The Seeds of Online Banking

It more or less started with telephones. On the day that a customer happened to call the bank to inquire or conduct a transaction, remote banking was on its way.

Well, sort of on its way. Telephones at home and in the office became increasingly complex as the 20th Century rolled forth, but not much changed for remote banking until 1961, when City Bank of New York installed the world’s first Automated Teller Machine, and branded it the “Bankograph.” At last, true remote banking was on its way.

Well, sort of. Well, OK, not at all. Whether unimpressed, or simply reluctant to entrust their hard-earned cash to a box of gears and wires, New Yorkers avoided the contraption. Six months after installing the Bankograph, City Bank removed it — presumably with less fanfare than when they installed it.

But good ideas are not easily suppressed. An ATM-ish device appeared in Tokyo in 1966. Another appeared a year later in Sweden. More attempts followed in London and New York. By the mid 1970s, ATMs were becoming commonplace.

With a slowly-adopting public, you might wonder why banks kept trying. There were two reasons. One was that, though still newfangled, ATMs were no longer a novelty in the 70s. Rather, they were a sign of a forward-thinking, with-it bank. Moreover, though clients over 30 were not easily persuaded to try, much less trust a non flesh-and-blood teller at that time, the next generation was growing up with personal computers. Banks understood that its future customers wouldn’t fear technology. On the contrary, they would demand it.

The other reason? Imagine the tears of joy in the eyes of the first CFO who did a cost/benefit analysis on Automatic Teller Machines. Continuous availability, no sick and vacation days, no benefits package, enhanced security, and reduced error.

For a possible third reason … those who were around in the 70s couldn’t help admitting that those new ATM things were just plain cool.

At that moment, banks began complementing person-to-person interactions with person-to-machine interactions — and more and more customers liked it. Virtual/interactive/online banking was a natural next step as technology permitted.

The natural next step after that is mobile banking. No, scratch that part about “next.” It is upon us. Our customers want to be able to interact with their bank whenever, wherever, and however it’s convenient for them. If we don’t provide it, someone else will.

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