It’s now possible to do all your banking without ever setting foot in an actual bank. Instead, customers visit a banking website or download an app, conducting financial transactions online through a computer or mobile phone. Virtual banking goes by several names including online banking, Internet banking, remote banking and phone banking. While many traditional banks allow customers to conduct some business online as a service, their overall approach remains tied to a physical location, like a branch office. The central identity of a virtual bank is electronic.
Opening an Account
To open an account with a virtual bank, you’ll have to fill out an online application and make a deposit. You’ll be able to submit the form online or print it and mail it. To make the deposit, transfer funds to the bank electronically or mail in a check. The bank may ask you to fax it a copy of your identification.
Transferring Money In
You might be wondering how to deposit money into a virtual account if there’s no branch to visit. One method is to have your employer deposit your paycheck directly into the account. If you have another bank account or a PayPal account, you can transfer money from there into your virtual account. You can also snail-mail deposits to your virtual bank. Finally, the online bank may let you take a smartphone picture of the deposit to make the transaction. If your virtual bank doesn’t offer that service, PayPal does, so you can transfer funds from there.
Transferring Money Out
Virtual banks issue debit cards, and you can order checks as you would from a traditional bank. With those tools, you can purchase products as you normally would. You’ll also have the option of paying your bills online. Virtual banks don’t have their own ATMs, so if you need cash you’ll have to use a machine owned by another bank. Though virtual banks don’t usually charge ATM withdrawal fees, the owner of the ATM probably will. However, your virtual bank may reimburse those fees.
Pros and Cons
Since virtual banks don’t have to pay for brick-and-mortar locations, they have lower expenses than traditional banks. This means they can offer higher interest rates on savings accounts and lower customer service fees. Additionally, virtual banks allow customers to conduct business whenever and wherever they want, instead of during established business hours. This level of control and convenience is usually attractive to busy customers. What users might find unattractive is not having the option of face-to-face interaction or making a cash deposit.
Sophie Johnson is a freelance writer and editor of both print and film media. A freelancer for more than 20 years, Johnson has had the opportunity to cover topics ranging from construction to music to celebrity interviews.