Saturday, July 18, 2009

1986: HomeBanking Arrives

Ever since Stone Age man chiseled the first check, he has dreamed of paying bills at the touch of a button.

Okay, maybe the idea of doing banking on a computer didn't start with the Neanderthals, but it did catch fire in the Seventies and Eighties, first in Europe and then in the United States.

The Big Boys paved the cow paths in this country, familiar names like Citi, Chemical and Chase. What a concept. Enter the merchants you want to pay, the amount, the due date and voila! No checks, no stamps, no worries.

Of course, it took a regional bank and a local online service in Texas to bring to market the innovation that all home bankers longed to have and couldn't get with the Eastern Establishment banks: The Float.

Most everyone agreed the notion of banking from your keyboard in your pajamas sure was appealing. Except for one thing -- losing the cushion that checks provided known as "float" -- that period of time from when you wrote the check and the money was actually debited from your account. Which, depending on your circumstances, could be the difference between "paid" and "insufficient funds."

We thought this should be included a "must have" feature. Luckily, InterFirst, our banking partner, agreed. But rather than call it "float," they opted for "provisional payment."

As David Zent, vice-president at the Electronic Banking Support Group at InterFirst, explained at the Videotex '86 Conference:

"Provisional bill payment is similar to conventional bill payment except that the payment is always forwarded to the company, even if the customer does not have the funds in his account at the time the payment is released. Instead, the debit to the customer's account is warehoused by the bank until the date the merchant is scheduled to receive the payment. On that date the customer's account is debited."

Zent went on to say:

"Provisional Bill Payment addresses the consumer problems associated with conventional bill paying systems. As a result, more consumers are expected to participate."

HomeBanking required almost 150 screns of options, which were navigated by a combination of menus and keywords. You could begin by typing BANK, which allowed you, after using your PIN, to check your balances, pay bills or transfer funds.

There was also the option to designate recurring payments and a request a "future statement" that reflected payments authorized and not yet paid.

Despite its many forward-looking features, HomeBanking didn't find the wide audience or acceptance we all hoped it would in the late Eighties. That would have to wait for the Internet to make its appearance. But in retrospect, I count it as among our best achievements.

A newspaper and a bank teaming up for a project like this is rare in and of itself. The resulting product was something of which we could all be very proud. Hats off to Larry Groebe, who led the programming effort, and Joe Donth, who supervised.

At the time, StarText subscriber Ray Quay was authoring a column called The Electronic Cottage. He devoted the March edition to looking at the history of home banking.

Quoting Ray:

"Though the future of home banking is uncertain, it is clear (at least to me!) that home banking holds tremendous potential benefits ... Home banking has the potential to be one of the few microcomputer applications which can actually prove cost effective for general home use."

As someone who has been "home banking" via the Internet for the last decade or more, it's hard to imagine going back to writing checks, finding envelopes or buying stamps (and we know where the price of stamps have gone). It's one of the "must have" conveniences of having a PC connected to the World Wide Web.

StarText and InterFirst had it right. Just about 10 years too soon.

For more on HomeBanking, go to this 1985 post.

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