Thanks to its advanced web services and mobile apps, online banking had come into the spotlight way before the pandemic. But, more than ever, business owners now rely on this technology to meet their banking needs from the safety and convenience of their homes. If you’re thinking of using an online bank for your business, it’s important to weigh its pros and cons and learn how these innovative banking features are changing the way business owners interact with their money.
In today’s fast-moving world, businesses use online banking to replace in-person visits to a branch. It offers a variety of web-based features to make financial transactions online including:
- Bill payments
- Tax payments
- Cash transfers to vendors and suppliers
- Deposits to retirement accounts (either your personal account or your company’s pension plan)
- Open new accounts
- Loan applications for business loans, credit cards or lines of credit
- The ability to deposit cheques.
Online banking can be accessed via a computer or your bank’s mobile app. All you need is a bank account, a secure password and a good internet connection, and you can access your account from anywhere, which is especially important as we are urged to stay home.
Advantages of online banking
In addition to being able to bank at any time, from anywhere, there are other advantages to banking online. You may also be able to:
Pay bills online
This might be one of the top advantages of online banking because you don’t have to take time out of your day to go to the bank. You can simply log into your account and pay your bill online right away. For increased efficiency, you may also set up automated bill payments, which helps you manage your cash flow when you have monthly payments to and from vendors.
Transfer money
You may need to do a rapid money transfer to a client or vendor, or you may need to transfer money from one account to another. Instead of sending a registered cheque and waiting for it to clear, you may securely transfer the money online.
Deposit cheques online
Rather than driving to a bank branch and waiting in line, you may be able to deposit cheques online in minutes. And because most financial institutions have an app that replicates its services from your phone, you have the ability to always bank on the go. Plus, some banks offer 24/7 customer service, so you can speak to a customer service representative at any time.
Lower your overhead fees
If your business banks online, your banking fees may be lower, as online banks may not have to pay for the cost and upkeep of branches, and those savings may be transferred to you. Plus, they may have more no-fee options that add to your savings.
Disadvantages of online banking
While online banking is always improving, there are some disadvantages for business owners reliant on immediate and constant access to their banking services.
Technology disruptions
Online banking relies on a strong internet connection. If your internet is disrupted by a power outage, server issues at your bank, or if you’re in a remote location, your ability to access your accounts might be affected. Scheduled site maintenance also means you can’t access your accounts and may have to seek an alternative.
Lack of a personal relationship
A personal relationship with your bank may be able to offer an advantage over online banking. If you need a business loan, a new line of credit, a waived fee or to make changes to your current banking needs, having that relationship can help.
In-person banking relationships can also help you craft a business account tailored to your specific needs. They can also make notes in your files about cheques, cash deposits and international payments so you can avoid extended holds on your money.
An ideal relationship would be a blend of online banking for your day-to-day transactions and a personal relationship with your banker to assist with bigger needs. That way, you have multiple options to support your business.
Privacy and security concerns
Financial institutions have very good security, but no system is foolproof. Valuable information is always prone to hacks, but you might be able to prevent this if you:
- Always use the mobile app and the website directly. You should see a small lock to the left of the search bar, which indicates the site is secure.
- Make sure you have a strong password based on a combination of numbers, symbols and letters. It’s also important to change your password regularly.
- Do not click on any links in text messages if you haven’t agreed to that method of communication.
- Use two-step authentication, which adds an extra layer of security.
Limited services
Online banking features a lot of services, but some of them still require business owners to go into banks to “wet sign” documents. This includes loan and credit applications, a large cash withdrawal or large deposits. But as online banking technology continues to evolve, you may eventually be able to electronically sign for these in the future.
These days, banks know business owners want the ease and convenience of online banking, so they’re constantly upgrading and improving their digital assets. You may take advantage of this rapidly changing banking technology and tailor an online banking system that is unique to your business needs. If you think online banking could benefit your business, talk to your bank about the time- and cost-saving advantages of going digital.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.