Online Banking Disadvantages (2024)

Online banking via personal computers and mobile apps on cellphones has made banking more convenient and accessible 24 hours a day. However, there are some downsides to online banking. While these disadvantages may not keep you from using online services, keep these concerns in mind to avoid potential issues down the road.

Technology and Service Interruptions

Anytime we use computers or internet service, we are at the mercy of the system's stability and efficiency. Your ability to access accounts online will naturally be affected if your internet service is running slowly or completely out for a period of time. Similarly, if the bank's servers go down or are temporarily unavailable due to scheduled site maintenance, you won't be able to gain online or mobile access to your banking information.

Security and Identity Theft Concerns

In general, online banking sites and mobile apps are designed to be secure and banks are continually putting updated security protocols in place. However, no system is completely foolproof and accounts can be hacked, resulting in identity theft via stolen login credentials. So while you can use mobile or online banking with general confidence, be careful to avoid using networks that are not secure and be careful to change passwords and protect your login information.

Limitations on Deposits

Daily or monthly mobile deposit limitations may make it difficult for individuals, but especially businesses to make large deposits online. Once you have reached your designated limit, you'll need to trek to a branch to deposit money. Also, not all types of checks are easily read by computer scanning software. For example, business checks that are handwritten and have a black line on the reverse side to make a carbon record in an account register may be kicked out of the online deposit system, requiring an on-site deposit.

Convenient but Not Always Faster

While it may take very little time to deposit a check via a bank's mobile app, you still need to wait for access to your money. Online banking provides convenience in terms of the amount of time saved in travel or waiting in line at a branch location, but all deposits are reviewed and funds are released for access according to bank policy, which may take up to three business days depending on the amount deposited.

Lack of Personal Banker Relationship

For the most part you may be able to handle your general banking needs by yourself. Yet when problems arise if you don't have a personal relationship with a banker, it might be more difficult to get your issues resolved. While online banking sites have customer service departments, you often need to work your way through a phone tree and wait on hold before speaking with someone who has no knowledge of your needs or banking history. In contrast, a local banker is motivated to serve their customers and strengthen their personal relationships.

A Limited Scope of Services

Although you can do quite a bit with an online bank account, such as make deposits, check balances and pay bills, there are limitations to the kinds of services you can access. You may be able to make an initial application for opening a new account or applying for a loan or mortgage, but in most cases you will need to visit a branch to sign forms and show identity documentation. Similarly, even though you can transfer money to a checking account or debit card in order to make purchases, if you need cash, you'll have to visit a branch office or a nearby ATM.

Potential to Overspend

The ability to check account balances in the spur of the moment could potentially cause some people to overspend the limits of their checking accounts. Without a careful look at your checkbook or record of uncleared debit transactions, the account balance may not accurately reflect the true amount you have available. Overdrafts and fees might occur if you don't keep close tabs on all your transactions.