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The Banking Industry: Past vs. Present

24 December 2012 No Comment


Just a generation ago, managing your money was a very different affair. Whether you were looking for a loan, withdrawing money or simply needed to deposit a check, every banking activity took place in the building of the bank. Every transaction required your physical presence at the counter. Where you did your banking was entirely dependent upon where you lived. Small local banks were independently owned entities, presided over by the genteel, but imposing character of the bank manager. (Remember George Bailey, Jimmy Stewart’s character from It’s a Wonderful Life, and his evil counterpart, Mr. Potter?) The local bank manager was a pillar of the community and he could effectively control the flow of credit in a small town. He made it his business to know the business of all of his customers, and your reputation was nearly as important as your bank balance in the decision making process.

Over the course of the decades that followed, the face of personal banking began to change as banks merged and became national and international entities administered by local branches. While some people missed the personal touch and local focus of smaller banks, these changes had favorable effects for consumers. Competition between these large banks meant that the balance of power shifted a little bit in favor of the customer. Personal banking customers followed the highest returns, and convenience became a major deciding factor when choosing where to do your banking. The widespread introduction of the ATM in the late 1970s was the first great leap in the evolution of personal banking. Suddenly customers had more control and autonomy over when and how they accessed their money than ever before. Rather than waiting in line at the bank with your deposit book, a little plastic card meant that you could withdraw funds as you needed them, wherever you happened to be.

If the ATM was a big step for personal banking, the innovation of the online banking account was nothing less than a revolution. The convenience and ease of an online checking account would have been unimaginable to the customers of the 1950s. Online banking has increased a person’s choices of bank even more, as customers can now open accounts with banks all over the world which may not have a local branch within driving distance. Some banks operate entirely online, without a physical presence at all. Instead of sacrificing your lunch hour to stand in line, or rushing to make it through the doors before your branch closes for the day, you simply log onto your account from your computer at your own convenience. With online banking, it’s possible to check your balance instantly, transfer money between accounts, and pay phone, utility or credit card bills online with just a few clicks of your mouse. Most banks will also let you set up an alerts system where the bank emails or texts you to let you know if your balance is getting low, or to remind you of a direct deposit that’s coming up so that you’re never caught short.

Banking online saves you money, too. Being able to check your balance whenever you like means that you’ll be able to avoid bounced checks or overdraft fees. You don’t need to buy envelopes or stamps to send checks to pay your bills, and many banks offer a substantial reduction in fees if you do most of your banking over the Internet.

These days, you don’t even need a computer to enjoy the benefits of online banking. The latest personal banking technology, mobile banking and online checking accounts, means that customers can complete almost any banking activity using only their phones. Text banking allows customers to immediately access up-to-date account information with a simple SMS. The futuristic option of mobile deposit takes things just one step further. Just download a mobile deposit app to your smartphone, and you can even deposit checks without going anywhere near a bank. You snap a picture of the check with your phone’s camera and upload it to your account in seconds!

In the space of fifty or sixty years, the imposing and austere mahogany and marble halls of yesterday’s big banks have been largely replaced with a little mobile phone. It’s hard to think of another industry that has changed so drastically in such a short space of time. The acceleration of banking technology is still speeding up. Who knows what personal banking will look like in another fifty years?

This article was written by Lana Cooper on behalf of Conestoga Bank. Conestoga Bank, which offers online checking accounts, mobile banks and mobile deposit, is located across Philadelphia and southeastern PA, serving both consumers and businesses in the area.

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