Digital disruption has impacted the world’s financial landscape, as well as other facets of society. Digital automation may become even more common in the years to come.
In the midst of a ferocious pandemic, economic and health-related pressures have stirred innovation towards the reinforcement of banking processes for both individuals and businesses.
Fintech can be found at the center of this trend, and major financial institutions are beginning to make way for smaller, more uniquely positioned, and more agile fintech solution providers.
Partnerships, pivots and added offerings have unraveled concepts that push convenience, speed and digital integration to the forefront. Among these concepts are digital banking and virtual banking. They may seem similar, however, these two concepts have major differences.
Virtual banks are fully online
The key difference to remember between digital and virtual banks is that virtual banks are made up of financial services and processes that exist solely online. By its definition, virtual banks don't rely on branch offices or any other forms of physical presence to resume operations. For the most part, interested applicants need to download a mobile banking app if they want to open a bank account under a virtual banking service. You'll need to
submit your details and complete various security checks through an online platform before being assigned a fully virtual account. These online platforms are usually verified and offer protective measures to keep customer safety a top priority.
It isn't difficult to see that virtual banking stemmed from a booming demand of convenience and rapid speed, amid rising digital infrastructures as consumers grow more dependent on online transactions and ecommerce. The concept itself is relatively new - compared to some other financial innovations - eradicating the need for many burdens carried by traditional banks. There are no physical outlets, so expenses like rent, maintenance and workforce for individual branches are non-existent. Every process, inquiry, transaction and application is conducted via an online system, which translates to freedom and efficiency.
Digital banking may comprise physical aspects
Also known commonly as internet banking or online banking, digital banking is more of a blanket term that describes the added digital components to conventional banking processes. In this regard, digital banking has been around for quite some time now, with earlier forms involving logging into bank websites to check active accounts or complete transactions. The term itself can be seen as a predecessor which led to the eventual rise of virtual banking in its current form. For the most part, digital banking might require users to first head over to conventional bank branches and register physically.

Some paperwork may be involved, and customers might have to complete their registration over the counter before they can access their online accounts. Of course, things have changed quite dramatically these days, and many traditional banks offer the option of creating online accounts from the comfort of your home. However, it's still necessary to create an active account with that bank - and that still requires you to head over to physical branches.
In mid-Jul 2020, CIMB Malaysia introduced an
online-to-branch account opening process for individual banking customers, who can now submit their application to open a current or savings account online. Subsequently, they proceed to a dedicated e-account opening priority queue available in all the bank's branches to complete the application via Know-Your-Customer due diligence.
Nowadays, digital banking is used more as a term to describe any banking activities which are conducted and completed through digital devices. Consumers are constantly using their phones to access saving apps or pay for products by scanning codes, while companies are used to paying salaries and expenses through banking apps online. By definition, these are all examples of digital banking.