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How to... make the switch to virtual banking

There are many benefits of switching to virtual banking for small businesses. In fact, the alternative approach to financial transactions often meets the needs of SMEs more effectively than traditional banks.

The lower fees for financial transactions and international payments, the ability to keep track of finances online and in real time, and greater flexibility and efficiency – such as making multiple payments with a single click of the button – are just a few of the benefits.

While some new companies may have decided to use virtual banking from the outset, more established businesses now approaching the move from traditional banking to a virtual approach may find it daunting.

But there are a number of things small businesses can do to ease the transition and minimise the disruption to day-to-day operations.


Start small and experiment

To begin it’s wise to open a virtual bank account and dabble in using the new approach to understand the benefits without having an impact on the wider business. Only by actually using virtual banking will you see how it can benefit your organisation.
Using a virtual bank account to manage employee expenses would be a good way to start, as it would involve making small one-off payments directly to individual employees. A relatively small amount of cash could be moved into the virtual bank account each month to cover travel, accommodation or training costs.
If your business sells goods or services via a website, adding a payment button for your virtual bank provider could also be useful in helping you understand how it could be used in the future.


Take an incremental approach

Once your businesses has had time to get to grips with virtual banking for non-business-critical purposes, you can work out what other parts of the business would benefit from using it.

Consider running a pilot, with one or two customers paying into a virtual bank account for the goods or services they buy. Then assess how the pilot went and finetune the process before asking other customers to adopt the new method.
A similar approach could be applied to paying suppliers. Ultimately it will be possible for your businesses to pay all invoices with a single click of a button rather than dealing with them one by one.

From there, your organisation could start experimenting with international payments or payroll, using the mass pay-out capability offered by many virtual bank accounts.


Foster a cashless approach

It will be easier to transition to the virtual banking and payments approach by making more of your financial transactions cashless.
There are practical benefits. For example, with less cash to deal with, staff can be spared from such routine tasks as depositing cash in a safe or with a bank branch, while the company’s money is more secure and easier to keep track of.
Going cashless will first require you to identify where cash is being used and where it can be feasibly phased out. Experimenting with new payment methods, such as prepaid payment cards and cost-effective contactless payment in customer-facing scenarios, should then follow.


Be prepared for obstacles

There will inevitably be a few issues that need to be tackled as your business makes the transition to virtual banking. Some parts of the business may not see the drawback of the traditional approach to payments and finances – but there will be greater acceptance if you can demonstrate the benefits of the new approach.
Like any new process around financial or company data, there will be concerns around compliance and security. But if organisations perform their due diligence, it will become clear which virtual banks can be trusted as secure and reliable.
As more of the systems and applications feeding into company finances systems move to the cloud, there is likely to be greater interoperability with virtual banking services, but some integration work is also likely to be needed.

Moving to virtual banking requires time and effort, as well as a change in mindset (dealing with your bank mainly using online and mobile technology could take some getting used to). But the above steps should help you make the shift with minimal pain and help demonstrate to the wider business that the move to virtual banking makes more and more sense.

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How to... make the switch to virtual banking
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