Bank Account Online: The New Trend

By: Frank Ellis
Submitted: 2007-01-17 16:17:17
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The Internet boom and the beginning of the cyber age has given rise to all sorts of things that, twenty years ago, would have sounded impossible. The Internet has become an entire world unto itself, filled with virtual business, auction houses, libraries, and galleries. There is nothing you cannot buy, sell, or trade online, no topic you cannot research, nothing you cannot view. With the click of a few buttons, you can virtually travel around the world.

The latest Internet trends have given rise to another trend that could only happen in this very modern age we live in: online banking. Online banking is probably the most exciting thing to happen to the financial world since the invention of coinage. And, to many, the concept of online banking is just as confusing today as the concept of coins were to people who lived more than a thousand years ago.

Wrap your mind around this: a virtual bank, filled with virtual money, transmitted through electronic impulses and bits of data. Completely through the Internet, you can invest, borrow, lend, withdraw, deposit – anything and everything you can do at the brick bank down the street. Only this bank exists on the Internet only.

The first question that springs to mind is where does the money go? If you deposit two thousand dollars in online banking, where is your money all of a sudden? An online bank exists in a virtual bit of cyberspace – but the two grand you put into that bank is an object you can hold in your hands. So how in the world, or better yet in cyberspace, does online banking work?

Online banking of any kind works in the same way that a credit card works. Even credit cards are somewhat hard to understand. The credit card feeds information into a computer system, information such as your account number and routing numbers that the bank keeps on file to track your specific account. One computer tells your bank’s computer that you have charged two hundred dollars to your credit card. This information travels through cyberspace on an encrypted, safe transmission, to electronically remove two hundred dollars from your account and electronically replace it in another account. Your balance changes to reflect that purchase, and theirs changes to reflect that change.

No actual money is exchanged, no human person holds that cash in their hands and takes it to another location because no one needs to do that in this electronic world. For the most part, even banks that exist in brick and stone do not have that much money in their vaults. Banks keep some money on hand to give cash out to those who come to make withdrawals. For the most part, money is moved from account to account, to account.

In online banking, the bank still keeps their money in a bank account. Based on your withdrawals and deposits (which you make through a credit card or similar contraption), money is moved around in your account. Through ATMs, you can still withdraw money to hold cash in your hand – but in today’s day and age, you hardly ever need to do that, anyway.

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