The history of Internet banking, or online banking, is tied into the evolution of various communication technologies to access and manipulate banking accounts remotely. The idea of online banking evolved from the telephone banking system put into place in the 1980s, along with the rising prevalence of the Internet into people’s homes. While online banking experiments took place on a small scale in the late 1980s, it did not become a common practice until the 1990s.

Distance Banking
Before the Internet became the chosen tool for remote banking, distance banking was done via telephone. Home banking, as it was called, utilized the phone keypad to send tones to the bank computer. In 1981, several banks centered in New York offered home banking services to customers. A British bank offered the first online banking in 1983 using a computer connected to the phone line with the information displayed on a TV screen. Customers could see their statements, recent transactions and transfers, but they could not manage transactions remotely.

The 1990s
It wasn’t until computers became affordable and present in many homes that the common desire for online banking really emerged. Combined with the advances in Internet connections, Web design and encryption programs for safety, online banking emerged as an option for banking clients. Internet banking services as we know them today were made available by Stanford Federal Credit Union in 1994.

Security
Initially, online security was limited to the knowledge and technology of the newly emerging systems. General security concerns were enough to make consumers anxious about doing banking transactions. Increased reports on invasive spyware, viruses, identity theft and outright theft by hackers fueled even more concern about the safety of banking accounts and the integrity of the online banking system. Today, banking companies spend millions in research and development to create the best online protection programs available. These programs encrypt the information being transmitted online so that only the chosen senders and receivers have access to the sensitive information.