Bank to the Future!

Blog Author Tyler Baccus

Written by: Tyler Baccus, Application Support Specialist, E-Services

Published: November 9, 2015

Found in: Services

The way we used to bank before the Internet became mainstream might be considered a nightmare for some and a nostalgic experience for others. To give you an idea of what it was like, there was not one place where all of your transactions and financial activity were conveniently populated and organized at your fingertips; acquiring this information generally required excellent queuing skills, a passbook or both. This was done manually with a writing utensil, in a ledger. For you Millennials, this activity is also known as "balancing your checkbook." There were no budget tools, lists of pending and categorized transactions or account alerts to help guide and inform you. Managing your finances then required much more involvement, time and paper - LOTS OF PAPER!

The pinnacle of accessing your finances currently - mobile banking - was born out of a need, a driving force for convenience and accessibility. This didn't happen overnight; it literally took decades to get to where we are now. Where did that need come from? When did it start? We will take a look through time and history at the tech that brought us to a mobile banking and explore where we might be headed. Keep in mind like most industries, credit unions and banks all move at different speeds when adopting new technology.  

One-Hit ATM Wonder

Let's step into our way-back-machine that totally doesn't look like a DeLorean or a phone booth and go to Dallas, Texas circa 1968. The ATM has been in development since the early 1960s with limited successful runs across the pond in Europe. Docutel - a U.S. baggage handling company and one-hit ATM wonder - developed Total Teller, the first fully functioning networked ATM which revolutionized banking as we know it. What made it fully functioning was the fact it could not only dispense cash but take deposits and transfer between accounts. Its predecessors were only able to dispense cash. Financial institutions were now able to be open 24 hours a day. This was made very apparent on September 2, 1969 when A Chemical Bank in New York installed a variation of the Total Teller, called Docuteller, and advertised, "On Sept. 2 our bank will open at 9:00 and never close again." This is not the last we will here of A Chemical Bank leading the way in bank technology.   Why the ATM? Through their research, Docutel discovered people liked convenience, speed and confidentiality over personal, face-to-face interactions (this sounds uncannily familiar). The Total Teller also was the progenitor of the magnetic strip on the back of your ATM/credit/debit cards. Previous ATMs would take your bank-issued card and mail it back to you at a later date. Sadly, Docutel was a victim of its own demise due to lack of further innovation and cost issues among competing with bigger companies like IBM and Diebold in the market it created. The flame that burns twice as bright burns half as long is very fitting when describing Docutel but the impact they made is undeniable. Self-service had finally come to fruition in the financial industry. At WSECU we acquired our first ATM in 1984; and this was when our journey started.  

Press "1"

The next step in convenience and technology was telephone banking or IVR (Interactive Voice Response), the same technology that brought you voicemail, answering machines, electronic dance music, speech recognition and VoIP. The way-back-machine is taking us all the way back to 1936 at Bell Labs where the first speech synthesis project, called The Voder, was attempting to electronically synthesize human speech and lay the groundwork for what we know as telephone banking. This started as an idea to encrypt voice communication in the 1930s and ultimately developed into a multitude of advancements and inventions spanning decades.   The link between human speech and mathematics was waiting to be discovered for this to become the IVR as it is today. That discovery was made by Bell Systems and was unveiled at the 1962 Seattle World's Fair as DTMF (Dual-Tone Multi-Frequency) or the touch-tone phone; i.e., the ability to carry the audible tones generated when you press the keypad in the same range as the human voice. Think of when you call WSECU, you can press "1" to get to telephone banking - this is DTMF. Things really began to progress in the 1970s when call centers, much like the one at WSECU, began to use IVR systems to better manage high call volumes and to intelligently route callers to the right place. However, we didn't get our Contact Center until 1990 and telephone banking came shortly after. IVRs grew in complexity from simply routing calls and limited vocabulary responses to getting account balances, latest transactions, transferring money, and making payments all done with a courteous automated response on the other end. Similar to the ATM, the IVR was - and still is - able to extend the hours of credit unions and banks willing to employ its use. With the advent of mobile phones this put WSECU in the pocket of anyone with an account.  

