22 February 1999 - First internet-only bank

Digital Innovation Days

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On the 22nd of February, 1999, the First Internet Bank of Indiana (First IB) opened its virtual doors to the public. This was the first state-chartered FDIC-insured institution to operate only through the internet. Marketed as the first “extended value online bank”, it provided a full range of real-time internet banking products as well as personalised interactive services. Today, it offers services in all 50 states where customers can have checking and savings (both regular and money market) accounts with competitive interest rates. Besides this, First IB offers credit cards, instalment loans, mortgages, and personal lines of credit.

Sitting at the intersection of finance and technology, First IB introduced a branchless financial institution that conducted transactions over the internet exclusively. This was at a time when only around 5% of the world population had access to the internet and only one-fourth of all U.S. banks had websites, with very few offering any kind of online banking services. To even consider that technology could do banking better than well-established financial organisations was a downright outrageous idea at the time to many. Interestingly, First IB was able to offer higher interest rates on deposits and charged no fees for most of its services since it did not have to maintain any branches and had lower overhead than most traditional banks. Moreover, such a bank has fewer access points than a brick-and-mortar structure, leading to stronger security.

First IB made banking available and convenient outside of the regular hours and introduced a completely new style of banking. Above all else, this venture signifies how efficiently technology can rival traditional, non-technical solutions - even when masses are sceptical about its success initially. Additionally, the idea of First IB reinforces how technology is truly meant to be employed - to bring convenience to the lives of people.

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