This has been a godsend for some (not least the purveyors of computer equipment and software); a totally new world for many; and quite frightening for others. The situation has highlighted and exacerbated the so-called digital divide; the gap between those who have or can acquire the necessary IT skills and those who either can not or will not adapt. Cost is a major factor and not everyone has the financial wherewithal to take advantage of the online world even if they want to. This digital divide has compounded the problems of isolation - already bad enough because of the restrictions in place.
One particular aspect of daily life that has changed considerably during the pandemic is the world of consumer banking - everyday use of high street banks and ATMs. The use of cash (notes and coins) for everyday needs has dwindled to such an extent that the amount in circulation (but not being used) is considerably greater than normal. Conversely there has been a dramatic increase in electronic payments by credit card, contactless transactions and by online expenditure. The Bank of England published a very interesting report at the end of 2020 called “Cash in the time of Covid”. Click here for an easy and worthwhile read.
The relationship that people now have with their banking and building society institutions has correspondingly moved away from in the branch/over-the- counter transactions to a far greater and necessary reliance on internet banking. Whilst the younger generation are relaxed about adopting online finance the more senior citizens have a lot of anxiety about no longer being able to handle hard currency - money and cheques - as they have been used to. Whilst they have traditionally been happy to put their trust in their high street bank (even though they can not see the money held on their behalf) they have far less confidence in an internet bank that they can’t see. Notwithstanding this, a surprising statistic is that at the end of 2020 some 80% of British people used some form of online banking; whilst over 25% (or 14 million people) have opened an account with a digital (internet only) bank. (See below for an explanation of this new type of bank.) This would tend to indicate that the level of trust in internet banking in this country is very high and this alone is reassuring.
What is Internet Banking?
For two reasons this article is not a tutorial on internet banking:
Firstly there are so many different banks and finance houses and no two are likely to operate in exactly the same way. Therefore it is best to visit the web site of the bank you are with or proposing to use and follow their guidance and instructions for signing up for internet banking. Naturally, I will not make any recommendations about which bank or type of account to select. Similarly, none of the links I provide in this article constitute any kind of endorsement.
Secondly there are many other sites that give detailed guidance on internet banking in general and I can do no better than to offer some links to trusted sites that tell you all you need to know. I have selected a few that I can recommend with the proviso always that I am not responsible for the content of external sites.
It is important to understand that there is a major difference between banks and finance houses that have both a physical (high street) presence and internet access, and others that are designated “Internet Only”. The latter can often be attractive because they sometimes offer higher interest rates and benefits purely because they do not have the overheads of premises and staff. Be careful before opting just for attractive offers.
Similarly online banking can be conducted on a range of devices - on computers, on laptops and tablets and on mobile phones. Many banks have a special app you can download to use on phones and tablets.
Recommended Links
There is a wealth of information on the internet about online banking and I only show below a few of what I think are sites of a more general nature (not related to a particular bank or service) and those which are aimed at the older generation. Never forget that you can use Google (or other search engine) to narrow down your questions. At the end of this selection of links I will also highlight some key golden rules to follow to keep yourself (and your money) safe.
Age UK has a very informative and helpful site that covers most of what you need to know - including how to start the process if you are new to it. See their advice by clicking their logo here
The Government sponsored Money and Advice centre has a lot of free information about internet banking on its comprehensive site which can be viewed by clicking on their logo here
Lastly a valuable resource is the Money UK website which covers all things to do with money but has a detailed section on internet banking. Click on its logo here to find the article about how internet banking works.
Internet Banking is remarkably safe considering the number of scare stories that one reads about daily. That is not to say that standards across the industry are necessarily the same. Which magazine conducts an annual survey to assess the security of internet banking. Its latest report (September 2020) compares 16 banks and building societies. Read it here Don’t be too downhearted if your own bank does not compare well because you need to remember that the survey is conducted rigorously to quite demanding security standards, carried out by cyber security experts attempting to break the web sites' defences.
Of all the risks surrounding internet banking (and indeed use of the internet in general) perhaps one of the greatest is the individual user. Human failings, carelessness and failure to observe basic caution account for more cases of lost money and data than the common risks. At all times one needs to stay aware and alive to all the risks. Just as you would not (should not) leave the house unoccupied without securing it or walk down the street with a handbag open or a wallet on show, neither should you feel you are safe just because you are sitting comfortably at your computer or device. So please adopt basic internet safety behaviour at all times especially where money is concerned.
There are some particular things to watch out for:
- Always ensure you use strong passwords.
- Never disclose your passwords to anyone else.
- Remember that Banks will NEVER ask you for your password.
- Beware of any email purporting to be from your bank or building society and never follow a “click-through” in an email. Always visit the site yourself and log on in the usual way, not by following an email link.
- Whenever possible avoid conducting secure business in public or on open (free) wifi services such as in cafes and hotels.
- If you are using an app on a mobile device use your mobile data service not open wifi.
- When in public, maintain your privacy and watch out for what is called “shoulder-surfing” by someone else.
- Always ensure that the banking site you are visiting has https:// and the padlock symbol in its internet address. This denotes it is a secure site.
- Always check your bank statements.
- Where offered, sign up for paperless statements. Paper statements are much easier to intercept and misuse.
- Always log off from your internet banking site when you have finished. (The more reputable sites will do this automatically but don’t assume it will be done).
- Lastly, something you can do safely is let someone know your Bank, Sort Code and Account name if they are going to pay you. However, make sure you know who you are dealing with first.
Summary
Internet banking is safe and very convenient provided you stay alert and follow the basic rules outlined above and as instructed by your bank.