Otherwise known as the ABA Routing Number. If you have a recurring bill that you want to have automatically deducted from your checking account, this is the number that they use.
The routing number is only part of the system. The development of Magnetic Ink Character Recognition (MICR) became a necessity due to the post-WW II explosion amongst the consumer class, of monetary transactions via checking accounts. Bank ‘backrooms’ had all but seized up trying to manually process the paper.
http://www.frbatlanta.org/filelegacydocs/er08no4_QuinnRoberds.pdf
The strong postwar growth in the U.S. economy led to an extraordinary increase in the demand for payment services. Over much of this period, this demand was met primarily through the increased use of checks. The check payment system simultaneously underwent a number of noteworthy changes that, though again evolutionary in nature and largely invisible to the check writer, greatly improved the overall scope and efficiency of the system. These improvements led to an unprecedented expansion in check use, as can be seen in Figure 3.
A critical development was the mechanization of check processing through the introduction of MICR (magnetic ink character recognition) technology. By the early 1950s, the check payment system had almost become a victim of its own success. Postwar prosperity had expanded the use of checking accounts by middle-class households, leading to a “crisis” in check processing. The overall number of checking accounts in the United States almost doubled between 1939 and 1952, from 27 million to 47 million, while the annual number of checks written increased at an even more rapid rate, from 3.5 billion to 8 billion (ABA 1954).
While there was some use of automation, in the 1950s most check processing was still done by hand. A check that moved across banks was manually sorted and tallied six times on average (McKenney 1995, 41), and continued restrictions on bank branching guaranteed that 80 percent of checks fell in the latter category (ABA 1954). In response to this situation, researchers at Stanford University, working in cooperation with the Bank of America, developed the MICR processing technology that is now the industry standard. MICR encodes the information necessary for processing a check—the bank’s identifying number, the bank account number, the check amount, etc.—on a single line at the bottom of the check, printed in magnetic ink. A model of “backward compatibility,” the MICR line did not alter the basic appearance of the check, which now became readable by both machines and humans. MICR did not completely eliminate the role for labor in check processing since, for example, someone still had to enter the amount of the check on the MICR line. By reducing the costs of check processing, however, it paved the way for the massive expansion in check volume that was to follow.
Following the Bank of America’s successful pilot program in 1954, in 1956 the ABA designated MICR as the standard for automated processing of checks in the United States (McKenney 1995, 50–51). Although the cost advantages of this technology soon became apparent, adoption took some time. By 1962, 97 percent of banks were encoding some checks with MICR (ABA 1962), but many checks continued to be processed by hand. MICR did not become the full industry standard until 1967, when all checks routed through the Federal Reserve were required to contain the MICR-coded identification of the bank on which they were drawn (Federal Reserve Bank of St. Louis 1967).
Some more stuff. Here’s a clip from History Channel on banking.
http://www.youtube.com/watch?v=ZiL0Cq7_iyI
And here’s the story of the computer that could read the MICR font.
http://en.wikipedia.org/wiki/Electronic_Recording_Machine,_Accounting
ERMA (Electronic Recording Machine, Accounting), was a pioneering computer development project run at SRI International under contract to Bank of America in order to automate banking bookkeeping. The project ran from 1950 to 1955.[1]
ERMA was under the technical leadership of computer scientist Jerre Noe.[2] After the project’s successful conclusion, General Electric was contracted to build 32 ERMA machines. They were so successful in operation that Bank of America was propelled ahead of other banks in profitability, and became the world’s largest bank by 1970.