How does a virtual bank differ from a conventional bank?

Virtual bank

One of the major features of a virtual bank is that it digitalises banking services and offers them through the internet. In addition, a virtual bank differs from a conventional one in terms of its scope of services, customer base and account balance requirements:

  Virtual bank Conventional bank
Scope of services Mainly retail banking Handles full range of banking services
Target customers Mainly retail clients (including SMEs) All types of clients
Service channels Electronic channels Bricks-and-mortar branches and electronic channels
Minimum account balance requirements/low-balance fees None At the discretion of the bank

Key points to note for using virtual banks

  1. All services and products of a virtual bank can be performed online. Consumers are able to use banking services anytime, anywhere. However, a virtual bank differs significantly from a conventional bank, which has on-site staff in the branches to offer services and to answer questions. The online service model may not be suitable for everyone. Some users may still prefer face-to-face services (for example, when they purchase investment products). Consumers should consider their own personal circumstances and requirements.
  2. Different virtual banks can have different business strategies, directions and features. Consumers should consider whether the services provided by a virtual bank meet their needs. Furthermore, it is anticipated that virtual banks will only offer basic banking services such as account opening, deposits and loans during the early stage of their operations. Expansion to cover a wider range of services and products would take place after they have been operating for a period of time.
  3. It is very important to be aware of technology-related risks with virtual banking. While virtual banks must have effective network security measures put in place, consumers should also pay attention to network security, for example, “personal digital keys” must be kept safe, set up passwords that are more difficult to crack; personal information should never be disclosed on social media; virus scans should be performed regularly, and public computers or network connections should not be used to access online account information, etc. 
  4. Beware of fraudulent websites, forged e-mails and similar scams. Consumers should verify the identity of a virtual bank and whether it has a banking licence. Always key in the bank’s URL directly in the browser or download the mobile app from the official source or other reliable stores or sources for connecting to your online or mobile banking account. Never click a link in an e-mail, an online hyperlink, a QR code or an attachment to log in to your account or to provide your personal information (including password). If in doubt, customers should contact the relevant bank for confirmation via other channels (such as the bank's customer service hotline).


9 December 2019