What Is a Virtual Bank Account? How It Works & Benefits

If you prefer to manage your finances online rather than wait in long queues, a virtual bank account might be a good fit for you.

In fact, you’re not alone. According to the American Bankers Association, 71% of consumers prefer to manage their bank accounts digitally. As banks worldwide shift towards digital services, virtual bank accounts are a convenient and efficient way to manage your finances in the modern world.

In this guide, we'll walk you through everything you need to know about virtual bank accounts, from what they are to how they work and their benefits. We’ll also provide some examples of virtual banks to give you some options to consider. 

Virtual bank accounts, or online bank accounts, are a type of bank account offered by digital banks that operate entirely online through mobile apps or websites. 

Like traditional banks, these virtual banks often offer a range of accounts, including checking accounts, savings accounts, and options for businesses like merchant accounts. Some providers also offer features like multi-currency support, international money transfers, and expense-tracking tools.

It is important to note that the term “virtual bank” has a specific regulatory meaning in some countries. For example, in Hong Kong, only 8 institutions are currently authorised by the Hong Kong Monetary Authority (HKMA) to operate as virtual banks. 

Unlike traditional bank accounts, virtual accounts are exclusively accessible online through the mobile app, providing a full digital banking experience. This means that you can view your account balances, make transactions, deposit checks, contact customer support, and access other banking services from your mobile phone without having to visit a branch.
Since virtual accounts are opened online, providers typically mail you a physical debit card for cash withdrawals and in-store purchases if one is available for your account.

Virtual banks operate on highly secure online platforms to safeguard customer information and protect your money. They often employ data encryption, multi-factor authentication, and biometric logins to protect your account from unauthorised access. 

Virtual account providers registered as banks are usually a part of the government’s deposit protection scheme, such as the FDIC insurance in the US. Other financial service providers, like fintech companies, typically partner with traditional banks to offer this deposit insurance and access to payment networks like wire transfers. 

It is important to note that the term “virtual bank” has a specific regulatory meaning in some countries. For example, in Hong Kong, only 8 institutions are currently authorised by the Hong Kong Monetary Authority (HKMA) to operate as virtual banks. 

There are numerous virtual banking solutions available today. Let’s take a look at some of the popular ones in different regions.

ZA Bank is one of the first virtual banks to operate in Hong Kong in 2020. With over 700,000 users on their platform, ZA Bank is also currently the largest virtual bank in Hong Kong by user base.

It is also the first virtual bank in Hong Kong to be granted a license to offer insurance products, including life, accident, heart attack and stroke, and cancer protection. ZA Bank is backed by Mainland capital through ZhongAn Online P&C Insurance.

Services and account features:

• Personal Accounts and Business Accounts
• Multi-currency time deposits in HKD, RMB, and USD
• Visa debit cards with no annual fees, supported by Apply Pay and Google Pay
• Local funds transfers and payment services (FPS/CHATS)
• Overseas remittance supporting 16 currencies
• Loans
• Insurance services
• Investment services

Mox Bank is another fast-growing virtual bank in Hong Kong that was launched in 2020. It is backed by Standard Chartered in partnership with Hong Kong Telecom (HKT), PCCW, and Trip.com.

Mox Bank offers a range of banking services with lifestyle benefits, including virtual checking accounts, Mox Credit Cards, and various deals and promotions like welcome offers for new accounts, cashback rewards, and discounts with partner merchants. It currently has over 500,000 users. 

Services and account features:

• HKD personal checking accounts for individuals
• Savings accounts with competitive interest rates
• All-in-one Mastercard® that lets you switch between debit and credit spending with free ATM withdrawals in Hong Kong
• Loans
• Foreign Exchange
• Fund investment and stock trading services 
• Local funds transfers and payment services (FPS/CHATS)

Revolut is a London-based global virtual account provider founded in 2015. It offers personal and business accounts for customers in over 20 countries, including the UK, the US, most countries in Europe, and some overseas territories. 

Revolut currently only holds a banking license for the EEA but is regulated as a financial service provider in other regions. 

Services and account features:

• Personal Accounts, Business Accounts, and Freelancer Accounts
• Money transfer abroad in 29 currencies
• Pre-paid debit cards for cash machine withdrawals in 120 countries
• Vaults for budgeting money
• Cryptocurrency exchange for converting currencies into Bitcoin, Litecoin, Ethereum, Bitcoin Cash, or XRP.
• Business API to automate financial tasks and integrate with other software or platforms

Varo Bank is an American neobank founded in 2015 and headquartered in San Francisco. It has over 3 million customers and is a chartered national bank in the US.

