Online Banking - History Still in the Making?

A very famous cash management tool that banks now use is their online banking access. Some call it internet banking, online banking or other catchy names but basically, it allows clients of banks to access their account online, view their balance, check the history of their account, pay bills, transfer funds and other actions previously available only if you physically visit a branch of your bank. Online banking saves time, effort, gas, parking fees and it lets you avoid traffic rush hours. More and more banks are now moving towards having this tool and it is gaining popularity faster than the earlier version of a similar tool, which was telephone banking. But how did internet banking start? Here is a brief online banking history.

It is believed that online banking began in 1995. It was October 6 and Presidential Savings Bank offered an alternative to the usual branch banking by offering an online access of bank services. This opened the gates for banks solely existing in the internet and allowed other physical banks to join in. Nowadays, it is rare to see huge banks that offer no online banking services as more and more people get connected to the web. There are also more and more banks that advertise on the web and there are now a huge number of web domains owned by banks. This is basically the start of the online banking history.

Today, 30 banks in the US exist only in cyberspace and their depositors grow exponentially due to the fact that they are virtually accessible 24/7 and they are hassle free. There are several types of people who avail of online banking services. There are those that see it as a toll that they can use but do not really explore what else they can do with it aside from balance checking and bills payments. For other transactions, they would rather go straight to the source. Then, there are those that are avid internet users, mostly those that make a living or spend half of their day connected to the web. These are actually so dependent on online banking that if a bank does not offer this service, they won't even consider that bank.

It has now been a decade and three years since the birth of online banking and research shows that it is 100 more cost efficient for banks to run on cyberspace than to have the actual teller to process transactions. However, a pit fall here is that not all Americans are ready for this sort of thing. Some would rather have a face to face interaction with tellers as trust is till a big issue, especially when it comes to money (although online banking virtually destroys human error). Also, research indicate that although phone banking is slowly losing popularity, it is still the number one go-to when clients are at a lost.

Online banking history is still in the making. More and more advances are being made each day on this field and with that being said, let us expect more on internet banking.

By : Julian Davidson
Julian Davidson is a banking specialist and has written many bank related articles to help people save money and avoid the traps.Learn about one of the best online banks RBC Online Banking or to learn about other online banks visit http://www.onlinebankingmart.com/ - A popular banking website that provides you with inside information on all the major banks.

E-banking (Online Banking) and Its role in Today's Society

The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us (Papers4you.com, 2006). An analysis of technology and its uses show that it has permeated in almost every aspect of our life. According to Tero et al (2004) many activities are handled electronically due the acceptance of information technology at home as well as at workplace. Internet can be seen as a truly global phenomenon that has made time and distance irrelevant to many transactions. According to Heikki et al. (2002), the transformation from the traditional banking towards e-banking has been a ‘leap’ change.

The evolution of electronic banking started from the use of automatic teller machines (ATM) and has passed through telephone banking, direct bill payment, electronic fund transfer and the revolutionary online banking (Alter, 2002). The future of electronic banking according to some is the acceptance of WAP enabled banking and interactive-TV banking (Petrus & Nelson, 2006). But it has been forecasted that among all the categories, online banking is the future of electronic financial transactions. The rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reasons for the penetration of online banking in everyday life (Papers4you.com, 2006). According to the latest official figures from the Office of National Statistics (ONS, 2006) indicate that subscriptions to the internet has grown more than 50% from 15 million in 2000 to 35 million in 2005 in the UK. It has also been estimated that 60% of the population in the UK use internet in their daily lives.

The fundamental shift towards the involvement of the customer in the financial service provision with the help of technology especially internet has helped in reduce costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere with access to an internet connection. According to theorists (Walfried et al., 2005) customer evaluation of the electronic services is influenced by attributions of success and failure in inter personal service situations.

The use of electronic banking has removed the banking personnel that facilitate the transactions and has placed additional responsibilities on the customers to transact with the service. Although the use of E-banking is provided for the benefit of the customers but these changes require increased work or involvement on the part of customers. These and other factors might be seen as lesser service provided in terms of customer service. But these assumptions would be wrong if the customer knows the value of using the electronic service.

Thus it can be concluded that a fit between task i.e. the banking; technology i.e. the user interface and its reliability; and individuals i.e. the customers and their knowledge about using the service, is the key to successful E-banking services (Zigurs & Buckland, 1998).

References:

Alter, S. (2002), “Information Systems” 4th Edition, Prentice Hall

Heikki Karjaluoto, Minna Mattila, Tapio Pento (2002), “Factors underlying attitude formation towards online banking in Finland”, International Journal of Bank Marketing; Volume: 20 Issue: 6; 2002 Research paper

ONS (2005), “Office of National Statistics”, www.statistics.gov.uk

Papers For You (2006) "C/B/93. Dissertation. Will online business replace the traditional business in the banking industry in UK?", Available from http://www.coursework4you.co.uk/sprtfina35.htm [17/06/2006]

Papers For You (2006) "P/F/174. Dissertation. Adoption of Online Banking", Available from http://www.coursework4you.co.uk/sprtfina35.htm [18/06/2006]

Petrus Guriting, Nelson Oly Ndubisi (2006), “Borneo online banking: evaluating customer perceptions and behavioural intention”, Management Research News; Volume: 29 Issue: 1/2; 2006 Conceptual Paper

Tero Pikkarainen, Kari Pikkarainen, Heikki Karjaluoto, Seppo Pahnila (2004), “Consumer acceptance of online banking: an extension of the technology acceptance model”, Internet Research; Volume: 14 Issue: 3; 2004 Research paper

Walfried M. Lassar, Chris Manolis, Sharon S. Lassar (2005), “The relationship between consumer innovativeness, personal characteristics, and online banking adoption”, International Journal of Bank Marketing; Volume: 23 Issue: 2; 2005 Research paper

Zigurs, I. & Buckland, B. (1998), “A Theory of Task/Technology Fit and Group Support Systems Effectiveness”, MIS Quarterly, Sep98, Vol. 22 Issue 3, p313-334, 22p

By : Verena Veneeva
Copyright 2006 Verena Veneeva. Professional Writer working for http://www.coursework4you.co.uk