What is online banking?

Online banking definition

Online banking is the ability to access your bank accounts through the internet instead of visiting a physical branch. By logging in to your bank’s website or mobile app, you can check balances, move money, and even open new accounts without leaving home.

Nowadays, most major banks and credit unions offer digital banking, and for many people, it has become the primary way to manage day-to-day finances.

Online banking vs. digital banking

"Online banking” and “digital banking” are often used interchangeably, but they aren’t exactly the same.

• Online banking refers to managing your accounts through the internet, typically on a bank’s website or mobile app.

• Digital banking is broader. It includes online banking, but also covers newer tools such as mobile wallets, budgeting apps, automated savings, and even AI-powered financial insights.

How does online banking work?

Online banking works by connecting you to your accounts over the internet, allowing you to securely manage everyday banking tasks.

After setting up your account and creating a login, you can check balances, transfer funds, pay bills, and deposit checks from your computer or mobile device.

This provides you with 24/7 access to your finances, allowing you to manage your money conveniently from anywhere with a stable internet connection.

What you can do with online banking

Online banking covers much more than just checking your balance. Banks now pack their websites and apps with tools that can replace the in-branch experience.

Pay bills and transfer money online

Set up one-time or recurring bill payments, send money to friends or family, or transfer funds between accounts. Many banks also support same-day payments and international transfers.

Check balances and manage accounts

Your dashboard updates in real time. You can see transactions, set up alerts for unusual activity, freeze your debit card, or order a replacement, all without calling customer service.

Set savings goals and track spending

Some banks have built-in budgeting tools that sort your purchases into categories. Others let you create automatic savings plans that move money into your savings account every payday.

Manage loans and credit online

Online banking makes it easy to pay loans, monitor balances, and track your credit score.

Online banking fees: why they’re lower than traditional banks

One advantage of online banks is lower fees. Because they don’t have to maintain physical branches, their operating costs are lower, and those savings are often passed on to you.

For example, Axos ONE® combines a competitive interest rate with low fees to deliver more value than traditional accounts.

• Monthly maintenance fees: Many online banks eliminate these entirely, while brick-and-mortar banks may charge $5–$15 a month.

• ATM fees: Online banks often partner with nationwide ATM networks, letting you withdraw cash for free. Some even reimburse out-of-network ATM charges.

• Overdraft fees: Fewer online banks charge overdraft fees, and many offer fee-free overdraft protection up to a set amount.

• Wire transfer fees: Domestic wires can still carry a cost, though online banks tend to be competitive with traditional institutions.

Is online banking safe?

Safety is often the first question people ask. The truth is, online banking is designed to be highly secure. Banks protect you with:

• Encryption that protects your information during transfer.

• Multifactor authentication to verify your identity.

• Fraud monitoring to detect suspicious activity.

• FDIC insurance protects deposits of up to $250,000.

Still, no system is foolproof. You play a role in your own safety, too.

• Use a strong, unique password.

• Avoid logging in on public Wi-Fi.

• Turn on account alerts for suspicious activity.

Pros and cons of online banking

Like any financial tool, online banking has advantages and trade-offs.

Pros of online banking

• Manage money anytime, anywhere.

• Get higher savings rates at online-only banks.

• Lower account fees compared to traditional banks.

• Fast payments and transfers.

• Real-time transaction monitoring.

Cons of online banking

• Difficult to deposit cash.

• Requires an internet connection and a computer or mobile device.

• Risk of scams like phishing emails.

• Less personal, face-to-face service.

Should you open an online bank account?

If you value convenience, online banking can be a great fit. It’s especially helpful if you rarely deposit cash and want higher interest rates.

But if you deal with cash often or prefer sitting down with a banker for complex needs, a traditional bank or credit union may still make sense.

Many people choose to keep both, using online accounts for everyday banking and a local branch for occasional needs.

The bottom line on online banking

Online banking puts control in your hands. You can pay bills, track your spending, and save money without having to step into a branch.

While it isn’t perfect, especially if you need to handle cash, it’s safe, flexible, and designed for modern life. For most people, online banking is the standard.

To assist you further, here are some frequently asked questions.

What’s the difference between online banking and mobile banking?

Online banking means using the internet to access your account. Mobile banking is a type of online banking done on a phone or tablet.

Can I deposit cash into an online bank?

Some banks partner with ATM networks for deposits, so you can deposit cash directly into your online bank account.

Are online banks safe and FDIC-insured?

Yes. Just like traditional banks, online banks are typically FDIC-insured. Always check before opening an account.

What happens if my internet goes down?

If you lose internet, you won’t have access online. However, you can still use ATMs, customer service lines, or wait until your connection is restored.