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Online Banking Grows on Mobile Devices/The Internet and ATMs Replace Branches and Tellers, Business and Industry Trends Analysis

Banks have learned that combining the convenience of online banking with a chain of branch locations and ATMs allows them to fill the entire range of many customers' needs.  This is similar to the trend among major retailers of combining ecommerce and physical storefronts, thereby creating synergies between bricks and clicks.  Virtually all banks now have web sites where customers can monitor the status of their accounts, including checking, savings, investments and loans; make money-transfers to pay bills; and apply for services online.  Online banking has been an enormous success, and was boosted even further by the Coronavirus pandemic, as people curtailed trips to physical bank offices.
Thousands of U.S. branch locations have closed in recent years.  Online banking, in combination with ATMs, goes a long way to fill the gap left by fewer brick and mortar bank locations.  The end result is greater operating efficiency for banks.  Nonetheless, providing online banking poses operational costs and challenges, including security and hacking issues. 
The popularity of mobile and online banking has enabled a highly competitive segment within banking known as “challenger banks” or “neobanks.”  These are companies that offer traditional bank services, such as deposit accounts and debit cards, but have no physical locations whatsoever.  In an effort to build market share, they often offer higher interest rates on deposit accounts, generous loyalty rewards and other perks that exceed those of traditional banks.  This is a global trend, and it is being fostered by “open banking” laws and technologies that make it easy for new challenger banks to startup.  Among the biggest players in this sector are Ant, in China; Revolut, in the UK; as well as Chime and Brex in the U.S.
E*Trade Financial, a major online stockbroker, entered the online and electronic banking field in a big way.  It owns a nationwide system of ATMs under the E*Trade brand and has a rapidly growing base of online bank deposits.
Brick and mortar branches still offer a few services that online banks cannot, such as cashier’s checks and safe deposit boxes, and a large percentage of customers want to know they can walk into a branch for assistance when needed.  Bank of America has opened a small number of employee-free branches, where customers can use ATMs and converse with remote tellers via video phones.
Security of online and mobile banking remains a daunting challenge, and banks are struggling to attempt to stay ahead of online fraudsters.  Bank of America offers SafePass, a 6-digit, one-time passcode sent as a text message to customers’ smartphones which can then be used to authorize fund transfers, administer the online payment system and receive higher transfer limits.  Major security software providers include RSA, the security division of EMC Corporation (, Broadcom, which acquired Symantec in 2019 ( and Entrust (
Biometrics are becoming more common with regard to smartphone security.  Customers by the millions at Wells Fargo, Bank of America and JP Morgan Chase use fingerprints to log into their bank accounts via smartphone.  Retinal scans are also in use at Wells Fargo for corporate accounts.  In addition, Citigroup uses voice recognition to verify its credit card customers.  However, the most advanced technologies being applied to mobile and online account and payments security are now based on artificial intelligence (AI) and machine learning (ML).  One of the most useful developments is “behavioral analytics.”  This is the application of ML to compare a customer’s activities in making a current transaction to the customer’s behavior patterns in previous transactions.  For example, a signal of fraud is if the user misspells words or otherwise enters data very differently than his/her known habits.  ML systems can analyze such patterns and flag potential fraud with lightning speed.

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