Banks are usually differentiated from other financial institutions by their principal functions of accepting deposits -- subject to withdrawal or transfer by check -- and of making loans. In recent years, however, this distinction has become blurred, as more and more non-banking companies have moved to take over the traditional business of banks (6).
Banking, in the form of making loans at interest, dates back to antiquity. It developed rapidly in the 18th and 19th century in England, primarily to support the expansion of industry and trade. The first technology to have a major impact on banking was the invention of the telegraph. This allowed banks in different cities and even different countries to communicate with each other to verify that sufficient funds were on deposit to clear financial transactions (7).
The next technology was the telephone, which put a voice to the communications. This allowed banks to talk to each other, but more importantly, it allowed customers to call in to banks and speak with bankers. This freedom of communication, however, led to problems, because bank employees were spending more time on the phone dealing with customers than they were on doing the business of banking. The improvement of telephone technology allowed for answering machines to handle questions, and this eased the burden somewhat (8).
As more and more customers became accustomed to banking, there were longer and longer lines, so the use of ATMs (Automatic Teller Machines) were created to make banking easier for both customers and employees. Customers could get money any time of day or night, and banks could control the crowds. The next step in technology, and the one which many bankers thought would pave the way for true electronic banking, was the creation of the debit card, which would eliminate the expense of writing, canceling, clearing, and storing cheques (9).
At this point in time, electronic banking i...