Virtual Banking

Definition: Virtual banking is a financial setup which provides numerous retail banking services through a wireless network using an electronic device. The customers need not be physically present at the concerned bank’s branch to carry out a transaction.

For instance; a company employing around 50 personnel disburses salary in their accounts on the first day each month. If this is done through the traditional medium, it would be impossible to credit such a huge amount the same day.

However, virtual banking has made this possible, by introducing national electronic fund transfer (NEFT). Through NEFT, the corporates can instantly transfer salary to the employee’s account.

Content: Virtual Banking

  • Features
  • Services
  • Types
  • Advantages
  • Challenges
  • Conclusion

Virtual Banking Features

What makes virtual banks a more convenient option for the customers?

The following essentials of this system make it a better choice for the technology-friendly clients:

Electronic Statements: Virtual banking facilitates the e-statements including payment, withdrawal and deposit receipts for almost every kind of banking service which automatically saves paper.

Message Alerts: The users can be instantly intimated about any bank account related activity through a message or notification. It can be reaching a minimum balance limit, online-offline transaction, login failure or login attempts.

Desktop Software Integration: Here, cyber technology integrates with electronic devices such as mobiles and computers, to simplify the lives of bankers and users.

Instant Account Creation: It has also made the online opening of bank accounts possible with fewer formalities and no physical presence to increase the customer base.

Mobile Cheque Deposit: Difficult to believe but the customers can submit their cheques through virtual banking with a simple upload of its image.

Account Summary and Reports: The mobile banking apps and other online banking means expedite the viewing and downloading of electronic reports and transaction summary.

Automatic Bill Payment: The customers pay mobile, telephone, electricity, water, municipal and other bills from their bank accounts and using mobile banking facility makes it quite convenient.

Virtual Banking Services/Functions

Virtual banking is evolving with the invention of high-end technology to serve the requirements of today’s busy lifestyle.

Thus, whenever a new banking software is introduced, it passes through the following stages:

Inception Phase: It is the adaptation stage where the technology is born. Thus as an infant, it needs to be nurtured with a considerable investment of funds to commercialize it among the customers.

Growth Phase: Then comes the evolving period where the users multiply rapidly and therefore, the technology also grows incredibly.

Maturity Phase: This is the final stage, where the users extensively rely upon the technology and it becomes a parameter of competition. Though rework or rethinking becomes essential at this phase to win over the competitors.

Types of Virtual Banking Services

The banks have introduced many different kinds of facilities in regards to virtual banking.

Technology penetration in the banking sector have given birth to the following:

Smart Cards: The handy plastic cards such as debit cards which assist in withdrawing money, making online fund transfers and carrying out multiple m-commerce activities.

Electronic Funds Transfer: EFT promotes crediting of fund from customer’s account to the beneficiary’s account (whether belonging to the same financial institution or not) with the help of a computerized network.

Automated Teller Machine: An ATM is no more a facility, its a necessity. The customer inserts debit card to withdraw funds, view balance, get the receipt, etc.

Shared ATM Network: In a shared ATM network the customers can transfer fund, globally withdraw money, repay the loan and do mobile and DTH top-up.

Internet Banking: The customer can proceed with various banking transactions via online mode by visiting their respective bank’s website.

Phone Banking: When the same internet banking services are availed by the user over their mobile phone with the help of a mobile network is termed as mobile or phone banking.

Stored Value Cards: A card which holds a monetary value and can be used for payments, such as credit cards, are known as prepaid or stored value cards.

Intranet Banking: The intranet system connects the inter-bank personnel or staff to facilitate documentation, employee profile, workflow management, policy and procedure management, etc.

Virtual Banking Advantages

When virtual banking is indispensable in the present scenario. Let us discuss its benefits below:

  • Time-saving: Virtual banking provides instantaneous service to a large customer pool at the same time.
  • Protection: The safety of consumers’ credentials is the priority of the banks while providing virtual banking facility.
  • Mobility and Flexibility: Unlike traditional banking, virtual banking services are accessible at any time and anywhere, providing flexibility to the users.
  • Convenient: It is an easy payment, fund transfer and other information access option in comparison to traditional banking.
  • User-friendly: The banking apps are designed in a compact and simple format to make it easily accessible by the users.
  • Cost-effectiveness: The stationery and other expenses reduce remarkably for the banks. Also, virtual banking saves on conveyance cost of the customers for reaching to the banks every time.
  • Easy Fund Transfer: With the help of online banking and payment interface, the users can send money to the various bank accounts in a fraction of seconds.
  • Eco-friendly: As we say ‘go paperless’, virtual banking helps to curtail the deposit, withdrawal and other form-filling to save paper and nature.
  • Provides Retrospective Data: Virtual banking integrates advanced storage with data management software to provide the customer with a quick transaction history.
  • Quick Documentation: The evidence of the transactions is easily and promptly available in the form of a message or e-receipt.
  • Advanced Technology: The virtual banking system functions on a well-integrated network and web technology moving a step ahead of traditional ways.

Challenges of Virtual Banking

Science has eased out human survival; however, every technological innovation is prone to certain drawbacks.

Given below are some of the shortcomings of virtual banking:

  • Lacks Customer Relationship: In virtual banking, the various bank personnel cannot directly interact or respond in person to the customer queries.
  • Technical Problems: As we know that internet and mobile or web connectivity supports virtual banking services, any kind of technical or connection issues can disrupt user access.
  • Traditional Banking Habits: People are hesitant in accepting the new ways or technology such as m-commerce and various online banking services due to lack of knowledge and rigidity.
  • Security Threats: The internet providers usually save the user information which can be stolen or misused by the hackers or miscreants.
  • Cyber Crime: While hackers or criminals crack the bank’s security codes, they can drain the users’ hard-earned money in no time.


Whether corporates or individuals, everyone relies upon the virtual banks for even the smallest transactions. Even the customers can escape the rush of the traditional banks with the help of this technological advancement.

With virtual banking, we have come a long way to streamline human’s way of living. And there is still a lot to conquer in the present technological era.

Virtual Banking
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