As the commercialization of the internet evolved in the early 1990s, traditional brick-and-mortar banks began to investigate ways of delivering online services. Though limited at first, the success of these early efforts led many banks to expand their internet presence through improved websites that featured the ability to open new accounts, download forms, and process loan applications.
Soon enough, however, internet-only banks arose, offering online banking and other financial services without a network of branch offices. The first fully-functional direct bank insured by the FDIC was the Security First Network Bank, which began operations on October 18, 1995. With lower costs due to the lack of overhead, Security First and the competitors that followed it were able to offer higher interest rates on deposit accounts and reduced service fees.
As the choice in virtual banks grew, so did customers' enthusiasm for banking online. More than 60% of account holders do at least some of their banking on the internet, according to the latest (2017-18) report on banking behavior from the FDIC.