Online banking is becoming the major way in which we carry out our personal banking. But it hasn’t always been the case. Online banking has had a varied development throughout the decades to get to where it is today.
The origins of online banking took form as ‘long distance banking services’ which were transmitted over electronic media in the early 1980s.
In the 1990s, many banks saw the potential of web-based banking and began to invest heavily in this new format of transaction. The banks realised the advantages of online banking. Diminished transaction costs, easier integration of services, interactive marketing capabilities. Additionally, Web banking services allowed institutions to bundle more services into single packages, thereby luring customers and minimizing overhead.
Financial institutions took steps to implement e-banking services in the mid-1990s. However consumers were initially hesitant to invest in online methods of payment. It took several years for online companies such as ebay and amazon.com to entice customers to e-banking.
By 2000, 80 percent of U.S. banks offered e-banking. Customer use grew slowly. At Bank of America, for example, it took 10 years to acquire 2 million e-banking customers.