Banking Before Computers

[GB]

I know I used banks before computers were common place. I do not remember it real well though. I was thinking about this today and could not wrap my head around what it must have been like before computers. How did banking work 40 or 50 years ago? How did they keep track of the money. If you went to a branch in NYC and withdrew $20 and then went to a branch in NJ how did they know what your balance was?

 

[Jeekinz]

Where does "get in the black" have reference anymore? lol

As far as crossing the Hudson, you would just overdraw the account. It was easier to "gamble" I'm sure. You know, send out a check before the deposit was made. Not anymore, money instantaneously gets withdrawn.

 

[Andy M.]

I know I used banks before computers were common place. I do not remember it real well though. I was thinking about this today and could not wrap my head around what it must have been like before computers. How did banking work 40 or 50 years ago? How did they keep track of the money. If you went to a branch in NYC and withdrew $20 and then went to a branch in NJ how did they know what your balance was?

Back in the "olden days" when I worked in a bank, you had to present a bank book (passbook) to make a withdrawal. The transaction was posted into the book and the new account balance was posted as well. If you went across town to another branch to make another withdrawal, they would ask for your passbook to record the transaction. Banks are pretty careful about giving out money.

I worked in a bank in the late 60s. The teller machines punched a strip of paper tape which was collected at the end of the day and sent to the data processing center to be recorded into the "mainframe", updating all account balances.

 

[GB]

Well I guess I did not go far enough back then since you are still talking about data being sent to a mainframe. before banks had computers of any kind, how did they share information from branch to branch to keep everything straight?

 

[pacanis]

Well I guess I did not go far enough back then since you are still talking about data being sent to a mainframe. before banks had computers of any kind, how did they share information from branch to branch to keep everything straight?

 

[Andy M.]

Well I guess I did not go far enough back then since you are still talking about data being sent to a mainframe. before banks had computers of any kind, how did they share information from branch to branch to keep everything straight?

Well, I only go back so far myself, but hand posting into a ledger and a passbook would have been necessary to maintain continuity. Early banks didn't have branches. I don;t know when branch banking was first allowed.

 

[GB]

Thanks Andy. I had not considered a time pre-branches.

 

[miniman]

My awareness is that you had your branch who were responsible for your money. You either had to make a special arrangement to withdraw money elsewhere or I can remember being asked to wait while they contacted my branch to check the withdrawl was OK.

 

[MostlyWater]

years ago i couod not withdraw money from just any branch of my bank. it had to be the branch that i had my account it.

 

[BreezyCooking]

Yup - had to withdraw money from the bank I initiated the account with. If, for some reason, I absolutely HAD to withdraw money from another branch, a phone call was made. Withdrawing money from other branches didn't happen all that often. For one thing, there weren't all that many branches - lol!!

 

[Barbara L]

I was so proud of my shiny blue passbook! That said, I do love the convenience of handling my accounts online.

Barbara

 

[stinemates]

It's funny, you think with all of the technology present in the world.. banks would be the first to update.

They aren't! The way they do business has been the same for a very long time.

Processing of account information is still done in batch, overnight. Ledgers are still sent from bank to bank manually, checks still require manual processing, etc.

 

[roadfix]

Technology aside, I'm just glad that my local branch allows me to roll my bike inside the bank right up to the merchant teller window every week. (I keep a spare errand bike at work)
The bank is only a mile away from my place of work and it's a heck of alot quicker than driving there, parking 2 levels beneath, taking the elevator up to the banking floor, completing the transaction, taking the elevator back down, getting back in the car, and driving a mile back to work.

Therefore, you can say that I do my banking the old fashioned way, by bicycle.

 

[Andy M.]

It's funny, you think with all of the technology present in the world.. banks would be the first to update.

They aren't! The way they do business has been the same for a very long time.

Processing of account information is still done in batch, overnight. Ledgers are still sent from bank to bank manually, checks still require manual processing, etc.

I don't know where you bank but that's certainly not true at my bank. I can go out on a Saturday morning and make a deposit at any branch, from there go to Costco and pay with a debit card, go to the supermarket and buy groceries on my VISA.

When I get home and go online to my bank, all the transactions are listed and the account balances are updated on a weekend day. Only the VISA is delayed on occasion because of the more convoluted path the transaction has to follow.

Not to mention the online bill payer function...

 

[Callisto in NC]

Well I guess I did not go far enough back then since you are still talking about data being sent to a mainframe. before banks had computers of any kind, how did they share information from branch to branch to keep everything straight?

Before banks had computers, you could only go to your "branch" to withdrawal money. There was no "interbranch" banking. You went to one place and one place only. Then again, before before banks had computers, people didn't have cars either and long distance travel was pretty much unheard of. A trip from New York to New Jersey would take days, not an hour or two.

 

[roadfix]

Then again, before banks had computers, people didn't have cars either....

Are you sure about that?

 

[Callisto in NC]

Are you sure about that?

Fine. Every house hold didn't have cars. Happy now?

 

[BreezyCooking]

Whoa there Callisto! Lighten up - Roadfix is correct.

There's an awfully big difference between saying "before banks had computers, people didn't have cars either" - which is totally wrong - and "every household didn't have cars".

And frankly, by the time computers came into existence, nearly every household DID have a car.

 

[roadfix]

Fine. Every house hold didn't have cars. Happy now?

I don't know the history behind the use of computing and data transporting devices in financial institutions. Your post made me think perhaps they were using some 'high tech' system during the early 1900's. That's all.

 

[Lynd]

I can hardly remember banking before computers, it certainly was a lot more time consuming. I'm glad we have the ease of use now.