Online Savings Banks

Online savings banks are financial organisations that operate across the Internet offering savings as well as other banking products. They may or may not also have a conventional ‘high street branch’ network. The nature of such a bank is that some or all of its products are offered purely to online customers. In reality, if you exclude the technology, online savings banks and their products should be judged in the same way as traditional banks - according to their product range, price, service and returns. Online savings banks will often win out on two main factors; Improved service over conventional bank branches or telephone call centres, and the financial benefits that the accounts offer.

The reason for the first advantage is that dealing with a traditional bank through a physical branch and its staff can be frustrating, time consuming and inconvenient. It may well be that the traditional branch is happily able to live its life around a 9-5day, but your life may be rather more complex and demanding and operate outside of these hours. The online savings banks operate 24/7 to reflect this. The online savings banks may also be able to claim that they can offer better returns on savings products because of their running costs. The conventional banks have high overheads involving hundreds of large buildings in the most expensive town centre locations across the entire country, staffed by thousands of personnel. The online banks do not have these cost overheads and as a result claim to be able to pass on these savings to you their customer through in theory higher interest rates and growth patterns etc.

Online Savings Banks: Points to Consider

• In the final analysis, you may feel that it is the banking product (i.e. the account itself) that is important. The technology is only a delivery channel to you. The technology 'kit' and website may be impressive to look at and user-friendly, but if the basic core banking products aren't competitive or what you need then the novelty of the technology itself will soon fade;
• It isn't always possible to relate the quality of a bank to the quality of the technology it uses. In addition, not all companies that offer financial services across the Internet are in fact banks in the legal sense. It may pay to check to ensure that the bank is a fully registered and regulated bank and that their accounts are subject to the government's guarantee schemes;
• It can be easy to open up offshore accounts across the Internet. These may offer advantages in certain cases but they may not be subject to stringent regulation and control. Before moving funds offshore it is usually advisable to get specialist advice and tax guidance;
• Household name providers need not necessarily offer the best deals in online banking. So, if you're looking for the best online savings banks it may be useful to search the Internet as a starting point and get advice from professional experts as to where the best options are.