Banking revolution sparked by humble Ardoyne branch
Lord Laird of Artigarvan recalls how banking history was made in north Belfast 40 years ago
Forty years ago tomorrow, a banking revolution took place at the Ardoyne branch of the Belfast Savings Bank (restyled TSB Northern Ireland in 1974 and First Trust Bank in 1992).
The branch was the first in Europe to offer its customers online real-time banking.
So what was the revolution? What is online real-time banking? And what was the significance of this event?
In the 1960s, a bank customer would take their passbook to the branch where the account had been opened to deposit or withdraw cash.
Salaries could be lodged directly and insurance premiums directly debited. Records would be on a card or a sheet of paper. The customer dealt with the cashier, who received or paid out cash and cheques.
Not only had the cashier to enter manually the transaction into the daily transaction log, but the balance in the passbook had to be verified with the balance in the account record and the transaction had to be manually entered into the passbook and the account record.
This was labour-intensive, high-cost and offered poor service: customers could wait 15 minutes for a simple transaction. A new system was required.
The solution chosen was an online real-time computer system supplied by Burroughs (now Unisys). The main computer was located in the bank’s then head office in Arthur Street. Computer terminals installed in branches were linked to the computer by telephone line.
To effect a transaction, the cashier would insert the passbook into the terminal, key in the account number, passbook balance and the amount.
The data was transmitted to the computer and processed and took, on average, between five to seven seconds, of which computer processing was half-a-second. In these few seconds, the system added the transaction to the daily log, verified the passbook balance, updated the account record and printed the transaction into the passbook.
Transactions now took less than a minute. The bank’s operations were transformed, the speed and quality of service were dramatically improved, and real-time meant virtually instantaneous.
When all branches had terminals every customer could go to any branch and receive full service, as every terminal could access all customer account records.
I was a member of the team which produced the system in 1970 and our boss was Bryan Johnston.
Bryan said then: “Up to now, to be a bank, you need a branch network. Others will follow what we have done and challenge the established banks. We have linked a computer to terminals by telephone lines, but the terminals don’t have to be in branches and could be operated by customers.
“In a couple of years we’ll have cash dispensers linked to the |computer by telephone line which customers will operate by plastic card and I’m sure that within 20 |or 30 years you’ll be able to do banking through your home telephone line. We have really started something big.”
How right he was. Bryan became CEO of the bank, was honoured with an OBE in 1991 and is now an Equality Commissioner.
Meeting recently he said: “Taking the European Union, people see online computerised banking as the norm. Within the EU, it had to start somewhere. John, you, I, and our colleagues were trailblazers.
“Today’s systems are a logical evolution from the system we installed in Ardoyne. It was a superb achievement and an extremely significant first in banking technology within what now comprises the EU.
“For me, Ardoyne is a cause of celebration. On August 24, 1970 the local branch of the Belfast Savings Bank began a European-wide revolution in banking.”