The Demo Site

1939

Bank automation started as early as 1939 with the invention of the ATM by Luther George Simjian (1905-1997) from Turkish origin.

Simjian came up with the idea of creating a hole-in-the-wall machine that would allow customers to make financial transactions. The idea met skepticism but he persuaded what is now Citicorp to give it a trial. After six months, the bank reported that there was little demand. "It seems the only people using the machines were a small number of prostitutes and gamblers who didn't want to deal with tellers face to face," wrote Simjian.

1960

ATM predecessor installed: New York's First National City Bank (now CitiBank) installs a Bankograph in several branch lobbies. The idea is for customers to pay utility bills and get receipts without having to see a teller.

1967

Cash dispensing machine at Barclay's Bank in London. June 27

On June 27 1967 De La Rue wins the race to unveil the first machine, drawing crowds to the unveiling.

The concept is developed by John Shepherd- Barron. He came up with a self-service machine which dispenses paper currency on a 24/7 basis. The first of this type of machines will be installed outside a north London branch of Barclays Bank in 1967.

It uses paper vouchers bought from tellers. The machine is called the De La Rue Automatic Cash System, or DACS.

1968

The concept of the ATM established by Wenzel.

Card-eating: Barclays and a few other banks introduce a machine that encodes cash on plastic cards purchased from a teller. The problem is that the machine always eats the cards, and customers have to buy new cards if they want to make more transactions.

1969

First use of ATM magstripe cards: Docutel installs its Docuteller machine at New York's Chemical Bank. The installation marks the first use of magnetically encoded plastic.

Chemical Bank's ad campaign announces: "On Sept. 2, our bank will open at 9:00 and never close again!"

Other manufacturers get into the game, but Docutel is the first to apply for a patent. Docutel is later credited by the Smithsonian’s National Museum of American History as being the ATM’s inventor. But most people in the industry recognize Docutel’s first machine as the first modern magstripe machine.

Donald C. Wetzel is given credit for developing the Docutel machine, which is initially met with resistance from bankers. Bankers say they’re concerned about the machine’s cost, which is about $8,000 more annually than a human teller. The bankers also fear that customers won’t like having a machine handling their money.

1971

First true bank ATMs: Docutel introduces its Total Teller, the first true fully functioning bank ATM.

Omron (Japan) installs the first On-line cash dispenser.

1973

Docutel rewarded a patent for the ATM.

Proliferation begins: By 1973, 2,000 ATMs — mostly from Docutel- are operating in the United States. They sell for about $30,000 each.

Diebold begins work on the development of its TABS 600 with plans for an off-line prototype.

1974

Diebold’s first TABS 500 machine, an off-line version, is installed at a bank in Atlanta.

Diebold develops the TABS 550, an on-line and off-line version. The flexibility of the machine makes it unique and more marketable to banks.

The TABS 600 also is developed.

1977

Chungho ComNet Co., Ltd. begins developing Teller Machines for banks.

1978

The first IBM-compatible Diebold machine is installed at a bank in Indianapolis.

1979

Chungho ComNet Co (Korea) begins selling Cash Dispensers

1983

Chungho ComNet Co (Korea) begins selling On-line Teller Machines. Machines like this now have a direct connection via telephone lines with the bank's mainframe computers. In later years this connection is regarded as too high risk open for fraud and the machines' records will only be updated once to several times a day.

1994

ICL, the IT services company, has designed the first cash dispenser (CD) with a bill paying facility.

The new CD incorporates a barcode scanner, which allows customers to pay bills automatically from their bank accounts, as well for traditional cash withdrawals and to check account balances.

Banque du Caire, Egypt’s third largest bank, is the first organisation to adopt the new technology in a bid to reduce queues in branches and offer customers a more convenient service. ICL will design and integrate 100 new cash dispensers for the bank in a deal worth £2.4million.

The first people to be able to use the service will be customers of an Egyptian national mobile phone network. Their phone bills will incorporate a barcode holding details of the amount due, as well as their bank account number at the Banque du Caire. The customer simply sweeps the barcode over the scanner at the cashpoint, keys in their PIN number and the bill is paid.

