The Evolution of Digital Banking (Part 2): How Early Online Tools Empowered Introverts and Set the Stage for Fintech

In Part 2 of my digital banking series, I explore how early online tools like Wingspan Bank and Sharebuilder empowered introverts to manage finances. These innovations laid the groundwork for FinTech, shaping my financial journey and offering lessons for introverts.

Rob

21 Sep 2024 — 5 min read

Photo by Christin Hume / Unsplash

This is Part 2 of my series on the evolution of digital banking, highlighting an introvert’s journey through these changes. In Part 1, I explored how ATMs revolutionized traditional banking for introverts. In this post, I dive into how online banking expanded those opportunities, offering even more control and flexibility. Stay tuned for Part 3, where I explore the rise of Fintech!

How Early Online Banking Tools Set the Stage for My Financial Growth

As I mentioned in Part 1 of this series, two pivotal events in my teen years further drove me toward online banking and forever changed how I approached personal finance. As I entered my late teen years, my world was expanding rapidly, and money played a much more significant role in my life. Having a driver’s license and earning my first paycheck were two major forces that pushed this change forward. I suddenly needed quick and easy access to my funds.

At that time, online banking tools were relatively unknown to the average person, but banks were beginning to realize their potential and were investing heavily in them. These tools evolved quickly, just as my financial journey was starting to unfold. For someone like me, an introvert, they became incredibly powerful. They allowed me to (sometimes) successfully manage my money, think about my future, and plan for financial growth—all without the need for face-to-face interactions.

Leveraging Online Tools for Financial Independence

Of course, this transition didn’t happen overnight—there were bumps, mistakes, and plenty of bad decisions along the way. But one thing is certain: online banking enabled me to leverage my strengths as an introvert and achieve a sense of financial stability. In this post, I’ll explore the evolution of these digital tools, their role in my personal financial journey, and how they might shape the future of banking.

The shortcomings of traditional banks that had characterized my first banking experience didn’t seem to improve much as I grew older. While ATMs filled some gaps, they still didn’t offer introverts like me the ability to observe and analyze finances independently and thoughtfully—something that aligned with my personality. The digital banking revolution I had long anticipated didn’t materialize as quickly as I had hoped. However, a new opportunity was rapidly growing, and banks were taking notice due to several perceived benefits, including:

Cost Efficiency: Banks reduced the need for physical branches, cutting down operational expenses.
Convenience for Customers: Offered 24/7 access to accounts, removing the necessity for in-person visits.
Broader Reach: Allowed banks to serve customers in wider geographic areas without the need to open new branches.
Faster Transactions: Enabled quicker transfers, payments, and other financial activities.
Personalization Through Data: Provided insights into customer behavior, allowing for more personalized financial products and services.
Competitive Edge: Attracted tech-savvy customers by offering services that traditional banking couldn't match.

Early Innovations that Transformed My Financial Habits

The internet grew rapidly in the early 1990s, with usage increasing by over 800% between 1990 and 1995 (FRED). Wells Fargo was an early adopter, becoming the first major bank to allow customers to access their accounts via its website in 1995 (Wells Fargo). When I opened a checking account alongside my savings account in 1996, I quickly realized that First of America was lagging behind in terms of online banking. Fortunately, they were acquired by National City Bank in 1997, which offered a robust set of online banking tools.

Finally, I had a financial workflow that worked well for me as an introvert. I could deposit my check at the ATM—though with the standard one-day delay for ATM deposits—withdraw the necessary cash, and monitor my overall financial situation in real time online. My financial plan was simple but ambitious for someone at that stage in life: log in after a deposit, move half of my paycheck into savings, pay my bills through online bill pay, and use the remaining cash for spending.

However, being young and inexperienced, my focus soon shifted. As new video games, computers, and cell phones began to dominate mainstream culture, I found myself prioritizing these over financial discipline. My account balances were usually very close to $0, as my introverted tendencies were beginning to be overruled by my emotional needs and desires.

A Pioneering Online Bank: Wingspan's Rise and Fall

Wingspan Bank was one of the first online banks, founded to fully capitalize on the benefits of online banking I mentioned earlier, with the added advantage of eliminating branch costs entirely rather than reducing them. What intrigued me most was their policy of reimbursing ATM fees for using non-Bank One ATMs (Wingspan’s parent company). This was also my first experience with an introductory offer to join a bank, as they paid me $100 to open an account. While I initially saw this as the next step in online banking, my excitement faded quickly when I realized that all deposits had to be mailed in, sometimes taking as long as a week to clear. The increasing prevalence of direct deposit in the 1990s, and its near-ubiquitous use in the 2000s, would have solved this problem, showing that Wingspan was a bit ahead of its time. Despite the appeal of their offers, many customers shared my frustrations, and Wingspan closed by 2001.

Sharebuilder: A Revolutionary Online Trading Platform

Founded in 1996 and relaunched in 1999 with a revolutionary idea, Sharebuilder wasn’t an online bank per se but rather an online stock trading company. At a time when online brokers were charging $40 per trade, Sharebuilder offered trades for as low as $4 by bundling large numbers of non-real-time stock purchases into a single transaction (Seattle Times). Sharebuilder encouraged small automated withdrawals into preset purchases at regular intervals. This approach aligned with Jack Bogle’s low-cost dollar-cost averaging strategy, which fits well with introverts’ strengths, including risk aversion and thoughtful decision-making.

My experience with Sharebuilder was another example of my introverted tendencies guiding me toward smart decisions, though I often struggled with the ignorance and lack of self-discipline of my youth. I did invest $100 in Amazon, which, according to a quick Google search, would be worth nearly $200,000 today. I also held shares in Sun Microsystems, Dell, and others, so not all my picks were winners. However, if I had stayed disciplined with a balanced, index-based investing approach, I’d have much less work to do today. Of course, I sold everything in a panic during the 2000 tech bubble burst—another lesson learned the hard way. Sharebuilder was acquired by ING Direct in 2007 (PR Newswire) and no longer exists in the same form after further acquisitions.

Lessons in Financial Discipline and the Introvert Experience

This post summarizes my financial journey as a young introvert trying to build a solid financial foundation. As I described, my introverted tendencies often guided me in the right direction, but I had a lot to learn about discipline—a key issue for any individual, introvert or extrovert. Many times, I valued the perspectives of others, especially those with more financial experience than my own. I kept my ego in check and didn’t assume that my successes would continue or that I had everything figured out. I also focused deeply and studied numerous books and resources. The tools I mentioned above were instrumental in helping to build that foundation and, in my opinion, paved the way for the Fintech companies that are disrupting the financial industry today.

If you’ve had similar experiences with online banking or stock trading platforms, I’d love to hear your stories and insights in the comments. How have your introverted tendencies influenced your financial decisions? Stay tuned for my next post, where I’ll explore how the rise of Fintech has disrupted the traditional banking model and share my experiences navigating this new digital financial landscape.