Study Questions

Twenty years ago - this chapter would not have existed. For someone who has been in this industry since 1972 - the changes have been amazing. As I sit at my desk - creating this web page (also something that didn't exist 10 years ago) - I can not only check on balance at my financial institution but I can - pay bills, transfer money from one account to another, apply for a loan - I can even do most of my non-grocery shopping from the comfort(?) of my computer chair.

And what I don't actually buy or do - I can verify - look for - or secure additional information.

The Automated Teller Machine - or ATM was an amazing device. No longer - it was claimed - would we need tellers and 'brick & mortar' branches - for a customer could do everything at the ATM that they could do at the teller window. Well, ok, not quite - but they did accept deposits (as long as it was checks or just a thin stack of bills) - and they did allow for withdrawals, which was about the same as cashing a personal check - and some even gave change. As a matter of fact there are banks - though not many in this part of the country - that accept most of their deposits through a network of shared ATM's (much as we allow withdrawals here).

And yet - it took 5+ years for the ATM to catch on. In those earlier days - in most of the country - the idea of 'sharing' an ATM (or anything else) was either not allowed - or had not caught on. In many places - there was an ATM on every corner - and some places (like New York City) not only was their an ATM on every corner - there were groups of ATMs on every corner. Since sharing was not allowed - if your were a Chase customer - you had to use the Chase ATM - which might be right next to the CitiBank ATM. In fact, on one of my visits to New York in those days long ago - I came across a corner that had 12 ATMs - sitting next to each other - all waiting for someone to use them.

Perhaps even more important to the early development of Electronic Banking is the use of the Magnetic Stripe Card - what we now more commonly refer to as a Credit and or Debit card. The early Credit Cards - had only the raised numbers that we are so familiar with - and all the charge tickets where sorted based on the imprinted card number. Do any of you remember the 'zip-zap' machines that the sales clerk placed your credit card on - put the sales slip over that - and used the machine with the across and back motion to imprint the sales slip? Ok - if you remember those - you might be as old as the hills.

There was NOTHING electronic about those early days - all paper processing. But it did get we consumers used to a new way of doing things. NO longer did we have to pay cash or write checks (ok does anyone remember checks before MICR lines?) for our purchases. We could just use the credit card. Of course - there was even a drawback to that. There was a time - in the history of this electronic evolution that you had to carry a credit card - for each store or gas station that you might want to visit. Retail stores had credit cards (Sears, JC Penny's, Wards (remember them) LONG before the Banking Industry came up with the idea of MasterCharge or BankAmericaCard. These new 'bank' credit cards, of course, allowed you to carry one card for your credit purchases - a card that could be used at more that one store - though not every store would accept them.

Today, of course all that has changed. Not only do we have VISA - but it can also serve as a Debit Card - for those times that we really have enough money in our accounts to actually buy what we want and not have to put it on a credit account.

We are all pretty much familiar with what the Debit card is and how it works - but there is a long history behind the history of electronic banking. Today, we take it pretty much for granted that once we set up a direct-deposit or automatic drafting, that our funds will be moved in the manner we wanted. Just remember that hasn't always been the case.

Even Home Banking - has gone through a number of changes. At one point - it was limited to picking up the phone - calling a live person at the Telephone Information Center (we didn't know what a 'call center' was) to have them make a transfer - or even pay a bill for us.

We can still use the phone today - but seldom do we need to talk to a live operator - we just respond to a menu to accomplish what we need.

Even more common now - is the use of the PC to accomplish all of our banking needs. Just as you are taking this course - sitting at home (or at the office) - you can take care of NEARLY ALL of your financial transactions. Yes, you can do most banking - you can buy or sell stocks - etc. but I don't believe that you can deposit a check your neighbor gave you for breaking your window with the golf ball - or cash-in your children's' piggy banks - but everything else can be done from your home.

Consider the impact of electronic banking on the Commercial customer. For most consumers - it is a convenience that we have grown accustomed to - and wouldn't want to give up. For the large commercial customer - processing thousands or even millions of payments and/or sales a day - it would be impossible to live without.

There is an old adage - "Time is Money" - and no place is this more true than in the processing of financial transactions. In a business that knows that 'float' is a waste of time/money - the faster we can process - the less time/money we waste. I am of the opinion that without electronic banking at the commercial level - that it would be nearly impossible for firms to grow as large and as efficient as they have.

We haven't even talked much about the lending side of Electronic Banking. Not only can I apply for a Credit Card - or car loan - or home loan - but the Bank - can do most of the verifications necessary electronically as well. Credit Reports - that used to take days to receive by mail - hours by fax - now appear instantly, in the software that accumulates all other necessary data and even - with the use of scoring - helps make the lending decision. Funds are electronically transferred from the bank to the seller.

Again, in a change from the 'old days', Automobile dealers have had to change the way they process cars for delivery. Back when credit applications took days to process - the car dealer would have that same time to get your new car ready for delivery to you. Cars came in from the factory - that still need a number of last minute - MAKE READY - things that needed to be done before the car was ready for you. (Silly things like making sure there was oil in the engine, etc.) Now, since you can apply and be approved in minutes - you expect the car to be ready to take home as soon as you sign the papers - so dealers have had to do 'make ready' BEFORE the car is sold - they don't have time to wait until later.

Consider all these electronic banking services - from two points of view, you as the consumer and you as the bank employee. Is there a difference in those perspectives? How about security? As a consumer, we want our funds to be secure and our transactions to process as we expect - but it sure is a pain to have to log-in every time we want to do something.

And passwords - why are some only four digits - while others are 6 or 8 with a combination of alpha and numeric characters? This difference - may mean that we must have multiple passwords - and it would be nice to have only one. Of course, only one - means that if someone can duplicate our password - they have access to ALL of our accounts etc.

Review the text information on Cash Management, etc. Which of these services are of use to Commercial Accounts - and which relate only to personal or family accounts.

Are there some services that benefit both the business and the individual? Direct Deposit - comes to mind. The individual customer has their paycheck deposited the first thing on the morning of payday - and didn't have to go to the bank in the rain to make the deposit. The business - doesn't write paychecks - doesn't have to reconcile that account - there are NO outstanding checks to deal with later.

ASSIGNMENT:

Summarize - (Web References aren't required but may be used) - what you have learned from this class. Each of you brings a different job history and set of experiences to this class - and I am interested in knowing what you found valuable about the material provided - either from the text, this class Website or other Websites that you visited.

Research paper must be emailed to the instructor by Friday of the fifteenth week of classes.