One of the world's first direct banks was
First Direct, which launched telephone banking in the United Kingdom on 1 October 1989. A subsidiary of the then
Midland Bank, it pioneered the concepts of no branches and 24-hour service through a call center. The commercialization of the Internet in the early 1990s was the biggest driver in the creation of fully direct banking models. In the 1990s, internet-only banks or "virtual banks" appeared. These banks did not have a traditional banking infrastructure, such as a branch network, a cost-saving feature that allowed many of them to offer
savings accounts with higher
interest rates and
loans with lower interest rates than most traditional banks. However, there was initial consumer hesitation in conducting monetary transactions over the Internet, especially with an entity that they could not deal with face-to-face. One of the first direct banks in the United States was the
Security First Network Bank (SFNB), launched in October 1995, and was the first direct bank to be insured by the
Federal Deposit Insurance Corporation. The direct bank model was used by many of the
challenger banks created in the UK during 2015–2018. ==See also==