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Online Banking Services: Definition & Types

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  • 0:04 Definition of Online Banking
  • 1:37 Mobile Banking
  • 1:59 Real-Time Gross Settlement
  • 3:08 National Electronic…
  • 4:03 Lesson Summary
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Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

After you read this lesson, you'll learn just how useful online banking can be. You'll learn that you can do almost any kind of bank transaction from anywhere you have an Internet connection. You can even do banking from your smartphone.

Definition of Online Banking

Back in the day, anybody who needed to deposit money into their bank account had to physically walk into their bank branch to perform that transaction. Well today, if you need to deposit a check, all you have to do is whip out your smartphone camera, take a picture of your check with your bank's smartphone app, and you're good to go. Your bank will then notify you when it's safe to shred the check. Your bank no longer needs to have a physical copy of your check. A photo works just as well.

This is one example of online banking. Online banking is banking over the Internet. This can be through the bank's website or via your bank's smartphone app.

Things you can do through your bank's website include these:

  • Pay bills
  • Check balances
  • Transfer funds
  • Open new accounts
  • Update your address
  • Download statements
  • Apply for demand drafts

That's right! If you have a State Bank of India (SBI) account that's online banking enabled, you can also apply for demand drafts online. Demand drafts are safer than regular checks written by people, similar to a cashier's check in the U.S., as they are paid by the bank to the payee instead of from a person who may not have the money to pay the check. Applying for a demand draft online is quicker than doing it in person at the bank. All you have to do is to log in to your SBI online account, fill out the details, and choose whether to receive it via mail or pick it up in person at the bank. If picking up from the bank, there's no wait; you just have to show your online demand draft printout and the bank will hand the demand draft to you.

Mobile Banking

With the introduction of smartphone apps from your bank, online banking has gone mobile. Now, instead of having to sit in front of a computer to conduct your bank transactions, you can perform your bank transactions through your smartphone from anywhere in the world as long as you have access to the Internet. You can be at your favorite coffee shop and pay bills. Of course, you can do the same if you bring your laptop.

Real-Time Gross Settlement

When it comes to transferring large amounts of money, several countries have introduced what is called real-time gross settlement (RTGS) systems. These systems transfer funds in real time without having to wait for a credit and debit transaction to take place between the account that's giving the money and the account that is receiving the money. RTGS is used by the central banks of countries to transfer funds to central banks of other countries.

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