Tuesday, October 26
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Online Banks Were a Thing Earlier than you Think

It’s hard to imagine life without credit cards these days, especially during a pandemic. Even before, most of us got used to paying everything using credit cards. Slowly, but surely they are substituting cash and make everything quicker. Unlike earlier, when you had to go to the bank to check your balance, now you’re only a couple of clicks away from finding out. You can easily send money to your friends in need, transfer funds, buy a concert ticket or send a present to someone, using online banking. All you need is your phone and internet.

Many of us use it without thinking, but what about the history of it? How much time did it take to become what it is today? How were online banks even functioning before? Online banking started in the 1980s when internet banking represented a different thing than today. Luckily, everything today is very much different, thanks to the effort of certain companies and their success.

Let’s look at the timeline and how it all began. 

1981: NYC Banks started At-Home Banking tests

New York City, the home of Wall Street, was the first place to test out this way of doing business by offering remote services to major banks at the time, making home-banking accessible to the customers so that they could gain more clients.

1983: Bank of Scotland Institutes Becomes First UK Internet Banking Services

Following the New York City example, The Bank of Scotland offered customers the first U.K. internet banking service called Homelink. Online banking succeeded even though people had to connect through millions of devices (internet through their tv and then telephone).

1994: U.S. Internet Banking

Almost ten years later, in 1995, Presidential Bank became the first bank to give customers access to their accounts online. The advantages became apparent, so everyone wanted to get on board as soon as possible.

1996: Netbank

We can say that Netbank was the first online bank that profited from the job. It was founded in 1996 and closed in 2007. 

1999: Bank of Internet USA

Bank of Internet USA was founded as part of the incorporation of BofI Holding Inc. in 1999, making it America’s oldest internet bank. It opened for business in the middle of 2000. It offered far more options that were very convenient and evident to many customers: they had higher interest rates if you go online, greater access to accounts, and online banking transfers.

2001: Three Million Online Customers in America

At the beginning of the 21st century, Bank of America became the first financial institution to have more than three million online banking customers, which was about 20 percent of its customer base. That was when people started to realize that online banking might be a better and easier way to take care of their money.

2006: Almost every U.S. bank is offering online banking

As the evolution of online banking continued, e-commerce started seeing an opportunity here. When big corporations began to offer online products and services, e-banking gained clients’ trust. By 2006, online banking had become a regular thing: An astounding 80 percent of banks in the U.S. offered internet banking services.

 2009: Ally Bank appears

In 2009, Ally took GMAC under their wing and grew into what we know today. In the last couple of years, it continues to be one of the top online banks. 

2010: online banking becomes more popular than the internet itself

In a 2010 research, it was found that online and mobile banking were growing faster than the internet. Online banking is continually evolving, as more innovations kept appearing.

Bank of Internet USA has introduced mobile internet banking apps for the most popular mobile devices and changed the rules of the game.

2018: Is online banking even a question anymore?

Online banking has become so ingrained in today’s society that it is reasonable to have online accounts for free for customers. Many banks only operate on the internet now, effectively decreasing the costs of saving accounts, which gives them leverage over regular institutions.

Additional Advice:

How to be secure while doing online banking

These are essential and necessary measures every customer should have if they are doing any online transactions:

  • Research a bank before you open an account with them – check their credibility and see reviews
  • Be aware there are many fake websites and that there are government websites where you can check if they are real or not
  • Always make sure the bank is FDIC-insured.
  • Keep your personal online banking information secure, and don’t share it with anyone.

What is the future of online banking?

Online banking is already a large and regular part of most people’s lives. It is only left to see how it will affect the world once it becomes cashless, closer than it seems. Today you have a variety of online banks to choose from that are safe and can offer you plenty of advantages.

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