24/7, any location in the world, anywhere, anytime
anyway, and speed, I want trades fast
I want to be able to do things
I want to be able to use automation
I like tech
I like the capabilities of advanced technology
Now, let me talk for a moment about early tech in FinTech
An early example of technology and convenience was Security First Network Bank
Security First Network Bank was the first what we might call
Direct Bank or branchless bank in the United States
It was a bank that had no branches, had no services
the first Internet-only bank to be approved by the FDIC and insured by the FDIC
They used Internet technology in 1995 to bring out online checking
online accounts, you could access any ATM anywhere in America for free
You could do deposits by mail or wire in
money if you chose to from another bank for free
Bank services were free and very convenient
You could have bill pay for free very conveniently
Now, you may say, "Yeah, so what?"
I have dealt with my bank today
Well, that's interesting and it illustrates an important concept of FinTech
Security First was first to offer branchless banking and
Internet-only banking because they have a low cost structure
they could offer services free that
other banks charge for like checking accounts used to cost money
Security F irst gave them three and that was pretty good
And they offered technology in a time when banks were saying
"I don't think we can do this.
This is not secure."
Security First started as a software company
They started in the encryption and military systems area and that technology people said
"I wonder if there's something in business we could do that needs
secure Unix because we know how to do that," and they came up with banking
And so they launched the world's first Internet bank
Consumers loved it. Within a year
they had customers at every state in America
They were one of the fastest growing branch
One of the fastest growing banks in America, very fast drove
Their stock price exploded
Of course, this was during the dot-com boom or leading up to the dot-com boom
But the price went up and up and up as they kept gaining more and more investors
more and more customers
more and more enthusiasm
Banks started investing in them and saying
"We don't know where this is going,
but this looks exciting.
This is new tech.
This is a new opportunity."
What happened to Security First?
Well, within about three years
they were no longer alone
By 1998, 1999, other banks started coming out with online banking
Now, they had three to four years by themselves to grow fast, to get attention
to get exuberance, and other banks were sitting back and saying
"I wonder if they're going to get hacked.
I wonder if they're going to go under.
I wonder if this is going to melt down.
I wonder if this is going to be a problem."
And Security First proved that they had really good security and they could make
Unix and the Internet a secure banking environment that no one could break into
That was important
Other banks said
"We think we could do that."
And so they got on the tech bandwagon and we saw Bank of America
Citibank, Wells Fargo, US Bank, HSBC
and many other banks opening up Internet banking services
checking accounts online, other services online
That was a problem for Security First because what happened
is that consumers who loved FinTech or they loved their branchless banking
it turns out they would rather have free Internet banking and a branch
then free Internet banking without a branch
It wasn't that they didn't like the branch
It wasn't that they didn't like their bank
They wanted the convenience
They wanted the services
It's not that we want just stock trading online and no one to answer the phone
no customer service, and no place to go into
Security First went from raising