Virtual banking gives businesses a way to handle everyday financial tasks online instead of visiting a branch. A virtual banking account may let you receive payments, transfer money, pay bills, monitor transactions, and manage cards from a digital platform.
While the term virtual bank can mean different things in different contexts, this guide focuses on virtual banking as a fully digital approach to business banking. We’ll explain how it works, what services to expect, and what to consider when choosing an account.
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?
Virtual banking can mean either a fully digital business bank account or a virtual account number used in treasury and payments operations. This guide covers the former meaning.
While 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.
The history of digital banking
Online banking platforms have been around for over three decades. According to Coin Telegraph, Stanford Federal Credit Union became the first to introduce an online option in 1994, followed by Wells Fargo in 1996. Early iterations from traditional banks made online bill pay popular. Following this trend, fintech companies—sometimes known as neo-banks or challenger banks—quickly began to form.
The first mobile banking app was introduced in 2007 by USAA Federal Savings Bank. Most banks offer apps today, but it’s important to differentiate between traditional banks/credit unions and financial technology companies that operate exclusively online. Digital financial services are typically more streamlined and faster, which can be an advantage for small businesses.
Today, there are over 350 global providers of online banking services. Those services include digital banking, digital payments, digital lending, investment services, financial management, and financial education tools. Some of these providers are chartered banks. Others are fintech companies that work through partner banks.
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 higher yields 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
The next generation of virtual banking will be shaped by developments in the AI sector, such as programmable AI agents to carry out financial tasks more complex than existing automation can account for. AI may also improve user experience for some by providing a chat-based interface for carrying out financial tasks, removing the need for those customers to manually execute financial processes at all.
The implementation of AI agents in the financial sector will necessarily inspire improvements to security, such as an increased reliance on biometric verification.
Get more for your money with Bluevine Business Checking.
Frequently asked questions
Virtual banking is banking that is primarily managed through digital channels rather than physical branches. A virtual banking account such as Bluevine Business Checking can let you check balances, transfer money, pay bills, receive payments, deposit checks, and manage cards through an online dashboard or mobile app. For small businesses that conduct most financial tasks online, a digital-first platform can provide the convenience of virtual banking while offering robust business checking functions.
Bluevine combines high-yield checking, payments, sub-accounts, debit cards, accounting, and business financing in one digital platform.
To open a virtual bank account, complete the provider’s online application, verify your identity, and provide information about your business and its ownership. Requirements vary, but you may need a tax ID, business address, formation documents, and government-issued identification. Bluevine allows eligible businesses to apply online and then choose a Business Checking plan after approval.
Yes, virtual banking can be safe when the provider uses strong security controls and appropriate deposit protections. Look for multifactor authentication, transaction alerts, fraud monitoring, user permissions, card controls, encryption, and payment protections. You should also verify which bank holds your deposits and how FDIC insurance applies.
