Internet banking has enjoyed considerable growth in recent years but is still tainted by the belief that it is open to breaches of security and risk of fraud. So what is the reality of internet banking?

Standalone or cyberbranch

There are two types of internet bank which are known as standalone and cyberbranch.

Standalone banks generally conduct their business solely via the internet with accounts opened and transactions conducted online. Communication with the bank is primarily through email though telephone support is generally available but many services accessed this way may incur a charge. Paying into your account may be done by post or through the use of a conventional bank branch with which the bank has an arrangement. One of the attractions of internet banks is that their interest rates (for savers and borrowers) are better than high street banks because they do not have the same overheads. Examples of standalone banks include Egg, Smile, Cahoot and Intelligent Finance.

Cyberbranches refer to the online operations of traditional branch-based banks, their internet operations running alongside their other delivery outlets and available to all customers. As an existing branch customer, getting access to their internet service is probably just a simple matter of getting a login ID and password. Most of the high street banks offer similar services such as viewing statements and balances, transferring funds and amending standing orders.

Good or bad - our experiences

We have found that our main experiences of internet banking have been positive:

• 24 hour access means you can do you banking at home or at work and not have to waste your lunch hour standing in a queue.
• Interest rates of the standalone banks are more attractive.
• Often have more attractive introductory offers.
• Make it easier to have control over your finances.

However:

• We have found service to be less than efficient on some occasions - it took over a month to complete the formalities for applying for a credit card with one bank. This is exacerbated by having to wait for paperwork to be dispatched and delivered.
• Sometimes what seems to be a straightforward transaction seem to require a telephone call or email which defeats the whole object of internet banking.
• Standalone banks tend not to offer preferential packages for graduates whereas cyberbranches tend to offer the same services as their high-street counterparts.

Security

A report last year claimed that at least four large internet banks have been attacked by hackers, and frauds in the hundreds of thousands of pounds committed. In addition, there have been cases of customers' account details appearing openly on the net. Ultimately, it's up to the individual to decide whether or not they are comfortable with banking on the internet. Most internet operations, even standalone banks, are part of a larger banking group and so are able to invest in security and have a sound financial base. In our experience, the convenience and financial benefits have been too valuable to forgo.

What next?

If you are finding that you don't have enough time to fit everything into your life then internet banking is an attractive option. Though some aspects of the service may be found wanting, the attraction of competitive prices and rates, along with the convenience of 24 hour banking means that they have a lot to offer the busy graduate. If you are a bit of a traditionalist why not try your existing bank's cyberbranch for starters. This may in any case be the best option for most graduates who wish to enjoy the preferential current account terms offered by conventional banks. In this regard we have found the best solution to be to keep you current account with your high street branch and use their internet services whilst using standalone banks such as Cahoot and Egg for savings and credit card facilities. Even the standalone operations are backed up by the sound finances of a long-established institution so there is little risk of you losing your savings. The main barrier to their success seems to be concerns over security, though, as in any walk of life perhaps we should not worry about what could go wrong and instead focus on the tremendous advantages this new option offers.