Understanding Electronic Banking

• Author: Lloyd G. Waller/Corin Bailey/Stephen Johnson
• Profession: Senior Lecturer in Methodology and Political Sociology and Head/Chair of the Department of Government at the University of the West Indies, Mona, and Director of the Centre for Leadership and Governance, a research and policy unit within the Department of Government, UWI/Fellow at the Sir Arthur Lewis Institute of Social and Economic Studies, ...
• Pages: 1-20

Understanding

Electronic Banking

THE HISTORY OF E-BANKING

Electronic banking saw its genesis during the 1960s and

1970s when the telecommunications industry in the United

Kingdom began experimenting with ways to send closed

captioning information across television streams using

    

spawned interest in the technology as it could be applied

to other services. Similar technology was developed by the



to send information both ways using a telephone connection

and a television. This new service was packaged and

marketed as Prestel, a revolutionary way to communicate

visually through videotex. By the early 1980s, several banks

in the United States began offering home banking services

through this videotex system. This activity slowly evolved

and became known as ‘electronic banking’.

Electronic banking was introduced to the United States

in the 1980s (Cronin 1997), when several major banks,

including Bank One, Citibank, Chase Manhattan, Chemical

and Manufacturers Hanover, began offering home banking

services to their clients. By 1983, Chemical Bank introduced



service’ utilising a home computer, the required software,

and a modem; users could perform functions such as

tracking budgets and balancing chequebooks. This was then

licensed to banks around the country and, in 1985, it was



2 ¦ FEAR OF CYBERCRIME

Pronto Business Banker. Spectrum is another home banking

service that was developed in 1985 by Chase Manhattan

and performed regular banking functions as well as allowed

users to sell and buy stocks through a Chase broker. In 1983,

the Bank of Scotland collaborated with the Nottingham

      

banking service in the UK. Shortly after, Barclay’s began

offering a similar service to its clients.

  

which a viable and cost effective version of electronic banking

would emerge. At the time however, the cost was prohibitive

and required large amounts of capital to implement that

was never recouped. The high degree of customisation that

was necessary to install the hardware as well as the cost of

acquiring and maintaining the software was out of the reach

of most customers. While the banks tried their best to create

a usable service, home banking struggled to take off because

a large part of the success was dependent on factors outside

their control. Allen (1984), observed that ‘truly user-friendly

software must be developed, home computer penetration

     

links (phone lines or cable) must be in place’ (1). When the

     

of them suffered from low subscription levels and failed to

   

and continued to preoccupy the imagination of bankers for

decades to come.

In 1986, Nadine Wandzilak reported in the Network World

on what she proclaimed to be the ‘second wave’ of videotex

in the form of Covidea, a collaboration between AT&T

and the Bank of America to provide a commercially viable

way to bank from home, as previous initiatives were too

expensive with terminals costing up to US$600. The new