Meaning Of Virtual Banking
The facility of getting access to all baking and related services online without actually visiting the bank branch or bank office physically is called virtual banking. In simple terms, getting all your bank-related work done without actually visiting the bank with the help of extensive information technology is called virtual banking. It is at times referred to as remote banking, phone banking, online banking, and internet banking.
Any financial organization that put forward virtual banking services is termed a Virtual Bank. Virtual banks render all the traditional services in the online format. This means a customer, with the help of virtual banking can carry out services like getting loans, making account inquiries, paying bills online, withdrawing and deposit of money, etc. whenever and wherever he or she wishes to.
Types Of Virtual Banking
Virtual banking operates in the following forms or types:
- Shared ATM network: An ATM (automated teller machine) is an electronic device that is set down at disparate locations by financial institutions so that with the help of it the customers can render services like cash withdrawal, deposit of cash, fund transfers, account information, balance information inquiry without actually getting in direct contact with the bank staff.
- Real Time Gross Settlements (RTGS): RTGS (Real Time Gross Settlements) points out a fund transfer system that enables customers or individuals to transfer money and securities in an instant or in real time.
- Electronic Clearing Service Scheme: ECS (electronic clearing scheme) is a provision of virtual banking that automates monthly transactions. In simple terms, an electronic clearing scheme permits the instinctive transfer of funds from one bank account to another at the due date. It is exercised by and large for fixed and recurring payments like EMI, salary, interest, pension, etc.
- Electronic Fund Transfer Scheme: EFT (electronic fund transfer) scheme also known as the direct deposit is the electrical movement of funds from one bank account to another with the extensive use of IT and without the involvement of bank employees.
- Centralized Fund Management System: CFM (Centralized fund management) system is a service started by the Reserve Bank of India (RBI) to facilitate fund transfer across the Deposit Account Department (DAD). It also helps banks in the management of funds by performing the function of centralized fund inquiry.
Features Of Virtual Banking
Virtual banking also known as internet banking holds the following features:
- With the help of virtual banking, we can deposit and withdraw funds in or from our bank accounts.
- We can open a fixed deposit account online.
- Virtual banking allows customers to pay utility bills such as electricity bills, water bills, etc. digitally.
- Checking the account statement online is also possible with the help of virtual banking.
- Customers can buy general insurance.
- The transfer of funds from one bank to another is the major and most useful feature of virtual banking.
- The service of recharging prepaid mobiles and DTH cable networks is also made possible by virtual banking.
Advantages Of Virtual Banking
Virtual banking holds the following benefits:
- Accessibility: Virtual Banking services are accessible by the customers round the clock throughout the year without any restrictions on time and place. Customers can avail of most of the services whenever they desire without waiting for the banks to reopen.
- Easy to utilize: The services of internet banking are easy to use. Completing the transactions with just one single tap is considered way easier than actually visiting the banks by a lot of individuals.
- Time Saver: Virtual banking saves a lot of time for the customers, unlike the traditional method where they have to stand in long queues, now any transaction can be processed within a few minutes.
- Convenience: Virtual banking is very convenient for users as they can process any transaction from wherever and whenever they desire. Whereas, in the traditional banking system users have to leave all their work behind and bear the long queues at the banks even for the balance inquiry.
- Reduced Paperwork: With all the services being carried out digitally the paperwork both for the banks as well as the users have been reduced. Now the users do not need to keep the physical receipts of all the transactions safely as it is all recorded in the virtual database and also an electronic receipt is generated which is much easier to handle than the physical ones.
Disadvantages Of Virtual Banking
Virtual banking holds the following disadvantages:
- Internet is a must: An uninterrupted or steady internet connection is the first, basic, and most important necessity for availing of virtual or internet banking services. So if the user has no internet connection or the bank servers are down no transaction can take place in the virtual banking domain.
- Threat to the data: Irrespective of how secured and encrypted servers are used by financial organizations a threat to the user data is always present by the hackers who illegally enter these servers and can steal the user data.
- Risk of fraud: If the user does not comply with the security measures issued by the bank like creating a strong password, sharing passwords or OTPs (One Time Password), and not logging out from the internet banking account then he or she can become a victim of online fraud.
- No cashless deposit option: No solution for depositing cash is provided by virtual banking. An individual must visit the bank branch or the nearest cash deposit machine to do so.