Home Banking

Home banking is the practice of conducting banking transactions from home rather than at branch locations. Home banking generally refers to either banking over the telephone or on the internet (i.e. online banking). The first experiments with internet banking started in the early 1980s, but it did not become popular until the mid-1990s when home internet access was widespread. Today, a variety of internet banks exist which maintain few, if any, physical branches.

The increasing popularity of home banking has fundamentally changed the character of the banking industry. Many people are able to arrange their affairs so that they seldom have need of a physical branch. Online-only banks have profited from this shift in the industry. The absence of brick and mortar locations allows many online banks to offer favorable interest rates, lower service charges, and many other incentives for those willing to bank online.

Online banking has become nearly synonymous with home banking as most prefer to bank via the internet instead of over the telephone. Online banks (or banks with online options) allow access for the majority of daily, traditional transactions, including deposits, checking account services, and some basic financial products like savings accounts. Online banking is generally available for both individuals and small businesses.

Additional services, such as certificates of deposit (CDs), and business, personal and mortgage loans, often still occur at physical branch locations. A certificate of deposit (CD) is a savings certificate with a fixed maturity date and specified fixed interest rate. CDs are generally issued by commercial banks and are insured by the FDIC up to $250,000 per individual.

Mortgages may come in many forms, including fixed rate mortgages and adjustable rate mortgages (ARMs). All mortgages are debt instruments, which collateral of specified real estate property secures. A borrower is obliged to pay back a mortgage with a predetermined set of payments over a set time period.

With the increased shift to online banking, new security threats have arisen. All information, such as customer account information, balances, recent transactions, and more, which is stored on a computer, other electronic device, or in the cloud, is vulnerable to hackers and theft. Many commercial banks with online arms have put into place cybersecurity measures to prevent such dangerous theft from occurring. Cybersecurity has become essential as the world is more reliant on computers than ever before.

Three major ways that cyber thieves obtain sensitive consumer financial data are: backdoor attacks, in which criminals exploit alternate methods of accessing a system (or don't require usual authentication methods); denial-of-service attacks, which block a rightful user from entering a system; and direct-access attacks, including more commonly known bugs and viruses. Bugs and viruses gain access to a system and copy its information and/or modify parts or all of it.