Updated 17.05.2021

Virtual Banking – Questions Answered

In past, the online banking system in South Africa was confined to only four major banks: Standard Bank, Absa, Nedbank, and FNB. One could never conceive this situation as provocative but the main reason was the ‘trust’ and clients had no issue concerning trust. Nowadays there are several new virtual branches and they offer low fees and higher benefits which magnetize people.

If you are inclined then you will find here answers to few FAQs about virtual banking in 2021.

What are virtual banks?

Virtual banks exist without physically located branches. Customers can experience digital banking e.g. money transfer between accounts, bill payments, view account balance, and check transaction history, etc. through mobile applications and online banking portals. On the other hand, virtual banks offer their radical products on simple and clean terms and conditions at low fees or without fees.

Like other conventional banks, virtual banks earn money the same way but the monthly admin fee is not charged by some virtual banks. Virtual banks generate interest on the money which is held by them for clients. They not only earn money from the fees paid by merchants on card transactions but also from the money that is moved between banks.

Virtual banks can be organized as mutual banks which don’t need to keep funds required for creditors.

What is a mutual bank?

For mutual banks to run they don’t require big capital reserves rather their customers are allowed to hold certain products and become stakeholders in the bank. Besides commercial banks mutual banks easily offer their customers saving products e.g. Stokvels.

Can Virtual banks be trusted?

South Africa’s banking system is equipped with rigorous standards of performance and advanced technology. Virtual banks’ standards, by all means, equal other conventional banks but they stand firmly on the platform which is not established on the old system. Virtual banks possess the latest verification techniques against any identity theft of customers. They are linked to the Department of Home Affairs’ databases so any client’s identity can easily be verified.

Virtual banks also use advanced fraud detection technology e.g. location services on mobile phones conjoined with other services that help prevent an account from being hacked and verify client’s identity. Like all other banks, virtual banks protect their customers’ data against any fraud because just one misfortune makes customers leave.

Why should one consider virtual banks?

In South Africa, bank fees are as high as in any other part of the world. Those who rarely use cash can feel at home with app-based banking. So they don’t need peculiar services and this is where customers can save a healthy amount in fees through virtual banks.

Discovery Bank and Vitality award you benefits against your banking behavior. Unlike conventional banks Bank Zero and TymeBank offer bigger interest rates on positive balances.

If you wish to know anything about how fees are charged and incentives work then virtual banks can assist you in lowering down the banking cost by raising the interest on the savings. Consequently, you don’t have to invest your precious time to visit a bank branch.

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