Thanks to advanced web services and mobile apps, online banking came into the spotlight well before the pandemic. But many small business owners now more than ever rely on this technology to meet their banking needs from the convenience of their homes – or anywhere else, for that matter. If you’re thinking of using an online bank for your business, it can help to weigh the pros and cons of online banking and learn how these innovative banking features are changing the way business owners interact with their money.
In today’s fast-moving world, many businesses use online banking to replace in-person visits to a branch. An online business bank account offers a variety of features to make financial transactions digitally, including:
- Bill payments
- Cash transfers to vendors and suppliers
- Deposits to retirement accounts
- Open new accounts
- Applications for business loans, credit cards, or lines of credit
- The ability to deposit checks
Online banking can be accessed via the internet, whether on a computer or through your bank’s mobile app. All you need is a bank account, secure log-in credentials, and a reliable internet connection, and you can access your account from anywhere in the world to conduct your business transactions.
Advantages of Online Banking
There can be a wide spectrum of online banking benefits from convenience to lower fees.
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 can help you manage your cash flow when you have monthly payments to and from vendors. Paying bills online can also help you save money – no need to pay for postage, for instance.
Transfer money
You may need to do a rapid money transfer to a client or vendor or transfer money from one account to another. Instead of sending a check or a certified check and waiting for it to clear, you may securely transfer the money online.
In today’s fast-moving world, many businesses use online banking to replace in-person visits to a branch.
Deposit checks online
Just as paying bills online saves you the time of travel and waiting in line, the same holds true with depositing checks. Most financial institutions have an app that replicates its services on your phone or tablet, so depositing a check can be as simple as snapping a picture of the front and back of the check and uploading it through the app. Some banks offer 24/7 customer service, so you also may be able to 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 or more competitive interest rates that add to your savings.
Disadvantages of Online Banking
While online banking is always improving, there are some considerations 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, although usually scheduled for off-hours, also means you can’t access your accounts and may have to seek an alternative during certain time periods.
Lack of a personal relationship
Sometimes it can be nice to talk directly with another human instead of just entering captcha codes and typing into chat-bot boxes. 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 also can help you craft a business account tailored to your specific needs. They can make notes in your files about checks, 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 typically have very good security, but no system is foolproof. Valuable information is always prone to cyberattacks, but you might be able to prevent this if you have strong cyber risk management strategies, such as:
- Always using 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.
- Making sure you have a strong password based on a combination of numbers, symbols and letters. It’s also important to change your password regularly.
- Never clicking on any links in text messages if you haven’t agreed to that method of communication.
- Using two-step authentication, which adds an extra layer of security.
Limitations of Online Banking
Online banking features a lot of services, but some of them still require business owners to go into banks to “wet sign” documents on a physical piece of paper. This can include 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.
The Takeaway
These days, banks know business owners want the ease and convenience of online banking, so regularly upgrading and improving their digital assets is common practice. You may take advantage of this rapidly changing digital banking technology and tailor an online banking system unique to your business needs. If you think online banking could benefit your business, you can talk to your bank about the time- and cost-saving advantages of going digital.
A version of this article was originally published on December 4, 2020.
Photo: Getty Images