Branches Gone Digital

Before online banking was called or became online banking, there were direct connections to a bank over the phone line using the same DTMF technology that telephone banking uses today and later on use Internet Protocol to fully become online banking. This would be like running a tin can and wire to your friend's house and later upgrading to walkie-talkies. So let's go as we travel through time to the totally radical 1980s! The year is 1981; the Internet (called ARPNET then) was still in its infancy. It was mainly used by government and research entities but was slowly growing in popularity and it was only a matter of time until the financial industry caught wind of this and saw its strategic importance for better serving members. Since there was not a standard connection or hardware to use for connecting to your bank (queue the Internet!), many of the home banking services were custom made to the financial institution needs from the ground up or they used a videotex system. These options were very expense and not easy to maintain. The first U.S. banks to employ its use were CitiBank, Chase, A Chemical Bank and Manufacturers Hanover that same year. Videotex was not around for long due to being what the Internet wasn't: centralized and easily controlled by one single provider. The a la carte solutions did not attract enough users due to only being accessible to those with financial means to buy the equipment and both were abandoned. If online banking was to succeed entry costs to access it needed to become more affordable for the average household.   Flash forward to 1995. PCs had become more affordable and the Internet has had time to work its way into 25 million U.S. households. The stars aligned, the stage was set and all that was left to do was to flip the proverbial switch. After many failed attempts by many of the bigger U.S. banks, Wells Fargo added account services to their website. In that same year, Presidential Bank rolled out with opening accounts online. This was innovation at its finest! Bank websites became more than just digital brochures hocking their products and services; they became digital branches. This is harkens back to the research done by Docutel in the 60s for their ATMs, which concluded people valued confidentiality and speed over going into a branch; online banking is exactly that. WSECU's website launched in 1996, and online banking in 2001.  

One System to Rule Them All!

I am sure most of you have heard of SMS/MMS text messages, 2G, 3G and 4G? For the next banking technologies, our stop is the year 1982 in Europe. The Casio C-80 calculator watch dominated wrists, the analog car phone was a thing and the banking industry was about to venture down a path of digital service and enlightenment - times were definitely good and the idea of mobile tech was working its way into the fabric society. The European Conference of Postal and Telecommunications Administrations created the Groupe Spécial Mobile committee and established framework and criteria that defined what digital cellular telecommunication would entail, the world needed to be able to send text, voice and data without wires. The need for a service like the public switch phones and data networks - only mobile - was growing. We needed some sort of global system for mobile communication, and thus GSM or 2G (2nd Generation) was the product of that need, the predecessor was analog and respectively called 1G (1st Generation).   Onward to 1987 when the Groupe Spécial Mobile committee established how GSM would be implemented, defined and ran. This jump-started the cellular phone industry and rallied mobile operators to get behind a single network for the time being. Think of this like a bunch of countries getting together and agreeing upon one language, all bound by the same rules of grammar and punctuation. This truly was a very unprecedented achievement. All of this hard work culminated in 1992 when the world's first text message was sent. This opened up the doors for SMS/text banking and gave users the ability to send a text message to their FI and receive a response containing their desired information. Slowly financial institutions began to roll out with this service so members could inquire about their account information without having to call or go to a branch. This was only the beginning for banking and mobile phones. The next generation will require a browser or an application (app), and more advanced hardware to run it.  

You Can Take it with You

We are close to our final stop in time with about two decades to go; 1997 is the destination. Most of the Western world was pretty keen on the idea of conducting personal business online, then somewhere along the way someone asked "What if you could take the Internet with you?" Much like the GSM standard for communication and small amounts of data needed to launch SMS/text banking, a similar standard needed to be created for displaying webpages on a mobile phone. An example of this is when you go to; this is called a WAP or Web Application Protocol. There you will find the WAP version of our Online Banking service. The intended outcome was to give you, the user, an experience that echoes the Internet you know and love on the PC only smaller. This isn't always the case; building a mobile version of a website and building and app for mobile services are two different beasts entirely, but they will ultimately culminate into one experience. It will not be for another 10 years until we see our first app, the successor to the WAP.   We have arrived in 2007 and the failure of the Pocket PC opened the doors for the new boss...same as the old boss: the smartphone, specifically the iPhone. Some of you may remember the massive brick and stylus that had all the great things smartphones have: Wi-Fi, touchscreen, Internet access and most importantly, a phone. Sadly, it was not user friendly enough for the masses. This is where the smartphone excelled with a trifecta of design, marketing and a mobile operating system, as well as the improvements of web languages like Javascript, HTML5 and CSS; it is just what we needed to bridge the gap between WAP and app. However, there is not a clear line that can be drawn that indicates when we stopped using WAP over app, most financial institutions use both! WSECU's mobile banking app hit app stores in April 2011 and has been widely used by members all over the world.   Now that we have traveled through 80+ years in time, where are we headed? By and large, technology has a tendency to converge - understanding this can make it easier to adapt when something new arises out of a necessity or convenience. What we do know is brick-and-mortar branches will not be as prevalent - or may not even exist - as the demand for mobile banking and similar services continue to grow. History tells us we will be more involved and immersed with our finances if we choose to be. I say this because the legacy technology and services are still around for those that do not adopt the new. Each progression in technology gives us more and more controls, visibility and access that are placed right in front of our face and fingertips. Perhaps a paradigm shift in how we look at currency and payments is on the horizon: crypto-currencies, wearables, Google Wallet and Apple Pay could certainly be catalysts. We are headed towards a future of convenience and automation with everything digital and mobile leading the way.  

Tyler Baccus