National Online Banking Day is October 8. It’s hard to imagine that there was a time when all banking was done at real financial institutions. Even the simple task of checking your account balance used to require a trip to the bank. Today, you can check your account balance, send money, withdraw money, transfer funds, and more, right from your smartphone, computer, or tablet.
Although so many people are taking advantage of the digital banking tools offered online today, most people don’t know the full history of online banking. Find out how this innovative form of banking has evolved and grown in popularity – and also find out how you can save money with online banking.
Click to learn how to deposit money into an online bank account.
The history of internet banking
The bank has come a long way since the days of regular visits to tellers. Now a customer can take a picture of a check with their phone to deposit it into a savings or checking account and receive SMS bank alerts as text messages. The evolution of online banking began in the 1980s when the definition and practice of online banking was very different from what exists today.
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What is online banking?
The definition of online banking, or e-banking definition, includes any electronic payment system that allows customers of a financial institution to conduct financial transactions through the financial institution’s website or Internet application. This is where it all started.
1981: New York City banks test home banking
The first version of what was considered online banking began in 1981. New York City was the first place in the United States to test the innovative way of doing business by providing remote services to four of its major banks—Citibank, Chase Manhattan, Chemical Bank, and Manufacturers Hanover—have made home banking available to their customers.
1983: Bank of Scotland establishes the first internet banking services in the UK
The Bank of Scotland has offered its customers the UK’s first online banking service called Homelink. People had to connect to the internet through their TVs and phones to pay bills and transfer money. It was at this time that what is now called online banking was formed.
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1994: Stanford Federal Credit Union offers Internet banking services in the United States
In October 1994, Stanford Federal Credit Union became the first financial institution in the United States to offer Internet banking services to all of its customers. A year later, Presidential Bank became the first bank in the country to offer its customers access to their accounts online. The advantages of internet banking systems began to be felt as many other banks soon followed the Presidential Bank’s lead.
1996: Creation of NetBank
The evolution of internet banking continued with one of the first truly successful internet-only banks, NetBank, which was founded in 1996 and closed in 2007.
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1999: Bank of Internet USA is founded
Bank of Internet USA was officially founded as part of the incorporation of BofI Holding Inc. on July 6, 1999, making it America’s oldest Internet bank; it opened on July 4, 2000. The conveniences and benefits of internet banking became apparent to many customers: higher online interest rates than with traditional banks, better access to accounts and bank transfers online, to name a few.
2001: Bank of America has 3 million online customers
In 2001, Bank of America made history as the first financial institution to gain over 3 million online banking customers, about 20% of its customer base at the time. More and more people were beginning to realize the benefits of online banking.
2006: 80% of US banks offer Internet banking services
As online banking has evolved, it has slowly gained popularity in e-commerce. When the major banks began to offer products and services online, e-banking seemed to gain legitimacy among consumers. By 2006, online banking had become mainstream: an overwhelming 80% of banks in the United States offered internet banking.
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2009: Launch of Ally Bank
In 2009, Ally transformed GMAC Bank into what we know today as Ally Bank, joining the ranks of internet-only banks. In recent years, it has been repeatedly named the top online bank in GOBankingRates’ annual Best Banks ranking.
2010: Online banking is growing faster than the Internet
In a 2010 survey of consumer billing and payment trends, Fiserv, a financial services technology company, found that online and mobile banking was growing at a faster rate than the Internet. Online banking has continued to evolve as more innovations and conveniences have been offered.
Bank of Internet USA has introduced a number of new, technologically advanced products and services since its inception, including mobile internet banking applications for the most popular mobile devices, mobile check deposit, Popmoney for SMS money transfer or via email and EMV chip debit cards. .
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2018: Online banking is common practice
Online banking has become so widespread today that customers expect accounts to include free online banking, and many banks only operate on the internet, effectively reducing overhead costs for offer more competitive rates on savings accounts and benefit from higher profit margins.
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Online Banking Security: How to Protect Accounts
Online banking is one of the most popular ways people manage their money today. Banks provide online banking security for customers by using encryption technology – such as the Secure Sockets Layer – by checking online banking account activity, incorporating account security features, and warning constantly giving consumers ways to avoid threats such as identity theft.
Consumer Responsibility for Secure Online Banking
Online banking customers should take steps to practice safe online banking. The FDIC advises consumers to take the following precautions:
- Research a bank before opening a paid or free online banking account.
- Beware of fraudulent websites designed to look like real banking sites.
- Always make sure the bank is FDIC insured.
- Protect your personal banking information online.
- Know your rights.
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The future of online banking
Despite the low adoption rate in the early history of internet banking, online banking has proven to be here to stay. Online banking features and services have evolved significantly since the early days of internet banking history – from the need to use a landline to pay bills in the 1980s to the ability to transfer funds, Pay bills and deposit checks with just one mouse click. or on a mobile device today. As technology continues to advance, online banking will likely become even easier and more ingrained in the average consumer’s lifestyle.
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Barri Segal and Laura Woods contributed reporting for this article.