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Banking On An Internet Savings Account
Michalis 'BIG Mike' Kotzakolios

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It used to be that when one thought about a bank, the first thing that would pop into a person's head would be the building that collects and later distributes money. This to most people of the world is a bank. A solid structure where our money is kept. However, as more and more people become inclined to study finance and economics, we've come to perceive banks slightly different, as ideas of The Federal Reserve and other such constructs emerge into our conscience.

However, today even that paradigm is being challenged when we stop to consider the internet savings account. This is a most unusual and interesting concept. Yet what exactly is an internet savings account? Basically it is nothing so esoteric or flamboyant, but rather is simply a "go-between" for two real brick and mortar banks.

Nearly everyone has heard of Western Union and utilized its services. A person simply goes to a store that has WU when one wants to "send" money to someone, somewhere in the world (often on the other side of the globe). Most places that service WU are grocery stores or liquor stores or the relatively new "money lenders" that wish that they were banks and act accordingly by making loans at high interest rates.

What happens with Western Union is very similar to what happens with an internet savings account. One end signals to the other end that money has been paid into "the cache" or "the system" if you will. This allows the WU on the other end of the world know that they can safely give money to whoever is designated to receive it.

The one place where an internet savings account differs is that the whole money system becomes even more abstract than with wiring and receiving money. We say "abstract" as the operations seem to have less and less to do with an actual physical bank. However, the truth is that without actual banks the system of internet banking simply would not stand in reality. When one has an account on an online bank, this bank is in turn in communiqué with a bank on the sending end and another on the receiving end. Simple, yes?

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