Varo offers a completely branchless banking experience, emphasising a mobile banking app with features like real-time transaction alerts and in-app chat for customer support. Varo customers can withdraw cash from over 40,000 Allpoint ATMs in the US. 

Services and account features:

• Virtual checking accounts that offer personalised financial insights for better cash management 
• High-yield savings accounts with competitive interest rates
• Varo Believe Credit-Builder Cards that do not require a credit check for approval
• Free peer-to-peer payment service
• Instant cash advances (eligibility requirements apply)

Monzo is a challenger bank headquartered in London. It was founded in 2015 and currently has around 9 million users, including personal and business customers.

In 2017, Monzo obtained a full banking license and began offering current accounts to its customers, including business accounts. As a result, the bank is regulated by both the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

Services and account features:

• Personal Accounts and Business Accounts
• Connect multiple bank accounts to view all your finances in one place
• Physical and virtual Mastercard® cards
• International Bank Account Number (IBAN) to receive international payments
• Pots to separate savings 
• Free cash withdrawals abroad
• Loans and overdrafts

In this section, we discuss the benefits and challenges of virtual bank accounts so that you can have a better understanding of this modern banking approach and determine whether it can help streamline your business operations.

Compared to traditional physical bank accounts, virtual accounts offer several advantages, including:

Convenient and Cost-Effective

If you prioritise convenience and affordability, virtual accounts are an excellent choice. 

As they are branchless, virtual banks often offer their customers lower fees than traditional banks. This includes offering cheaper transaction fees, waiving monthly maintenance fees, and providing competitive exchange rates for cross-border payments.
In fact, according to Statista, the top reason American customers switch to virtual banks is these lower costs. 

Additionally, virtual banks let you access all of their services from a mobile banking app at any time of the day without visiting a branch, meaning you can conveniently manage your account from anywhere with an internet connection. 

Multi-Currency Support

Dealing with multiple currencies can be a hassle, whether you are a frequent traveller, an expat sending money home, or a business involved in global trade. 

However, many virtual financial institutions, including banks and fintech companies, offer multi-currency accounts that allow you to hold, convert, and make transactions in various currencies under one account number. 

Innovative Features

Virtual accounts often have innovative features to simplify account management, like spending insights, categorised saving spaces, and integration with accounting software and other tools. 

Moreover, some virtual banks incorporate artificial intelligence (AI) and machine learning (ML) to provide personalised financial insights, helping to track your spending patterns and set possible financial goals. 

Online Customer Support

Most virtual banks offer online and 24/7 customer service, which saves you a lot of time and effort compared to traditional institutions, where you would have to wait in long queues or follow their limited business hours. This accessibility is particularly useful for start-ups or small business owners who may need support outside of traditional banking hours.  

Additionally, virtual banks usually prioritise user-friendly interfaces, simplifying banking operations and potentially reducing the need to contact customer support. 

Although virtual bank accounts offer many benefits to individuals and businesses, there are some challenges to consider whether they are the right fit for you. 

Technical Difficulties

Since virtual banks heavily rely on the Internet and technology, there might be some cases of technical issues, glitches, or planned maintenance that prevent you from accessing your account.  

Virtual banks typically have a reliable system to quickly resolve issues and minimise downtime. However, if having a physical branch to visit during such times is a priority for you, virtual banks may not be the best fit. 

Lack of Human Interaction

Unlike traditional banks with branches, virtual banks offer customer support via in-app chats or phone calls. Although it might sound convenient, it might not be ideal for those who prefer face-to-face interactions or need in-person assistance with complex financial matters. 

Overall, virtual banks offer innovative solutions in the financial sector, making them worth exploring for anyone seeking a seamless, digital-first banking experience. The growing trust and usage of this type of bank also reflect its potential to reshape the financial industry in the near future. 

Overall, virtual banks offer innovative solutions in the financial sector, making them worth exploring for anyone seeking a seamless, digital-first banking experience. Moreover, the growing trust and usage of this type of bank also reflect its potential to reshape the financial industry in the near future. 

If you are looking for a multi-currency business account in Hong Kong that offers personalised customer support, consider Statrys. Statrys business accounts allow you to hold, send, and receive money in 11 major currencies; plus, you’ll get dedicated support from an account manager who understands your business needs.