Precursors The precursor to the modern online banking services was distance banking electronically and by telephone since 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 lines.
Emergence of computer banking The first home banking service was offered to consumers in December 1980 by United American Bank, a
community bank with headquarters in
Knoxville, Tennessee. United American partnered with
Radio Shack to produce a secure custom modem for its
TRS-80 computer that allowed bank customers to access their account information securely. Services available in its first years 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 Bank, and
Manufacturers Hanover) offered home banking services, using the
videotex system. Because of the commercial failure of videotex, these banking services never became popular except in France (where millions of videotex terminals (
Minitel) where given out by the telecom provider) and the UK, where the
Prestel system was used. The first videotext banking service in France was launched on December 20, 1983, by CCF Bank (now part of HSBC). Videotext online Banking services eventually reached 19% market share by 1991 The developers of United American Bank's first-to-market computer banking system aimed to license it nationally, but they were overtaken by competitors when United American failed in 1983 as a result of loan fraud on the part of bank owner
Jake Butcher, the 1978 Tennessee Democratic nominee for governor and promoter of the
1982 Knoxville World's Fair.
First Tennessee Bank, which purchased the failed bank, did not attempt to develop or commercialize the computer banking platform. In 1996
OP Financial Group, a
cooperative bank, became the second online bank in the world and the first in Europe. The attraction of online banking is 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. In 1995, Wells Fargo was the first U.S. bank to add account services to its website, with other banks quickly following suit. That same year, Presidential became the first U.S. bank to open bank accounts over the internet. According to research by Online Banking Report, at the end of 1999 less than 0.4% of households in the U.S. were using online banking. At the beginning of 2004, some 33 million U.S. households (31%) were using some form of online banking. Five years later, 47% of Americans used online banking, according to a survey by Gartner Group. Meanwhile, in the UK online banking grew from 63% to 70% of internet users between 2011 and 2012. By 2018, the number of
digital banking users in the U.S. reached approximately 61 percent. The penetration of online banking in Europe has been increased as well. In 2019, 93 percent of the Norwegian population access online banking sites, which is the highest in Europe, followed by Denmark and Netherlands. Across Asia, more than 700 million consumers are estimated to use digital banking regularly, according to a 2015 survey by
McKinsey and Company. 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. 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. The early 2000s saw the rise of the branch-less banks as internet only institutions. These internet-based banks incur lower overhead costs than their brick-and-mortar counterparts. In the United States, deposits at some direct banks are FDIC-insured and offer the same level of insurance protection as traditional banks.
Neobanks are branch-less banks in the United States which are not FDIC-insured.
First online banking services by region The United Kingdom 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. Homelink was delivered through a partnership with the
Bank of Scotland and British Telecom's
Prestel service. 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." By 2010, most major banks implemented online banking services, however, the types of services offered varied.
Hong Kong In Hong Kong, the term "virtual bank" usually excludes the internet banking or online banking (often termed "eBanking", "iBanking", etc) services provided by traditional banks which serve primarily via physical branches. The
Hong Kong Monetary Authority defines "virtual bank" as a bank which primarily delivers retail banking services through the internet or other forms of electronic channels instead of physical branches. The first virtual banking license in Hong Kong was issued in 2018. Virtual banks are subject to the same set of supervisory requirements applicable to conventional banks
India In 1998, ICICI Bank introduced internet banking to its customers. India's online banking system includes the
National Electronic Funds Transfer (NEFT) and
Real-time Gross Settlement (RTGS), which are overseen by the
Reserve Bank of India (RBI) and the
Immediate Payment Service (IMPS), which is run by the
National Payments Corporation of India (NPCI).
Brazil In 1996, Banco Original SA launched its online-only retail banking. In 2019 new banks began to emerge as the
Conta Simples, focused only for companies.
Slovenia 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
Canada 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 Also in 1996, RBC started providing banking information online and had the first personal computer banking software released that year 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.
Ukraine Remote customer service of banks via the internet or Online banking (e-banking) in Ukraine was introduced more than two decades ago. Legal entities have been using the remote control of bank accounts since the mid-1990s. PrivatBank, which launched the “Privat24” system in 2000, became a pioneer in retail online banking. Since 2000, most financial institutions have been actively implementing online offices and web banking. 2007 - the number of Ukrainian banks that introduced Online Banking exceeded 20. 2018 - the ability to manage accounts and make transfers online is available in almost all financial institutions in Ukraine. Nowadays, the list of Internet banking services, with rare exceptions, repeats the entire product line of banks. With the help of Internet banking (IB), you can not only control the movement of funds in their accounts, but also perform more complex operations: for example, order a payment card or open a deposit account, repay the loan, and recently it became possible to buy and sell currency. The rapid development of Internet banking in Ukraine is provoking the growth of Internet users. It is important to mention that the largest functionality, more than 40 options - from transfers and opening deposits to home accounting and purchasing tickets are available in PrivatBank. There are 37 options in the Internet banking system of the First Ukrainian International Bank, 35 - in Alfa-Bank. One of the most popular services in which Internet banking users are interested in the ability to pay remotely for utilities.
Macedonia Compared to several years ago, when the people living in Macedonia had to go directly to the banks to perform financial transactions, today there is a widely functional e-banking system. Macedonian banks today offer conventional e-banking services, electronic products including debit/credit cards and e-trading and contemporary electronic services like internet banking and online investing. What is important when it comes to e-banking is the trust in banks, usability of the platforms and the overall marketing for e-banking from banks. Moreover, it's also important to constantly update the e-banking services. One successful example regarding the above-mentioned characteristics in Macedonia is “Stopanska Banka” AD Skopje. In the country, several factors significantly influence the level of adoption and usage of e-banking services, such as age, level of education and complexity of the e-banking services offered by banks. Naturally, elderly clients use e-banking services less than younger people. In addition, the level of education has a significant influence on the level of usage, meaning that the higher the education level, the more likely is for the citizen to use e-banking services. As for the satisfaction, citizens are generally more satisfied with the e-banking services offered by various banks when they have a diverse portfolio of services and offer fast and simple completion of transactions.
Cook Islands The Bank of the Cook Islands introduced online banking in 2015, under the leadership of
Vaine Nooana-Arioka. ==Operation==