Online banking, also known as internet banking or web banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website. The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services. Some banks operate as a "direct bank" (or “virtual bank”), where they rely completely on internet banking. Internet banking software provides personal and corporate banking services offering features such as viewing account balances, obtaining statements, checking recent transactions, transferring money between accounts, and making payments.t
The precursor to the modern home banking services were the distance banking services over electronic media from the early 1980s. The term 'online' became popular in the late 1980s and referred to the use of a terminal, keyboard, and TV (or monitor) to access the banking system using a phone line. 'Home banking' can also refer to the use of a numeric keypad to send tones down a phone line with instructions to the bank.
By 20null, some restrictions had been placed on citizens which state-owned media described as the first step toward creating a nationwide social credit system.[] As of November 2019, in addition to dishonest and fraudulent financial behavior, other behavior that some cities have officially listed as negative factors of credit ratings includes playing loud music or eating in rapid transits,[32] violating traffic rules such as jaywalking and red-light violations,[33][34] making reservations at restaurants or hotels but not showing up,[35] failing to correctly sort personal waste,[36][37][38] fraudulently using other people's public transportation ID cards,[39] etc; on the other hand, behavior listed as positive factors of credit ratings includes donating blood, donating to charity, volunteering for community services, and so on
The first known deployment of home computer banking to consumers came in December 1980 at United American Bank, a community bank headquartered in Knoxville, Tenn. United American partnered with Radio Shack to produce a secure custom modem for its TRS-80 computer that would allow bank customers to access account information securely. Services available in its first year included bill pay, account balance checks, and loan applications, as well as game access, budget and tax calculators and daily newspapers. Thousands of customers paid $25–30 per month for the service.
Large banks, many working on parallel tracks to United American, followed in 1981 when four of New York's major banks (Citibank, Chase Manhattan, Chemical, and Manufacturers Hanover) offered home banking services,[2][3][4] using the videotex system. Because of the commercial failure of videotex, these banking services never became popular except in France (where the use of videotex (Minitel) was subsidized by the telecom provider) and the UK, where the Prestel system was used
When the clicks-and-bricks euphoria hit in the late 1990s, many banks began to view web-based banking as a strategic imperative.[5] In 1996 OP Financial Group, also a cooperative bank, became the second online bank in the world and the first in Europe.[6] The attraction of banks to online banking are fairly obvious: diminished transaction costs, easier integration of services, interactive marketing capabilities, and other benefits that boost customer lists and profit margins. Additionally, online banking services allow institutions to bundle more services into single packages, thereby luring customers and minimizing overhead.
A mergers-and-acquisitions wave swept the financial industries in the mid- and late 1990s, greatly expanding bank's customer bases. Following this, banks looked to the Web as a way of maintaining their customers and building loyalty. A number of different factors are causing bankers to shift more of their business to the virtual realm. While financial institutions took steps to implement e-banking services in the mid-1990s, many consumers were hesitant to conduct monetary transactions over the internet. It took widespread adoption of electronic commerce, based on trailblazing companies such as America Online, Amazon.com and eBay, to make the idea of paying for items online widespread.
By 2000, 80% 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. However, a significant cultural change took place after the Y2K scare ended. In 2001, Bank of America became the first bank to top 3 million online banking customers, more than 20% of its customer base.[7] In comparison, larger national institutions, such as Citigroup claimed 2.2 million online relationships globally, while J.P. Morgan Chase estimated it had more than 750,000 online banking customers. Wells Fargo had 2.5 million online banking customers, including small businesses. Online customers proved more loyal and profitable than regular customers. In October 2001, Bank of America customers executed a record 3.1 million electronic bill payments, totaling more than $1 billion. As of 2017, the bank has 34 million active digital accounts, both online and mobile.[7] In 2009, a report by Gartner Group estimated that 47% of United States adults and 30% in the United Kingdom bank online
Online banking started in the United Kingdom with the launch of Nottingham Building Society (NBS)'s Homelink service in September 1982, initially on a restricted basis, before it was expanded nationally in 1983.[9] Homelink was delivered through a partnership with the Bank of Scotland and British Telecom's Prestel service.[10] The system used Prestel viewlink system and a computer, such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone system and television set. The system allowed users to "transfer money between accounts, pay bills and arrange loans... compare prices and order goods from a few major retailers, check local restaurant menus or real estate listings, arrange vacations... enter bids in Homelink's regular auctions and send electronic mail to other Homelink users."[10] In order to make bank transfers and bill payments, a written instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Homelink system. Typical recipients were gas, electricity and telephone companies and accounts with other banks. Details of payments to be made were input into the NBS system by the account holder via Prestel. A cheque was then sent by NBS to the payee and an advice giving details of the payment was sent to the account holder. BACS was later used to transfer the payment directly.
In the United States in-home banking was "is still in its infancy" with banks "cautiously testing consumer interest" in 1984, a year after online banking went national in the UK.[10] At the time Chemical Bank in New York was "still working out the bugs from its service, which offers somewhat limited features".[10] The service from Chemical, called Pronto, was launched in 1983 and was aimed at individuals and small businesses. It enabled them to maintain electronic checkbook registers, see account balances, and transfer funds between checking and savings accounts. The other three major banks — Citibank, Chase Bank and Manufacturers Hanover — started to offer home banking services soon after. Chemical's Pronto failed to attract enough customers to break even and was abandoned in 1989. Other banks had a similar experience.
After a test period with 2,500 users starting in 1984, online banking services were launched in 1988,[12] using Minitel terminals that were distributed freely to the population by the government. By 1990, 6.5 million Minitels were installed in households. Online banking was one of the most popular services. Online banking services later migrated to the Internet.
In January 1997, the first online banking service was launched by Sumitomo Bank.[13] By 2010, most major banks implemented online banking services, however, the types of services offered varied.[13] According to a poll conducted by Japanese Bankers Association (JBA) in 2012, 65.2% were the users of personal internet banking.[13]
In 1998, ICICI Bank introduced internet banking to its customers.[16]
Virtual or online banking became a reality in Slovenia in 1997, when SKB bank launched this service under the name of SKB Net. Two years later, they were followed by the largest Slovenian bank, NLB bank, who started offering online banking services in 1999 under the name of NLB Klik. Nowadays, actually every bank in Slovenia is offering online banking services. The Slovenian Central bank's data shows that there was a rise of 5,1% in 2017 from the previous year and the number almost doubled from more than ten years ago. At the end of 2019, the number of users was almost 1 million. The number of payments is around 26 million per quarter, which means that there are more than 100 million payments made online in Slovenia every year, and another 3 million made to offshore accounts. Data from the Slovenian Central bank also show that the total value of payments in 2017 reached more than €240 million. More than 900,000 use online banking in Slovenia[19]
Virtual banking first became a possibility in 1996 with the Bank of Montreal's mbanx. mbanx was released at the very beginning of the internet banking revolution in Canada and was the first full-service online bank [20] Also in 1996, RBC started providing banking information online and had the first personal computer banking software released that year[20] In 1997, the bank ING Direct Canada (now known as Tangerine Bank) was founded with almost entirely online banking using only small cafes for meetings and very few physical branches.[21] This was completely different from how banks had operated in Canada previously. By the early 2000s, all of the major banks in Canada rolled out some form of online banking. .