What is online banking — and how does it work?

The old-school way of banking relied on manual work — you calculated how much was in your account, you sat around the table with a bunch of envelopes and a checkbook to pay the bills, and you had to drive to the bank to deposit your paycheck. In a word, it was slow. But, that doesn't really cut it anymore in the era of online banking.

Online banking 101 🏦

What exactly is online banking? Simply put, it's the ability to perform all your banking tasks over the internet, whether it’s through a website or a mobile app. It’s a convenient, time-saving alternative to traditional banking, where you have to physically visit a bank for every little transaction. Online banking is a seamless blend of technology and finance that keeps your financial world at your fingertips — quite literally!

You would sound like a wizard if you could go back in time to the early 90s and tell people that your paycheck arrives instantly in your account and that bills withdraw automatically. But, it didn't get this way overnight.  

Online banking evolved from a novel idea in the early days of the internet into a core feature of modern financial institutions. Banks started offering services online, allowing customers to check their account balances, transfer funds, and pay bills without ever stepping foot inside a bank. This transformation not only changed how banks operated but also reshaped our approach to managing personal and business finances. 

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Pros of online banking

Online banking comes with a bundle of benefits that make managing money a breeze for busy parents. 

Unmatched Convenience:

• Perform financial tasks from home or on-the-go

• 24/7 access to check balances, transfer funds, and pay bills

• Easily set up bank accounts for minors online

Speed and Efficiency:

• Complete transactions with just a few clicks

• No need to fit in trips to the bank

• Utilize tools for practical financial education like the Greenlight® banking app for kids and teens¹

Cost Savings:

• Often have lower fees and higher interest rates compared to traditional banks

• Savings from not maintaining physical branches

• Benefits like cash-back on credit cards offered by some online banks

Cons of online banking

However, it’s important to weigh the downsides too. One of the main drawbacks of online banking is the:

• Lack of in-person assistance - If you're someone who prefers face-to-face interaction for resolving issues or getting advice, online banking might feel a bit impersonal. Despite that perception, you can often get better and faster customer service on the online banking side. 

• Security - Although online banking security is robust and continually improving, you've got to be vigilant about potential fraud and cyber threats. Always use secure connections and be cautious about sharing personal information. Simple steps like changing your passwords often and choosing hard security questions go a long way toward bolstering the security of your accounts. With Greenlight, you can rest easy knowing your accounts are FDIC-insured up to $250,000.

How to choose an online bank or money app📱

Selecting the right online bank or money app is like picking the perfect tool for a job — it needs to fit your specific needs. You want a mix of top-notch security and easy-to-use features. Consider factors like fees, interest rates, and the range of services offered. Do they provide easy access to customer support? How user-friendly is their app? 

Once you choose a bank or platform, open a savings account or checking account. You can also learn how direct deposit works to see if that's a good option for skipping the hassle of a physical paycheck. Most employers now offer direct deposit.

Best online banking app options for kids and teens 💰

When it comes to your kids, you want an app that offers more than just the ability for them to manage their finances. You also want it to help educate kids about money. A good starting point is the Greenlight debit card, which offers robust features for managing allowances, spending, and saving. It’s not just about storing and spending money; it’s a platform for financial education. The Greenlight app also allows parents to have control and oversight, ensuring a safe and educational environment for their kids to learn about finances.

Couple that card with Greenlight's Infinity plan, and your teens can get up to 5%² on their savings, as well as features like SOS alerts and location sharing for your own peace of mind.

Greenlight strikes that perfect balance, giving kids a taste of financial freedom while keeping parents in the loop, so it's no wonder Greenlight has been getting rave reviews. The Wall Street Journal even picked Greenlight as their favorite debit card for kids and teens. And Bankrate's review said that, "The Greenlight Debit card is no doubt one of the best debit cards for kids thanks to its comprehensive features and rewards opportunities."

Modern families 🤝 Modern banking

The landscape of banking is evolving, and modern families are at the forefront of this change. It aligns perfectly with the dynamic, on-the-go lifestyle many of us lead. The ability to manage finances from a smartphone or laptop means that banking can happen anytime, fitting seamlessly into the hectic schedules of parents and teens alike. This shift towards digital banking solutions is not just about convenience; it's about integrating financial management into daily life, making it a more natural and accessible part of our routine.

Greenlight, with its innovative app and debit card service, is a shining example of how modern banking tools can adapt to the unique needs of families. By offering features like real-time balance updates, instant transfers to your kids’ accounts, control over where your kids can spend, and educational resources, Greenlight helps bridge the gap between traditional banking and the digital age, providing a secure and engaging platform for kids and teens to learn about money management.

¹Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC. ²Greenlight + Invest families can earn monthly rewards of 1% per annum, Greenlight Core and Greenlight Select families can earn 2% per annum, Greenlight Max families can earn 3% per annum, and Greenlight Infinity families can earn 5% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max and Infinity families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.