History of Online Banking

A Detailed History Of Internet Banking

Internet banking as we know it today is still a relatively new phenomena. It was only 30 years ago that we were all doing our banking at a local branch, rushing out to get there before they closed and standing inline behind everyone else waiting to be served by a teller. How times have changed! Now we can do our banking from anywhere and at anytime thanks to the rapid advances in computer technology.

Online Banking Timeline

The history of Internet banking obviously coincides with the development of the internet, which is now a household name, but which actually did not even exist too long ago.

Although the term Internet was first used around the year 1974, it wasn't until the 1990s that the Internet became a really universal phenomenom. The Internet grew incredibly throughout the 90s, and as it continued to grow, various different search engines and Web directories were created in order to assist Web browsers, as well to track pages on the Web and allow people to find things more easily.

The earliest computers were so large that they would take up an entire room, while today some are so small that they fit in the palm of your hand.

After the introduction of the desk top computer, which was much more practical and affordable for home use, there was a huge shift from manual tasks to computerized ones. More and more industries were being computerized and banking was one of them. Although there are certainly some tasks and jobs that cannot be handled solely by computers, and therefore still require manpower, for the most part, computers have helped to make life significantly easier, productive, and more convenient for us all.

First Online Bank

In 1983 The Bank of Scotland was the first bank to offer a service to Nottingham Building Society customers that later became the basis of online banking as we know it today. This service was called "homelink", which enabled customers to send transfers and pay bills using a television and the telephone.

1994 saw the development of personal finance software called Microsoft™ Money which enabled users to access their bank accounts online. The Stanford Credit Union created the first online banking website and a company called Yodlee created the first account aggregation software which enabled consumers to view all of their financial accounts in one place.

By 2001 internet banking had grown substantially and eight US Banks each boasted 1 million customers were accessing their bank accounts online.

Internet Only Banks

As the need for actual bricks and mortar banks became less necessary there was an influx of internet only banks which began to offer banking services online. Names like Ing Direct, President's Choice Financial, HSBC Direct and E*Trade Financial were born. No banking fees, higher interest rates, and the ability to do your banking from the comfort of your own home was very attractive to the public. This increased competition forced the regular banks to offer similar online services and internet banking, as we now know it, was born.

Mobile Banking

A move to mobile banking came in 2005 with the introduction of the iPhone by Apple. Banking via your smartphone allows you to bank from anywhere you have an internet connection and you no longer have to be in front of your desk top computer.

As of 2009 there were reportedly 54 million US households accessing their bank accounts online. Due to this tremendous online growth, we see fewer bank branches on the high street today, fewer people are visiting their local branch to take care of their banking needs.

Internet banking has been around for thirty years now, but has gone mainstream over the past three years or so. Internet banking offers an array of advantages to the user, including: account balances and history including year-to-date information, the ability to transfer money from one account to another and to payees for bill payments, check history, reorder checks, and stop payments, check credit card balances and statements, complete online loan applications, secure interactive messaging with staff, and much more.

Internet banking basically allows you to be able to do everything that you can in your regular banking institution, only with the benefit that you can do it all right from the convenience of your own home or on the go. Not only is this great because you can be comfortable and have peace of mind knowing that you can keep track of your own banking transactions, but as well it allows for more flexibility because you never have to worry about rushing out and making it to the bank in time. You can complete your banking need 24 hours a day, 7 days a week.