How Do Banks Use Computers?

Banks use computers in several different ways including the tracking of account transaction histories, interfacing with customers and executing trades. According to, the first computerized banking system was ERMA, the Electronic Recording Method of Accounting, first implemented by Bank of America in 1956.

Computers are central to the smooth functioning of the banking system, and they can be found operating at every level of the finance industry. One very common way that banks use computers is through electronic funds transfers (EFT). According to the Federal Trade Commission, this takes several forms. One form of electronic funds transfer happens every time a customer uses an ATM. In exchange for an authorization from a legitimate user, the banks computer authorizes the release of cash, which is then debited against the customer's account. Another use of the ATM, and for EFT generally, involves remote deposits. In this process, a picture of a check can be used to authorize the deposit of funds to the customer's account without the paper check ever being presented to a teller. Still another computerized transaction is the direct deposit. This involves the electronic transfer of funds from one computer system, usually a payroll company, to the bank for deposit.