The Banking Revolution

[ 0 ] April 11, 2018 |

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The Banking Revolution

There is some controversy as to the location of the world’s first bank; some cite the Taula de la Ciutat in Barcelona, Spain while others contend that it was the Banco dei Medici in Italy. For the purpose of this article, we’ll trace “modern banking” to 14th century Italy and label it “Banking 1.0.

The word “bank” is derived from the Italian “banco” which translates to “bench.” In the early days of banking, merchants and lenders would negotiate credit, terms, and rates at benches (picture a work bench). If a “banker” was unable to meet obligations, his bench was broken in a symbolic show of failure. The word “broken” is derived from the Italian “rotto,” so “banco rotto” translates to “broken bank” or bankruptcy.

Though there were many innovations to “Banking 1.0” over its 600-year reign, innovation was relatively slow and had limited impact on consumers. A meticulous system of ledgers and authentications had to be maintained, and communication was by courier. “Banking 1.0” was limited by the ability to communicate and authenticate transactions.

Finally in the 1970s, “Banking 2.0” emerged with the introduction of computerization. This innovation gave banks the capability to provide accurate deposit and lending records at multiple branches and between institutions. Services, products, ease of use, and accuracy all greatly improved.

Some would call the present state of the industry “Banking 3.0.” This period is characterized by the ability for consumers to do banking practically anywhere, at any time via their mobile devices. Lightning quick internet connections and rapidly improving technology have set the stage for this capability. But, many believe we’ve just scratched the surface of what is possible, and that we’ll see more banking innovation in the next 10 years than we have seen over the past 100 years.

From benches to smart phones, banking has dramatically improved since its beginning. Through it, IAACU continues to be committed to providing our members with the latest innovations to meet their expectations for convenience and functionality. Though our team continually investigates and evaluates emerging technology, we’d really like to hear from you! If there’s something you’ve seen and would like to have done, please let us know. We’ll investigate the possibility, and if it can bring value to our members, we’ll strive to get it done.

Thank you for your continued membership and support of IAACU!

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Category: CEO Corner

About the Author ()

Sean has held the position of Chief Executive Officer at the IAA Credit Union since June of 2005. In this position, he is responsible for the overall management of the $200 million financial institution, assuring financial strength while providing maximum value to its members. Also, he ensures that the Credit Union complies with all State and Federal laws and operates within the policies and expectations of the IAACU Board of Directors. He is a 1986 graduate of Illinois State University where he received a Bachelor of Science Degree in Agribusiness with a minor in Economics. He has also completed the coursework and received the CPCU, ChFC and CLU insurance industry designations. Sean served a combined 20 years in the United States Air Force and Air National Guard as an Aircraft Maintenance Officer retiring in 2002 at the rank of Major. Sean and his wife Kim have five children and reside northeast of Eureka, Illinois in Woodford County.

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