Online banking is a relatively new way of transacting financial matters over the Internet. This gives people a more convenient way of handling and transacting business with their respective banks regardless of location or time. As an example, people will have an easier time checking over their bank accounts without having to go to the bank or heading to the nearest ATM to do so. All one needs to do is go online and head to the secured website of his or her bank in order to conveniently do that.

Online Banking Features

Aside from the simple task of checking one’s account online, there are also other features that online banking has been offering customers. Browsing over one’s account online is part of just the non-transactional features of Internet banking. Customers are also now able to do some online transactions with their banks over the Internet. This includes electronic payment of bills, transfer of funds, investment transactions as well as loan applications and transactions.

Online Banking Origins

Online banking has its roots from the way some banks offered distance banking services over electronic media during the 1980’s. The early method is by using a terminal, keyboard and monitor to access a certain banking system through a phone line. Another early method conveniently called "home banking" allows bank clients to use the numeric pad to send tones through a phone line as a set of instructions to the bank.

Online Banking Security

Since online banking is associated with distance transactions between the bank and the client, security remains an important key to its success. Providing the right level of security ensures the confidence of the clients in using the online system of banking more often. The usual protection to secure banking accounts online is through the use of password authentication. But then, it may not offer the most effective form of security and protection for bank clients over their accounts online.

Currently, there are two types of security methods being employed in online banking. One of them is the PIN or TAN system. PIN stands for Personal Identification Number while TAN stands for Transaction Authentication Number. The TAN offers bank clients with a second level of security since it goes beyond the usual single password authentication system such as when only the PIN is used.

In using the TAN, clients are usually given a list of several TAN’s that are usually eight characters long made and furnished by the bank upon providing the required personal identification requirements. Upon every transaction over the Internet, bank clients may need to provide an unused TAN aside from the PIN in order for verification. If there is a match, the online transaction is processed.

Another method of secured online banking used today requires the use of electronic signatures. In this method, all transactions require client signatures which are then encrypted digitally. The electronic signature as well as the keys can be stored in smart cards or in any other form of memory storage depending on what the bank provides.