Online Banking

Online Banking

Marta Vidal (Complutense University, Spain) and Javier Vidal-García (University of Valladolid, Spain)
DOI: 10.4018/978-1-4666-9908-3.ch013
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Abstract

Over recent years, technological developments in the Information and Communications Technology industry have ensured that the internet has become a significant part of man's way of life. For instance, there is tremendous popularity on the use of social sites, electronic commerce, and internet banking. Such use of the internet has created a global network in a cyberspace that connects everyone together regardless of one's geographical location, economic status, religion, or race. As a result, the trade sector, the finance sector, the media industry, and all other sectors that enable the world to run have had to depend on technology for normal function, and on the internet as a way of associating with the public. For instance, the fact that banks have stayed in the forefront of technological advances has led to significant value addition, and improvement of their products and services offered. Therefore, this paper discusses the use of technology in the finance sector, particularly internet banking in today's world, and the various factors associated with it.
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Background

Electronic banking is a precursor for home banking services the former entailing the use of the touch-tone telephones. In the late 1970’s home banking was a common way of conducting financial services without the physical presence at a banking hall (Xu et al., 2006, p. 19). During this time, financial organizations referred to this service as home banking although the whole process depended on the use of phones. Financial services consumers were allowed to pay their bills, transfer money or check their account balances while at home via touch-tone telephones. Consequently, this important development in the financial industry led the invention of software that allowed customers to the bank to connect with their local bank through a dial-up connection. In the late 1980s, this service still unpopular because of a number of reasons. Firstly, the home banking service was only limited to allow certain transactions that the bank and the client had to agree initially. Secondly, this service required heavy investment in technology at the time, and only a few banks could manage to fund such costs. Finally, home banking was not popular after 1985 because the use of PCs was not extensively spread in many households (Laopodis, 2013, p. 26). Examples of banks that offered home banking services during this period include world’s major bank that is Citibank, Manufacturers Hanover and Chase Manhattan. Noteworthy, all these financial institutions had roots of origin in America; therefore, illustrating the contribution of the United States in the e-banking services.

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