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Virtual Banking: The Latest Hot Topic in Finance


Imagine doing all the traditional financial services without even going to a branch or an office?

Imagine making all the transactions at the comfort of your home?

Wondering if it is possible or not?

Well, YES! It is.

Virtual Banking precisely means doing all the financial services without even visiting a bank. Almost every bank nowadays is offering virtual banking facility and it may be that your existing traditional bank offers these services in order to conduct transactions over the phone or via some mobile application.

The first ever virtual bank was set up in the 1990s in Japan with no physical branches. Virtual banking literally means banks that exists only online and has no physical branches at all. Virtual Banking has become a thing now and people are opting this type of banking services above anything else with improvement in technology and the rise in the usage of smartphones; the behavior of customers is changing and people are showing more interest in virtual banking and hence becoming more successful. 

WONDERING IF THERE IS ANY ONLINE ONLY BANKS IN INDIA!

Well I am here to tell you my friend that, YES! 

There is Digibank by DBS. This is Asia’s biggest online only bank with a history of more than 50 years. This allows you to have 0 balance in your account which this facility has not been provided yet by the traditional physical banks. You just need to install the application on your device and create an account

adding all your necessary details like bank account number, address, IFSC code, holders name and you will get your account activated within no time.

digibank

Virtual Banking has a lot to offer and has a wide range of benefits for any average user. It has different policies than that of a physical running branches. From cheaper services to higher interest rates, they offer it all because they do not suffer from overheads that traditional banks do.

BENEFITS OF VIRTUAL BANKING?

  1.  Improved Interest Rate:

If you are looking forward to get some best interest rates, then opt for nothing else than Online banking services. Virtual banking not only meets the overhead commitments but also offers a comparatively higher interest rates than any other traditional bank offering the same services. The latest study shows that the average interest rates on savings and money market accounts at online banks is 5 to 6 times higher than that of traditional offline branches.

  1. Cheaper loan:

Virtual banks offer very cheaper loans in comparison to traditional physical branches. Physical banks can sometimes go overboard with high fees and charge high interest rates which makes opting for a loan for a customer becomes a task in itself.

  1. Free Withdrawals:

“You want to make sure you choose the bank where the geographic footprint of their ATM network is similar to your regular movements,'' says Barrington. Traditional banks have ATMs all over in many major cities while online banks often have agreements with ATM networks for surcharge free withdrawals. 

  1. Easily accessible:

You can make higher or lower banking transactions while stuck in the middle of traffic or on a fancy holiday out of the country. You do not have to be physically present in order to access your bank account which makes the whole idea of online banking meaningful. Money can easily be transferred within seconds even between countries and currencies. You no longer have to wait in longer queues and you can in fact open a whole new account just by the convenience of our own phone and data connection. 

Why do you need a Banking App?

  • Banking apps keeps a track of where you are spending. It tracks your spending on daily categories such as groceries, entertainment, transport, bills and much more. 
  • Banking apps helps the individual to have control over their budget. They get the liberty to see where they are spending more or less and then can make a budget and cut down on things they are overspending on.
  • Banking apps gives the benefit of having an access on new offers every now and then. They offer a crazy amount of discounts on movie tickets, gym memberships and a lot more. 
  • You tend to save a lot of money because of the extra transparency provided by the banking apps. 
  • It has become much easier and swift to pay off debts with the help of banking apps.
  • Lesser amount of paperwork is required while accessing through a banking app.

Transactions are more quick and easy even overseas without being worried about the country and the currency.

Virtual Banks are fairly nimble and they tend to operate in a particular segment of the millennial, freelancers, students, immigrants,'' says Mr. Venkatesh Srinivasan, group Vice President at Oracle Financial Services.

The biggest uptake in the usage of banking apps and virtual banking has been seen by the tech savvy millennial. The generation for which comfort and convenience is king. Banking apps gives you a notification instantly whenever some activity happens on your account. The pop up notifications that comes instantly makes accessing their bank accounts easy and are happy to conduct their banking from their phones even on the bus or at work.

CAN VIRTUAL BANKING BE TRUSTED?

The lack of face to face validation and having absolutely no need of signatures on papers for proof is leaving online banks with a risk of fraud. Criminals are becoming more tech savvy and using the techniques like ‘Smurfing’ where it becomes easier for them to move money a little at a time to avoid detection. Traditional banks have customer support services and have invested their time and money in order to make their customer base strong and virtual banks should opt for the same to avoid any kind of fraudulent activities. 

futurebank

IS THE FUTURE OF VIRTUAL BANKING SECURE?

The Chairman of the Monetary Authority of Singapore announced the issue of 5 new licenses for digital banking in order to keep it ‘resilient, competitive and vibrant’. The estimate suggests that by 2020, virtual banks will still only account for 1% of banking sectors and might as well take over the traditional finance market. Traditional bank might as well prepare to offer all the convenience that a virtual bank is providing but with a stability of being a bigger name in the traditional finance market.

In simpler words, virtual banking will be a thing in the banking industry very soon. Everybody likes getting things done without much hustle but, going to banks every now and then for major or minor things is not so convenient, which is why we can see virtual banking going a long way in the future. Major to minor, all sorts of transactions can be done with just one click on your phone. Everything has become so digitally equipped now, that if in the future, we see nobody going to banks and just making transactions sitting at home with their phones will not surprise us. 

So, let us wait and watch how things unfold for the better, or if I may say so, FOR THE BEST!

By Garima