WEST PALM BEACH, Fla. -
That's right-despite the fervor over online banking among financial institutions, the Internet will be replaced by something else in two years.
And if that isn't enough, here's another sobering forecast: ATMs will also be put to rest.
"If you want to use an ATM, you'll have to go to the Smithsonian," asserted one data processing provider. Instead, members will simply log-in to recharge their smart cards online, eliminating the need to visit ATMs for cash.
Sound outlandish? These were the predictions of a credit union IT manager in the Silicon Valley and a core vendor in the northeast 10 years ago.
The year was 1997, and the credit union industry was buzzing with the promise of the Net. CUs and vendors alike told The Credit Union Journal about big dreams for online services.
No wonder: Members would be able to help themselves to electronic statements, account balances and bill payment at any time of day from any place, all at a cost of $.01 per transaction to the credit union.
"The Internet will do more over the next two years than PCs have done over the last 15," prophesized core processing provider re:Member Data Services, Inc. of Indianapolis, which was acquired by Open Solutions, Inc., in 2004.
The Internet also promised to level the playing field: small institutions online would look the same as their larger counterparts. A number of players even predicted the fall of brick-and-mortar.
"The Internet will become the main channel of delivery, whether that means Internet-connected kiosks or Internet access from the television," said San Diego-based Symitar.
But credit unions in 1997 had a serious reservation about offering online services: they said the Internet wasn't a safe place to perform financial transactions. In fact, some critics favored telephone banking. (Credit unions, of course, have a place in history as Stanford FCU was the first financial institution in the world to conduct a transaction online.)
Vendors themselves disagreed about the viability of Internet security. A southern California technology provider told The Credit Union Journal that the Internet was, in fact, safe, and that log-in names and passwords guaranteed security.
Today, everyone knows that log-in credentials don't cut the mustard; instead, a decade later and credit unions are talking about layers of security that are adjusted according to transaction risk.
In the name of security, half of the credit unions that offered account access in 1997 bypassed the World Wide Web, instead offering homebanking via direct-dial, private networks.
But the direct-dial approach presented its own share of problems. One San Jose, Calif.-based credit union complained that it had to send the direct-dial software to members and help them install it, troubleshoot different operating systems and software versions, and replace corrupt floppy disks.
Consequently, that same Southern California technology provider foresaw the downfall of private network banking, predicting that credit unions would move en masse to Internet banking before the millennium-despite the painfully slow dial-up connections and crashing online banking servers that were the norm in 1997.
'Within Five Years, Everyone Will Be Using It'
In 1997, about 15% of all credit unions had a website, but less than 5% of those offered account access, according to research published by Online Banking Report. That same year, Boulder, Colo.-based Premier Members FCU, then IBM Rocky Mountain Employees FCU asserted, "Within five years, everyone will be using it."
Today, though security is still a concern, 99% of credit unions have websites and 93% of CUs feature homebanking, according to Callahan & Associates. Most members are taking advantage of homebanking. Adoption rates average at about 20% but are as high as 90% at some credit unions.
At Cornerstone Credit Union in Caldwell, Idaho, about 3% of the membership was using homebanking in 1997. President Paula Reedy predicted that adoption would spike when dial-up Internet access became more popular. Reedy was right, but even she didn't guess that dial-up would be slowly replaced by broadband, which allows members to transfer money, download transactions into financial management software and view high-impact graphics in seconds. Today, 30 % of the membership at Cornerstone CU uses Internet banking.
In 1997, Internet access wasn't the only obstacle to online banking adoption. Many members couldn't afford a personal computer. Computer prices would come down, vendors accurately predicted, making it cheaper to get online. Many credit unions offered special loans to purchase PCs.
Digital Insight, the Calabasas, Calif.-based Internet banking provider, suggested that mobile phones with screens would also present a more affordable option.
In addition, many vendors told The Credit Union Journal they were placing their bets on WebTV, which would allow frugal subscribers to watch TV and use the Internet using just one common household device. WebTV never saw overwhelming success, despite a number of facelifts over the years. WebTV was eventually subsumed by a broadband version called MSNTV in 2004.
In some ways, today's Internet offers more than anyone imagined in 1997. Few, if any, were talking about members' ability to transfer money between financial institutions or chat online with a credit union representative, for example.
And no one was talking about members viewing check images online, although Peerless Group, Inc. of Richardson, Texas, now a subsidiary of Jack Henry & Associates, Inc., claimed that credit unions could use imaging systems to quickly research checks, and that members could store the check images in special binders.
Now, the Internet has even changed the face of check images. Members can view images online, and credit unions are exchanging check images in real-time with the Federal Reserve.
