The History of Internet Banking

Written by hulbert lee
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The History of Internet Banking
Banking on the Internet (working place iii image by Mykola Velychko from Fotolia.com)

Whether your bank is Chase, Citibank, Bank of America or Wells Fargo, each of them has an online system that tracks your statements and allows you to do transactions at the touch of a keyboard. This system provided by banking and financial institutions is called Internet banking. Internet banking has been a popular option because it is easy to use and gives consumers the ability to make transactions anytime during the day.

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Distance Banking

Before the Internet became the main source for remote banking, distance banking was done over the telephone from home. This was also called home banking and the system used phone keypads to send tones to the bank computer. Several banks that were centred in New York offered home banking services to customers in 1981 as a way to promote this new system. In 1983, the first bank offered the first online banking system to the public, using a computer that connected to a phone line, with the information displayed on a TV screen. Customers were able to see their statements and recent transactions, but they still could not manage the transactions remotely.

The 1990s

During the 1990s, computers became more prevalent in homes. This was when the desire for online banking really emerged. With the advances in Internet connections and encryption programs for safety, online banking started to become a more feasible option for banking clients. In 1994, banking services were made available by the Standford Federal Credit Union.

First Bank in America

On October 6, 1995, online banking in America first began when the Presidential Savings Bank offered its customers an online alternative to traditional banking. Other banks soon followed, such as the Security First Network Bank, Wells Fargo and Chase Manhattan Bank.

Security

During the 1980s and 1990s, since the technology was relatively new, hackers found ways to hack into the system and steal account information. This kind of identity theft, in combination with increasing reports of invasive spyware and viruses, made consumers anxious about doing banking transactions online. Banking companies invested millions of dollars in research and development to create the best online protections possible. Today, there is a lot more knowledge, information and security programs that help customers protect their most valuable information from potential hackers.

The 2000s

By the year 2004, about 53 million Americans were using online banking to perform transactions. If this trend continues and technology becomes more efficient, faster and safer, there's a good chance that in the near future, more than half of all Americans will use Internet banking.

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