Banking activities were sufficiently important in Babylonia in the second millennium b.c. that written standards of practice were considered necessary. These standards were part of the Code of Hammurabi the earliest known formal laws. Obviously, these primitive banking transactions were very different in many ways to their modern-day counterparts. Deposits were not of money but of cattle, grain or other crops and eventually precious metals. Nevertheless, some of the basic concepts underlying today’s banking system were present in these ancient arrangements, however. A wide range of deposits was accepted, loans were made, and borrowers paid interest to lenders.

Similar banking type arrangements could also be found in ancient Egypt. These arrangements stemmed from the requirement that grain harvests be stored in centralized state warehouses. Depositors could use written orders for the withdrawal of a certain quantity of grain as a means of payment. This system worked so well that it continued to exist even after private banks dealing in coinage and precious metals were established.

We can trace modern-day banking to practices in the Medieval Italian cities of Florence, Venice and Genoa. The Italian bankers made loans to princes, to finance wars and their lavish lifestyles, and to merchants engaged in international trade. In fact, these early banks tended to be set up by trading families as a part of their more general business activities. The Bardi and Peruzzi families were dominant in Florence in the 14th century and established branches in other parts of Europe to facilitate their trading activities. Both these banks extended substantial loans to Edward III of England to finance the 100 years war against France. But Edward defaulted, and the banks failed.

Perhaps the most famous of the medieval Italian banks was the Medici bank, set up by Giovanni Medici in 1397. The Medici had a long history as money changers, but it was Giovanni who moved the business from a green-covered table in the market place into the hall of a palace he had built for himself. He expanded the scope of the business and established branches of the bank as far north as London. While the Medici bank extended the usual loans to merchants and royals, it also enjoyed the distinction of being the main banker for the Pope. Papal business earned higher profits for the bank than any of its other activities and was the main driving force behind the establishment of branches in other Italian cities and across Europe.

Much of the international business of the medieval banks was carried out through the use of bills of exchange. At the simplest level, this involved a creditor providing local currency to the debtor in return for a bill stating that a certain amount of another currency was payable at a future date often at the next big international fair. Because of the prohibition on directly charging interest, the connection between banking and trade was essential. The bankers would take deposits in one city, make a loan to someone transporting goods to another city, and then take repayment at the destination. The repayment was usually in a different currency, so it could easily incorporate what is essentially an interest payment, circumventing the church prohibitions. An example shows how it worked. A Florentine bank would lend 1000 florins in Florence requiring repayment of 40,000 pence in three months in the banks London office. In London, the bank would then loan out the 40,000 pence to be repaid in Florence at a rate of 36 pence per florin in three months. In six months, the bank makes 11.1 percent that’s an annual rate of 23.4 percent. It is also interesting to note that a double-entry bookkeeping system was used by these medieval bankers and that payments could be executed purely by book transfer.

During the 17th and 18th centuries the Dutch and British improved upon Italian banking techniques. A key development often credited to the London goldsmiths around this time was the adoption of fractional reserve banking. By the middle of the 17th century, the civil war had resulted in the demise of the goldsmith’s traditional business of making objects of gold and silver. Forced to find a way to make a living, and have the means to safely store precious metal, they turned to accepting deposits of precious metals for safekeeping. The goldsmith would then issue a receipt for the deposit. At first, these receipts circulated as form of money. But eventually, the goldsmiths realized that, since not all of the depositors would demand their gold and silver simultaneously, they could issue more receipts than they had metal in their vault.

Banks became an integral part of the US economy from the beginning of the Republic. Five years after the Declaration of Independence, the first chartered bank was established in Philadelphia in 1781, and by 1794, there were seventeen more. At first, bank charters could only be obtained through an act of legislation. But, in 1838, New York adopted the Free Banking Act, which allowed anyone to engage in banking business as long as they met certain legal specifications. As free banking quickly spread to other states, problems associated with the system soon became apparent. For example, banks incorporated under these state laws had the right to issue their own bank notes. This led to a multiplicity of notes many of which proved to be worthless in the (all too common) event of a bank failure.

With the civil war came legislation that provided for a federally chartered system of banks. This legislation allowed national banks to issue notes and placed a tax on state issued bank notes. These national bank notes came with a federal guarantee, which protected the note-holder if the bank failed. This new legislation also brought all banks under federal supervision. In essence, it laid the foundations of the present-day system.