A virtual bank is a bank that offers banking services through electronic channels. All services of virtual banks can be performed online and there are no bricks-and-mortar branches. Clients can open an account, make deposits, taking out loans and perform other banking transactions via a mobile app or through the website of the virtual bank, thus saving time due without having the need to visit a bank.

Some common forms of virtual banking are, ATMs, use of magnetic ink character recognition code (MICR), Electronic clearing service scheme, electronic fund transfer scheme, RTGS, computerized settlement of clearing transactions, centralized fund management schemes, etc.

One of the advantages of virtual banking service is that the transactions can be checked in real time, i.e. as and when the transactions are made and the customer is not required to wait for the day or a month to end to check the transaction details. The cost incurred in handling the transactions is lower than the traditional form of banking, and also, it charges low fee comparatively because of less overhead expenses.

Also, the response time has increased manifold with the invent of online banking. The customer can access his account any time round the clock and indulge in the banking activities as per his convenience.