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HISTORY OF BANKING TECHNOLOGY

“It all started with a vision to bring to banks a faster, better and less expensive way to process their daily work. Computers were in their infancy and much of the work was posted manually or via IBM punch cards. It was hard work. When my father Harold began his journey, he could not have dreamed about the technology that is available and utilized by FSI today,” reflects Jack Schunke, Chairman and CEO of Financial Services, Inc.

Banking technology has changed as much within the lifetime of most of the readers of this article as it did in the 100 years before they were born. The invention of the telegraph in the 1840’s enabled regional stock markets and banks to compete on a level playing field with New York banks. Ninety years later, the first tabulating machines came into use in banks. A real revolution began in the 1950’s (FSI opened in 1954) when computer-driven automation was introduced. Bankers, facing an increased volume of transactions in a booming post-war economy, realized that information handling could be automated, eliminating error-prone manual input. The punch card era followed.

The 1970’s saw another revolution with the introduction of electronic payment technology. Branches were equipped with dedicated, task-specific computers such as the NCR 270. The first nationwide credit card and electronic funds transfer systems were built. ATM cards came into widespread use. Now, finding a parking spot, getting the baby out of the car seat and heading into the branch just to wait for your money is a thing of the past. It’s hard to remember in today’s technologically-savvy era a time when you couldn’t transfer funds via the telephone or stop at an ATM to deposit or withdraw money.

Starting in the early 1980’s, the introduction of PC’s to the workplace enabled banks to increase productivity and to develop new, cost-effective applications that did not rely on mainframe computing power. At the same time, the rise of the World Wide Web and the Internet in the 80’s and 90’s brought about another revolution in banking. Consumers can pay their bills from their home PC’s, access their balances on their cell phones, apply for loans online, and draw on their bank accounts immediately at retailers’ point-of-sale terminals.

Jack Schunke remembers when punch cards led to mainframe computers and eventually to a personal PC on every employee’s desk. He reflects how stand-alone PC’s were linked by networks, and how those early, point-to-point networks were supplanted by newer technologies.

His Rolodex has been replaced by a PDA, his radio with an iPod, his AAA road maps with a GPS navigator. He says, “There’s more computing power in the digital picture frame on my desk than FSI ever had in its first 10 years of existence!”

In contemplating the future of banking technology, Schunke says, “What we will see in the next 10 or 20 years will surprise us as much as did the developments of the last quarter-century. Banking won’t look like it does today, and the bankers who keep up with the changes and effectively manage their technology investments will come out on top.”