Virtual banks have grown in the past couple of decades, providing convenient and accessible banking services entirely online. A virtual bank account gives customers an online solution to accessing and sending money, handling your debts, and making international bank transfers even easier. In this guide, we’re breaking down exactly what virtual banking is, the pros and cons of using a digital-only bank, and how to check if your money is safe when banking with one of these providers.
As the name suggests, virtual banking takes traditional banking services completely online. While many traditional banks now offer online banking as a part of their banking services, virtual banks eradicate in-person branches altogether.
The end result of this is that you can manage your money online instantly, with numerous benefits over traditional banking. Already, digital banking is embraced by millions of customers around the world, and virtual banking is just another step forwards in having more transparent, direct access to your finances.
Some of the best companies in the virtual banking world include:
Wise is a popular choice for frequent travellers. The company offers a multi-currency account – their ‘Borderless Account’ – which supports over 40 currencies to make transferring your own money across borders cheaper and more efficient. The account also comes with a MasterCard debit card which allows for more affordable foreign ATM withdrawals.
Payoneer is an international money transfer provider supporting over 150 currencies and 200 countries worldwide. The company is most commonly used by businesses and freelancers who have contacts and clients around the world, and therefore often need to receive and send payments in different currencies. A Payoneer virtual bank account also comes with a MasterCard debit card.
With over 4.5 million users, Monzo is an extremely popular challenger bank option that provides both personal and business accounts, savings, and borrowing all through its app. The company enables users to send money easily to friends and family, sync up your other bank accounts into one place, and get instant notifications on your spending.
Particularly popular with frequent travellers, Revolut is a virtual bank account that offers international money transfers with no hidden fees and also allows you to hold up to 30 different currencies within the app. Revolut has over 12 million customers worldwide, with one core aim to put your finances at your fingertips.
Virtual banks offer a number of advantages compared to traditional banking. The features we’ve found particularly enticing include:
Most virtual banks provide the option to set up your account within minutes and, of course, completely remotely – so you don’t have to make that extra effort of visiting a physical bank to open a new account or wait days for your account to be verified.
A huge bonus to virtual banking is that all you need is your smartphone to have full control of your money, from transferring payments and sending money abroad to managing cryptocurrencies, loans, and direct debits. Instead of having to make a trip to your local bank branch to access your money, being able to manage your funds from your phone is a big plus.
Virtual bank accounts are particularly popular due to their low international transfer fees compared to the fees charged by the international transfers using your bank. Many virtual banks charge just a fraction of the cost or, in some cases, no fee at all for international transfers, making this a popular choice for people frequently trying to send money overseas.
Virtual banks can’t rely on a savvy salesman to explain and sell their products to customers, so instead, their products are usually explained more transparently online to ensure customers have access to any information they might need to make a decision. This can be useful for anyone who wants a clear, simple explanation of exactly what your banking services will do for you.
Virtual banking is not dependent on the traditional office opening hours most traditional banks adhere to, so you don’t need to wait for 9 am on Monday to roll around before you can manage certain services – which is another huge plus point for frequent travellers who aren’t always in one location. Additionally, virtual banks are likely to be able to process your transactions over the weekends, whereas most traditional banks stick to a Monday – Friday format. If you’d like to know more about traditional bank to bank transfer times, check our guide on how long do international bank transfers take.
For anyone interested in cryptocurrencies, virtual bank accounts are a good route to go down. Many virtual banks are crypto-friendly (such as Revolut, who directly support BitCoin), or provide crypto exchange services to fiat currencies via third parties such as BitStamp or Kraken.
Cryptocurrencies are an increasingly integral part of our modern world’s financial system, and the fact that virtual banks already seem to be a step ahead in terms of integrating these currencies into their banking systems compared to traditional banks is notable.
There are many advantages to virtual bank accounts – but that doesn’t necessarily mean that they’re the best option for everyone. Virtual banking products tend to be more fixed offerings, so may not be the best route for customers looking to negotiate on certain financial services such as a loan, debt repayment, or mortgages.
Likewise, while virtual banking makes accessing your finances easier for anyone who embraces all things digital, someone who is not used to working online and prefers face-to-face contact may not appreciate the more hands-off features of a virtual bank account.
If you’d like to stick to the traditional banks, and prefer wiring money abroad, take a look at our guide covering ways to wire money abroad.
A huge bonus of virtual banking is that when it comes to securely accessing your accounts, most digital-only banks are way ahead of the curve compared to traditional banks. Most virtual banks use a combination of fingerprint scanning, facial recognition, or two-factor authentication – as well as the traditional PIN method.
However, we also need to consider the security of virtual banking in terms of protection by governing bodies. As a general rule, most customers will expect a bank to be protected by the Financial Services Compensation Scheme (FSCS), which will protect your savings up to £85,000, and be Financial Conduct Authority (FCA) approved.
Regarding the virtual banks we’ve mentioned in this article, Transferwise and Revolut are regulated by the FCA but not currently covered by the FSCS. Monzo and Starling are both FCA approved and FSCS protected.
Virtual bank accounts are an increasingly sought-after option for millions of people around the world, providing a more convenient way to access and manage your money even when you’re on the go.
What is worth pointing out is that at this point, many people use a virtual bank account in addition to their traditional financial institution, rather than as a replacement. Virtual bank accounts make sending and receiving money easier, and provide an excellent overview of your finances across all of your accounts, but for many, having the reliability of a traditional bank is still a big draw.
Yasmin Purnell is a Content Writer and Editor for MoneyTransfers.com. Having over 5 years’ experience writing across a range of industries including finance, insurance, and travel, Yasmin joined the team with a mission to make international money transfers and everything they encompass accessible to all.