What are the 5 differences between a virtual (challenger bank) and a traditional bank? (20 marks - 2 pages) Analyse and assess the compliance requirements of a virtual banks vs traditional banks in...

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FINANCE ESSAY
Table of Contents
1. Distinguishing between Traditional and Virtual Bank    3
Presence    3
Cost    3
Customer Support    4
Accessibility    4
Security    4
2. Compliance Necessities of Traditional versus Virtual Banks in terms of Capital and Anti-Money Laundering    5
3. Benefits and Drawbacks of Virtual Banks for Different Individuals    6
Bibliography    8
1. Distinguishing between Traditional and Virtual Bank
The banking industry has seen rapid growth in the past few years. Before this expansion, we used to have centralized or state or local banks but now banks. Moreover, banking has become a global institution. We have banks now operating around the globe. This has been possible through virtual banking. Hereafter, we are going to vary the differences between virtual and traditional banks, on basis of cost, presence, customer support, accessibility and security.
Presence
The foremost difference between online banking and traditional banking is physical presence. Traditional banks have a strong physical presence with headquarters, regional headquarters, local
anches that are located across countries they operate in[footnoteRef:1]. According to a global banking consumer survey done in 2016, 60% of 55,000 customers from 32 countries think they feel more safe with visiting a physical
anch and having in-person customer services. People tend to trust traditional banks more in the primary stages of their banking experience[footnoteRef:2]. [1: Tham, Jacquline, Mohd Shukri Ab Yazid, Abdol Ali Khatibi, and SM Ferdous Azam. "Internet and data security–understanding customer perception on trusting virtual banking security in Malaysia." European Journal of Social Sciences Studies (2017)] [2: Broby, Daniel, and Tatja Karkkainen. "FINTECH in Scotland: building a digital future for the financial sector." The Future of Fintech Supported by International Financial Services District (IFSD) The Technology Innovation Centre, Glasgow Date: 2nd September (2016)]
In that same survey, more than 65% of customers chose banks with awesome digital presence characteristics. In addition, the Eurostat database shows 59% of Europe's virtually active people utilize online banking services. Although online banks cannot provide in-person services, they can provide services around the clock. That is a huge positive side according to the consumers. They can check their financial status and do banking operations from any point around the world and also at any point of time.
Cost
The online category of banks that have emerged with the advancement of technology affects banking cost hugely. Banks that operate online only, provide all the functionality of a normal bank 24 hours but as they do not have to ca
y an overhead cost for facilities, they can provide better rates than tradition banks. Whereas traditional bank’s customers need to bear a little amount of cost that, the bank charges as service providing charges. It also includes a number of hidden charges that generate from all the categorized services and facilities traditional banks provide[footnoteRef:3]. [3: Driga, Imola, and Claudia Isac. "E-banking services–features, challenges and benefits." Annals of the University of Petrossani. Economics 14 (2014): 49-58]
Customer Support
Providing better and safe service to the client should be the primary objective of every bank. Online banking has
ought a new edge to this belief. Customers can now access their banking information and complete needed banking operations with just touch of a button. Although the processing time is the same, clients do not need to go through the hassle of going to their banks maintaining a certain period. This feature is hugely appreciated throughout the world[footnoteRef:4]. [4: Fraering, Martin, and Michael S. Minor. "Beyond loyalty: customer satisfaction, loyalty, and fortitude." Journal of Services Marketing 27, no. 4 (2013): 334-344]
Accessibility
The most problematic issue between clients and traditional banks is the accessibility the clients get into their accounts. In addition, as traditional...