The word "bank" is derived from the Italian word "banca", which comes from Germany, meaning "bench". For banks to exist, they need to make a profit just as with any other business. For traditional brick and mortar banks, the majority of profit comes from fees charged for various financial services being offered, as well as interest being charged on loans, CDs, etc. While online banking also makes a profit through fees and interest charged, other ways are used as well. For instance, thanks to technology, online banks have the ability to create affiliate partnerships whereby networking and sharing of information yields profits. Additionally, online banks can set up pages on their websites for information and tools such as articles and loan calculators. In this case, the pages would be established as pay-per-click opportunities, meaning that every time a person clicks over to one of those pages, the bank makes money. Specific to making profit, it is easy to see that options for online banking tend to be more innovative and fluid than with traditional banks. Now, for online banking associated with a conventional brick and mortar bank, chances are good that regular customers would not be subject to some of the fees that people creating accounts only online would incur. It would be expected that some fees would apply through an online bank such as a fee being charged to transfer money from one account to another but these are typically nominal. Considering the thousands and thousands of online customers, the small fees would quickly add up, proving to be a nice money-making opportunity for the bank. Millions of people all around the world now use online banking and while these people are fully aware of the convenience and time-saving benefits, there is much more to know. If you have interest in banking online instead of in person, it would be beneficial to learn all you can in that with knowledge, you can make educated decisions. For one thing, some online banks are divisions or extensions of conventional brick and mortar banks but for others, operation is done solely online, without a brick and mortar location existing. The same would be true regarding the products and services offered. In other words, both types of banks offer checking and savings accounts for both personal and business needs, loans of varying types, money market accounts, certificates of deposits, etc. However, conventional banks and online banks also have unique characteristics. With internet banking staying open 24x7, 365 days a year, you would have the chance to pay credit card bills, transfer money, check accounts, and manage other finances from virtually anywhere in the world. On the other end, conventional brick and mortar banks have notary public services and rent safety deposit boxes whereas online banks do not. As mentioned, the convenience factor of online banking has made it a huge success. If you maintain an online savings or checking account but plant to travel on vacation, you would handle many financial issues sitting in a hotel room, dining at a beach side cafe, or from your wireless mobile phone while at the beach. With this service, you could track accounting, reconcile an account, determine if a check had cleared, transfer money, etc. Just imagine going out of town to relax only to remember you forgot to pay an important bill. Instead of panicking, you would simply log onto the internet bank and within minutes, have the bill paid and a confirmation number saved. Online banking is convenient for other reasons too. For instance, rather than fighting to get to the
bank in time to hit a deadline when sick, pushing through two feet of fresh snow on the ground, or having no one to watch the small children, you could handle your banking needs online without ever leaving the home. Although online banking is now a well established service, with so many new banks launching sites, the types of products and services are becoming more competitive. Even prices, fees, and interest rates are changing so banks can stay competitive.
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