This was a hot topic in 2019, so most people are familiar with the tangible benefits that come from switching to a virtual bank — the lower or non-existent fees, high-interest rates paid on deposits, lower interest rates on loans, and the flexibility afforded by mobile banking.
But there are secondary benefits to virtual banking that aren't quite as obvious but are equally potent — the industry's positive effects on the environment.
When you switch to a virtual bank, you no longer drive to a brick and mortar branch to do your banking - you save gas and reduce emissions.
As more people make the switch, physical branches will become too expensive to maintain. Large banks will begin closing redundant or lightly-traveled locations. These shuttered branches will no longer consume electricity. They won't require heating and cooling. They won't need to be maintained or repaired.
Cars and branches all release atmospheric carbon, so branches reduce banking's overall carbon footprint. And as more branches close, the environmental savings rise.
Consider all the ways that physical bank branches use paper.
- Deposit slips
- Transaction receipts
- Back office paperwork
- Account statements
Think about the massive stack of papers you have to sign when applying for a mortgage or a car loan - virtual banking gets rid of nearly all of it. With a virtual bank, you open accounts, make deposits, transfer money, and view your account statements on your mobile device or computer.
The entire banking experience is digital; nothing needs to be signed on paper or mailed.
Producing paper requires energy and creates waste.
Running the servers that support all the data processing necessary to handle hundreds of millions of transactions requires power. However, traditional banks required the same resources. Overall, this is a more efficient use of resources and represents a net gain for the environment.
About: Mr. Rory Brown has focused on financial technology and investment management for 30+ years. Rory Brown Co-Founded one of the world's first Virtual Banks and writes extensively about the industry.