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Virtual Banking: A New Era of Cashless Transaction

Author: Akhil Bhadauria
by Akhil Bhadauria
Posted: Jul 06, 2020
Introduction

Virtual banking is one of the most effective steps taken towards a hasslefree and innovative future for the banking industry. It has revolutionized and made traditional banking a little redundant.

Virtual banking has improved the whole banking process with the help of information technology. This advancement and use of information technology by the banking sector has reduced the need for people to physically walk-into the banking premises.

The definition of virtual banking applies to any institution that provides the old traditional banking services "online" and is known as a virtual banking services provider.

It helps the customer to ease the process of paying bills, checking account details, securing loan withdrawal, and depositing money as per their convenience. Some common forms of virtual banking that you have seen in your daily life are among the following.

  • ATMs

  • The use of magnetic ink character recognition code (MICR)

  • The electronic clearing service scheme

  • An electronic fund transfer scheme

  • RTGS

  • Computerized settlement of clearing transactions and many more

There are many advantages of virtual banking. The key advantage is that we can check the transactions happening in real-time.

In the traditional banking sector, the cost incurred in handling the transactions is higher. Less overhead expenses and better efficiency are the key reason for this shift to virtual banking.

There are so many difficulties that one can face while going through the traditional banking process. Hence, virtual banking process is a great solution and it has ushered in a new era in the banking sector.

You can read about the advantages and disadvantages of virtual banking below.

Advantages of Virtual Banking
  1. Offers Better Interest Rates and Lower Fees

Virtual banking offers great interest rates or APYs( Annual percentage yields) on your savings compared to the traditional banks, by saving on additional infrastructure and overhead costs.

There are various virtual banks that offer as much as 1 to 2% additional interest rates, compared to traditional banks. There are some virtual banks that provide options that have high yield saving accounts, CDs(Certificates of deposit), and no penalty CDs in the case of early withdrawal.

In some of these banks, there is no need for a minimum balance or service fee. You can open your account quite easily.

  1. Provides Completely Free Balance Checking

This new system has changed the thinking of people about the banking process. All internet-based banks around the world do not charge any cost to the customer for checking the balance of their accounts.

It is a great advantage; since in traditional banking, checking your account can cost you. With the help of a virtual bank, you can check your account balance whenever and wherever you want by simply clicking on your mobile or laptop.

  1. Transfer Money Between Accounts

This system allows you to transfer money easily between accounts. You can check your available amount in your account before transferring it. It can save your time, efforts, and energy. It also provides an option to transfer money between different banks.

  1. Virtual Banks Offer Advanced Web Technology

The banking process with the help of a virtual bank has become easier and more efficient. With its advanced web technology and features, the experience of the customer during the whole process has become more simple and user friendly.

  1. Provides Lower Mortgage and Loan Rates

These banks don't require staffing and space as traditional banks. The saving on the infrastructure and personnel costs can be used to provide higher interest rates on the savings of the customers and can also provide lower mortgage or loan rates.

Disadvantages of Virtual Banking
  1. The problem of Slower deposits

According to some research done on virtual banking, it was found that this process can be a little tricky and troublesome while adding money to an account. But with technological advancement, this problem is being solved.

  1. Technological Interruptions

It is one of the most common recurring problems when a person does virtual banking. This system operates through the internet and if the internet service is disrupted in any way, it can cause an interruption in the transaction process.

  1. Causes Lack of Relationship between Bank and Customer

With the introduction of virtual banking, the face to face interaction between customers and bank staff have reduced drastically. The benefits that one can get from the face to face personal interaction between people becomes impossible when it comes to virtual banking.

  1. Risk of Security and Identity Theft

In this modern tech driven world, the websites and apps designed for virtual banking are very secure. But it is proved that there is no system that is fully foolproof and safe from the hands of hackers. That's why there is always a risk of identity theft.

Whenever you confidently use banking sites and apps for your transaction, always be careful since it can sometimes be a threat to your confidential personal information.

  1. Not Fast Enough in Some Cases

It is a known fact that Virtual banking is a convenient way of transaction. But with this convenience, there is also the problem of slowness in the transaction.

According to certain bank’s policies, it may take up to three business days to show the amount in your account. But this problem can be dealt with by improving technology and it will happen soon.

  1. Limited Scope of Services

There are certain limitations of the services that you can perform with virtual banking. You may make an application to open a new account online, but you still need to visit the bank branch to sign the form and show your identity proof documents.

Conclusion

Now with the changing times, a technological revolution is happening all around the world. Virtual banking is one of the benefits of that technological revolution. It has made the process of banking quite simple, fun, and efficient.

We sometimes may not require our wallet everywhere we go. The phone in our pocket can complete the task. This new system has brought us a new era of cashless payment. But we can't totally forget about traditional banking. Both the banking process have their own advantages.

But it totally depends on you what type of banking you want to do. You can open an account in both a traditional and a virtual bank so that you can enjoy both high interests and personal human interaction. Old folks generally prefer the traditional banking system while the younger generation loves virtual banking.

Every moment of one's existence, one is growing into more or retreating into less!

About the Author

Ubuy is not your usual e-commerce website, we provide our customers with access to excellent products. Today’s shoppers want more in a shorter time period, and let's not forget the easy purchase methods & delivery to make it worth their while.

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Author: Akhil Bhadauria

Akhil Bhadauria

Member since: Nov 27, 2019
Published articles: 3

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