Virtual Bank

Warning: mkdir() [function.mkdir]: Permission denied in /home/webs/affiliatelib2/CacheManager.php on line 12

Warning: mkdir() [function.mkdir]: No such file or directory in /home/webs/affiliatelib2/CacheManager.php on line 12

Warning: fopen(/home/templatecore2cache//*cluesnet.com/76/76db34fb6ebfe0efb0b057e24a13fddf2846c601.tc2cache) [function.fopen]: failed to open stream: No such file or directory in /home/webs/affiliatelib2/CacheManager.php on line 130

Warning: fwrite(): supplied argument is not a valid stream resource in /home/webs/affiliatelib2/CacheManager.php on line 131

Warning: fclose(): supplied argument is not a valid stream resource in /home/webs/affiliatelib2/CacheManager.php on line 132

A virtual bank is a bank with a very small or nonexistent branch (banking). It offers its financial services by:

Telephone banking
Online banking
Automated teller machines (often through interbank network alliances)
Mail banking
Mobile Banking

By eliminating the costs associated with retail banking, particularly bank branches, virtual banks may offer higher interest rates and lower service charges on their savings accounts than their competitors.

History Traditional banking was impacted greatly by the commercialization of the Internet in the early 1990s. As the Internet became more generally accessible, traditional banks began to realize its potential to deliver services to their customers while reducing long-term operational costs. Upon realizing this, traditional banks began to offer limited services online.

The initial success of internet banking services provided by traditional banks lead to the development of internet-only banks or "virtual banks". These banks were designed without a traditional banking infrastructure, a cost-saving feature that allowed many of them to offer savings accounts with higher interest rates and loans with lower interest rates than most traditional banks.

The world's first fully-functional virtual bank was the Security First Network Bank (SFNB) which began operations on October 18, 1995. Based at Atlanta, Georgia, USA, it was the first virtual bank to be insured by the Federal Deposit Insurance Corporation (FDIC). After three years of operation, it was acquired by the Royal Bank of Canada (RBC). Though SFNB did not make much profit in the initial years, it demonstrated that the concept of virtual banking could work.

Europe's first full-service virtual bank was "First-e" launched by Enba, a Dublin-based company under the banking license of Banque d'Escompte, France. First launched in the United Kingdom in late September 1999, it garnered appreciable attention, resulting in more such ventures all over Europe. After about two years of operations, it shut down its operations during the dot-com bubble bust. Though Egg Banking plc, launched earlier in October 1998 by Prudential plc, was touted to be a virtual bank, it was not a full-service virtual bank initially.

Asia's first virtual bank was finatiQ – a division of the Bank of Singapore. It opened on April 3, 2000 (though the public launch was on April 18, 2000), heralding the arrival of virtual banking in Asia.

List of virtual banks

AmTrust Direct, a division of Ohio Savings Bank (United States)
AXA (France)
Bank of Internet (United States)
Citi Direct, a division of Citibank (United States)
Citizens Bank of Canada (Canada)
Emigrant Direct, a division of Emigrant Bank (United States)
E*Trade Bank, A division of E*Trade Financial (United States)
EverBank Direct (United States)
FNBO Direct, a division of First National of Nebraska (United States)
HSBC Direct, a division of HSBC Bank USA (United States)
ING Direct, part of ING Group (worldwide)
Inteligo, a division of PKO BP S.A. (Poland)
Manulife Bank of Canada (Canada)
mBank, a division of BRE Bank SA (Poland)
mbanx, a division of Bank of Montreal; now defunct (Canada)
Openbank (Spain)
President's Choice Financial (Canada)
Rabobank (Belgium, The Netherlands)
Skandiabanken (Norway, Sweden, Denmark)
Smile (bank) (Co-operative Bank, UK)
USAA (United States)
UnivestDirect, a part of Univest Corporation of PA (United States)
VirtualBank (United States)
* WTDirect (United States)