving your identity and sign a form at a bank branch. Signing of other authorization papers or a request by the bank to provide a power of attorney may be required if you wish to manage your and your spouse' accounts together online.
- Usability: some banking sites seem more like a maze than simple interfaces. It might be necessary to spend some time in order to become familiar with functionalities and how to access them. Banks are competing so strongly to provide 'friendly and easy to use formats', that user-friendliness is constantly improving.
- Changes: periodic upgrades of banking system are the rule, which means having to re-learn how to do operations all over again. Or, in the worst case scenario you may be asked to re-register your account all over again.
- Trust: For many people, the biggest hurdle to online banking is learning to trust it. Did my transaction go through? Did I push the transfer button once or twice? Best bet: always print the transaction receipt and keep it with your bank records until it shows up on your personal site and/or your bank statement.
- Privacy: The online experience is largely relying on trust, but this trust can be easily lost if the bank has even a minor privacy breach. If you register any telemarketing abuse or unwanted email from third party then you might want to look for another bank. In fact, the bank's sharing of personal information with third parties is a touchy subject that can prompt you to close an account. Banks should have a clear policy regarding the protection of your privacy and should provide you with information on how you can contact the bank with questions or concerns.
- Identity theft: The biggest fear of any e-client is identity theft and you should be aware of the bank's policy to protect it. If your bank can prove to you its commitment to have secure and safe identity verification procedures, which might include denying access to accounts if the identity cannot be verified and notifying the owner as soon as possible of any unauthorised access to his/her account, you are in good hands; if not, start looking for a more reliable institution.
- What is missing?
We hope that banks will offer more in the future in multi-lingual online services, to offer expatriates coming to a new country the opportunity of banking in their own language.