e-skills UK Guide

Online banking

Introduction to online banking

The UK is recognised as one of the leading countries in the world when it comes to online banking. Despite numerous security scares thousands of small businesses happily manage their day to day banking using online tools with little or any problems.

This guide will explain the ins and outs of online banking and show how this tool can assist small businesses save money by becoming more efficient with their time and finances. The cost of online banking is negligible as it is normally paid for with standard small business banking fees.

What is online banking?

Quite simply it is the management of your small business bank accounts across the internet using your own PC 7 days a week, 365 days of the year. With online banking you log into a secure web site where you can see your banking accounts displayed in the screen. At this point you can check balances, pay bills, transfer funds and many other activities. This can save considerable time and effort and most transactions, certainly between your own accounts, happen “instantly”.

With online banking we have seen more and more payments to small business happening online, so instead of receiving a cheque which you then send to your bank your accounts can be credited directly by your customers.

Setting up online banking

The first action is to open a regular bank account with a institution you would like to work with. Many banks and building societies will offer a period of free business banking (maybe up to 18 months) so shop around. You will be expected to fill in appropriate paper forms and take then to the bank to prove your identity. Once you have a regular account you can then apply online for and online account. This is a question of going to the bank web site and entering your details into a secure screen.

You will normally wait a few days and then be sent confirmation of the account and separately a password to use when logging on. Practices do differ between institutions but they all have the security of the small business as a major priority. You will need to decide who to share the banking details with. In a small business then the owner/manager will normally run the bank account, but as you expand you may decide to give access to your accountant or book keeper.

If you are in a partnership your partners and co-directors will probably need to sign some paperwork as well. Having a couple of people being able to access the account is a good way of providing support in case you are off sick and bills need to be paid.

Online banking security

The institutions will factor in security of the system from the start. This will often be a combination of data including birth dates, phrases and/or passwords. If you protect this security data then the chances of you being hacked or attacked are very slim.

When you login to the account it will ask you a set of questions. This may be some numbers from your PIN and then letters from your password. This will be checked and if it is correct you will have access to your account. If you loose these passwords or pin data then you may be responsible for any subsequent losses, so treat it very carefully.

Some banks are now sending out password generating devices. These look like pocket calculators but have a slot for your bank card. By using some clever mathematics these gadgets can create one time passwords to improve the level of security on your bank web site.

If you use email then you will probably receive spam messages pretending to be from your bank. These often ask you to login to make changes to your account or password. On no account are you to respond to these messages. They may look very authentic, and refer you to a site that is an identical copy of your bank or building society. In fact this site is a fraudulent copy and you are about to give criminals access to your bank account.

You need to make sure that the computer you use to complete you transactions with is fully updated (patched in technical speak) and the browser is the latest version from the vendor. Out of date software is often used as a weak point in an attack on a banking client.

If you are using internet cafes or other shared computers you need to be very careful about logging off the PC correctly and deleting any private data that may remain on the computer when you leave. The simple rule, and certainly best practice, is not to use a shared computer for online banking unless it is an emergency.

Likewise you need to be careful about using your computer via a wireless link or network. These are often insecure and are certainly more liable to being listened to and data copied from the messages being sent to and from the bank. If possible make sure the wireless link is secured or use a “wired” network. Never email your password to anyone as again this can be intercepted.

We cover computer security in more detail in these guides, and it is thoroughly recommended that you read these before opening your online account:

Assigning Data Access, Backing Up Data, Computer Viruses & Malware, Controlling Access To Data, Creating IT Security Policies, Data Security Training, Preventing Hardware Theft, Protecting Important Data, Remote Data Access, Securing Computer Data, Securing Laptop Data and Securing Data On The Move.