The history of digital banking

Doing our banking at home is now totally normal for most of us. Thanks to our laptop or smartphone, we can access our bank any time. We pay bills, open a pillar 3a account or invest in stocks – all with just a few clicks. However, it took a long time to get here: find out which historical events have influenced the history of banking, from the first bills of exchange to digital banking.

To understand the history of digital banking it’s worth starting at the very beginning, with the term bank itself. The word comes from the Italian “banchi” and refers to the benches used by merchants and money changers in the Middle Ages. It was not safe for sailors who often traded in the East to carry their gold and silver coins with them on journeys lasting several months. In the 11th century, the Italians therefore developed a new form of payment called a bill of exchange, a revolutionary concept for the time. When a transaction was executed, the buyer handed over a document to the seller with which they could collect the agreed sum from the “banchi.” And so it was that the world’s first banks were created. Centuries followed in which the banking system was dominated by stationary institutions in which our financial transactions were processed.

Can you remember the moment when you first withdrew money from an ATM? The invention of the ATM was a decisive step towards the emergence of digital banking. The first ATM was opened in London in 1967 and Switzerland received its first ATMs the same year.

In addition to withdrawing money from their own bank, clients could now make use of selected services from other institutions. The first ATM was developed by John Shepherd-Barron, who was responsible for printing banknotes and stocks at the De La Rue security printing company. The technology was highly innovative because data between the ATMs and the central processing unit was exchanged electronically rather than via punch tape.

From the 1980s onwards, innovations in digital banking picked up speed. The Bank of Scotland was the first bank to provide electronic home banking services to its clients in 1985. The first website for banking services was launched by Stanford Credit Union in 1994 and is a milestone in the history of digital banking. From then on, the spread of internet banking was unstoppable, with more and more private customers starting to use digital services.

When Apple launched the first iPhone in 2007, not only did it revolutionize the way we communicate, this new type of portable device was also an innovation driver that accelerated the development of mobile banking, facilitating and simplifying access to banking services on our smartphones.

Although the global economic crisis of 2008 was a difficult time for many bank customers, it did not disrupt digital banking. According to the American Bankers Association, online banking went mainstream in 2011, with a majority of Americans aged 55 and over already preferring online banking over visits to the branch.

According to a 2021 study by the Lucerne University of Applied Sciences and Arts, 90 percent of the Swiss population now use online banking services. Services such as payment with TWINT, which was established in Switzerland in 2016, have also contributed to the success of digital banking.

But the digitalization of the banking sector is still far from over. Read our article “What are digital assets?” to learn which trends will shape the industry currently and in the future.

This article has covered much of the general history of banks and their digitalization. UBS has also played a defining role in this worldwide development and has its own unique story to tell. Test your knowledge and find out which milestones have influenced the history of our bank.