The first big change came with the spread of ATMs in the 1970s: From that point onward, cash could be obtained 24 hours a day. Another change came in the following decade, when in 1983 the Bank of Scotland became the first European financial institution to introduce home banking.
Credit Suisse Led the Way
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Electronic banking only caught on when the internet went mainstream. The US led the boom in online banking in 1995, closely followed by the European countries and emerging-market nations like India, Korea, and Brazil.
In April 1997, Credit Suisse blazed a trail when it launched a comprehensive online banking service. The service offered an overview of accounts and safekeeping accounts, payment transactions, real-time share prices, as well as share-dealing. Other banks followed a few months later. Although Switzerland was a relatively late starter, the number of people using online banking services had risen to twice the European average by the year 2000. "Initially, Switzerland wasn't among the trend-setters in online banking," explains Andreas Dietrich, Professor for Banking and Finance at Lucerne University of Applied Sciences and Arts and the author of several studies on Internet banking. "More recently, however, things have developed extremely fast: The number of users is doubling every four years or so."
Boom in Mobile Banking
Even higher growth rates can be seen in mobile banking, where customers access their bank account from smartphones and tablet computers. Mobile banking opens up totally new horizons for bank clients. They can keep a constant eye on their account and credit card transactions – no matter where or when. What's more, they can arrange account transfers and payments at any time simply from the palm of their hand.
The annual user growth in European countries is 60 to 100 percent. It's a boom that only began with the advent of the iPhone. Around a million people have downloaded a mobile banking app, says Dietrich, but often it's just to see how it works or to watch stock market prices.
Dietrich is nevertheless convinced that "mobile banking is a lot more than a short-term trend." Not least because sales of desktop PCs and notebooks are stagnant, while sales of mobile devices are skyrocketing. In global terms, smartphone and tablet sales made up as much as two-thirds of the computer market in 2012 – on a sharply rising trend.
Trends – And What The Future Holds
The lack of direct contact with their bank advisor is what continues to put some people off making the switch to online banking. The banks are now seeking to redress the deficit by personalizing their web presence. Thus Credit Suisse clients are now addressed in person, and actively made aware of services the bank thinks might be of interest to them.
"I'm convinced that the online and mobile banking market will continue to develop," Dietrich stresses. People still use mobile banking primarily to find out their account balance, pay bills, or transfer money. But thanks to the rapid development of cell phone technology, the opportunities will steadily grow.
Speech recognition, for example, enables new, more advanced forms of service to be provided. Fingerprint technology promises greater security, and can be used to supplement existing security measures for mobile banking. Clients continue to have a user name and password, but also a card that can read their fingerprint.
The emergence of "full-service online banks," offering all services on an online-only basis and operating with no branches at all, is another likely development. Whether pure cyber banks will actually get off the ground remains to be seen. One thing is certain: The established institutions will massively expand their online services, the prime objective being to combine ease of use with optimum security.
Payment By App
Location-based apps are creating new possibilities. For example, they can be used to find the nearest ATM, or the range of properties available in a particular district. Both can in turn be linked to the bank's services.
App technology is required for mobile payment in particular, and is what lies behind the boom in mobile banking. Andreas Dietrich believes mobile payment is at the beginning of a real revolution. Some retailers have already introduced payment by e-purse. Clients with the required card can install an app on their mobile phone. When they wish to pay using their card, a barcode is requested and later scanned at the point of sale. Simplifying and optimizing this technology will take researchers a while yet.
Picture: © Credit Suisse
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Source: Bonviva Magazin 1/2014