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Virtual banking 101: Navigating the world of digital banking platforms

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The days of waiting in line at the bank and filling out paperwork to do basic transactions have been over for a while, and today it’s faster and easier than ever for customers and business owners to manage their day-to-day finances with virtual banks. Virtual banking is similar to traditional banking in terms of transactions and services, but virtual banking has its own unique advantages and challenges, and overall is better equipped to adapt to your business needs.

What you need to know

  • Virtual banking refers to any banking platform that has no brick-and-mortar locations and
    operates exclusively through a browser dashboard and/or mobile app.
  • Virtual banking can slash your travel time and transaction costs, and can help streamline your operations with mobile deposits, payments, and more.
  • The best business banking platforms offer FDIC insurance, favorable fees and interest rates, and a robust, easy-to-use mobile app.

What is virtual banking?

These days, traditional bank accounts allow you to send money, pay bills, or manage accounts from a browser or mobile app. Virtual banks offer the same digital services but operate entirely online and have no physical locations. For the banking services provider, this reduces the overhead costs of brick-and-mortar branches. 

Advantages of online banking for business owners

Virtual banking has one major advantage that you won’t get from using digital tools at traditional banks—you’ll save money on banking costs. Virtual banking platforms tend to have lower fees than traditional banks, and most have no minimum account balance, monthly maintenance fees, or overdraft fees. Digital banking platforms often have higher interest rates or annual percentage yields (APY), offering 1.0% to 2.0% more than traditional banks.

Banking online using a virtual bank or the digital tools of a traditional bank also comes with these benefits:

  • Manage your money from anywhere. Transactions and payments can be made from wherever you do business, at any time.
  • Pay bills and track spending more easily. Digital platforms let you use automation tools to stay on top of important financial decisions and due dates.
  • Protect your account. Overall, online banking is more secure than dealing with cash. You’ll have more visibility into every transaction and be able to pay people without the risk of theft or loss. If your account becomes compromised, it’ll be easy to lock your card(s) remotely and reverse fraudulent transactions.

Standard features of virtual banking platforms

Most virtual bank accounts have these features in common:

  • Mobile check deposits
  • Real-time notifications and automated payments, which can help you stay on top of due dates and improve cash flow management
  • Tools for expense management and invoicing, accounting software, or software for accepting payments
  • Sub-accounts, which allow you to separate money for payroll or long-term business goals

How to choose a virtual banking platform for your business

Below are four things to look for so you can choose the best virtual bank account for your business.

1. Deposit insurance

Look for an account that’s insured by the Federal Deposit Insurance Corporation (FDIC). They offer up to $250,000 in standard deposit protection, so you won’t lose your money if the bank fails. Many accounts now offer even more protection through sweep networks.

2. Low fees, high APY

Shop around for the most beneficial fees and interest rates—high fees can eat into your profits, while high annual percentage yield (APY) on checking can help your money grow without needing to move money around. 

3. User-friendly app

Look for a business bank account with a mobile banking app that allows you to make transactions on the go and is well-regarded by other business owners.

4. Accessible support

Because virtual banking is done entirely online, customer service is essential. Make sure the business checking account you choose has live chat or a phone number to reach representatives.

What do I need to open a virtual business bank account?

Most virtual banking platforms make it easy to open an account online, within minutes. Though exact requirements vary, you’ll typically need to provide the following:

  • Some basic information about yourself and any additional business owners
  • Identification, like your driver’s license and/or Social Security number
  • Your tax ID number and/or EIN
  • Legal business documentation (see below)
  • Possibly, a minimum opening deposit

The legal documents you’ll need to provide will depend on what type of business you run:

  • Sole proprietorships require a business name registration certificate and a business license.
  • Partnerships require a partnership agreement, business name registration certificate, business license, and a state certificate of partnership.
  • LLCs require articles of organization, an LLC operating agreement, and a business license.
  • Corporations require articles of incorporation, corporate bylaws, and a business license.

The future of virtual banking

Virtual banking is a relatively recent addition to business banking, and there are emerging trends which will continue to change it. AI and machine learning are being used to improve recommendation algorithms and chatbots to help show you relevant products and resolve issues quickly.

Open banking is a growing trend that can create even more efficiencies for business owners. It allows banks to work with fintech firms to provide various financial services through a single platform. 

Blockchain technology and cryptocurrency have the potential to make transactions faster, more secure, and less expensive.

Virtual banking will evolve to become an even bigger part of daily life for both consumers and business owners. Integration with wearables and voice banking through smart device assistants like Alexa and Google Home are on the horizon. Banking experiences might become immersive through Augmented Reality (AR). Security measures will always be a priority, especially as virtual banking becomes more commonplace.

Get more for your money with Bluevine Business Checking.

Disclaimer

This content is for educational purposes only and should not be construed as professional advice of any type, such as financial, legal, tax, or accounting advice. This content does not necessarily state or reflect the views of Bluevine or its partners. Please consult with an expert if you need specific advice for your business. For information about Bluevine products and services, please visit the Bluevine FAQ page.

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Disclaimer

This content is for educational purposes only and should not be construed as professional advice of any type, such as financial, legal, tax, or accounting advice. This content does not necessarily state or reflect the views of Bluevine or its partners. Please consult with an expert if you need specific advice for your business. For information about Bluevine products and services, please visit the Bluevine FAQ page.

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