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An Historical Appraisal of Information Technology in Commercial Banking

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The central role of information processing in banking leads to an expectation that banking and finance companies will be strongly affected by technological innovation in general and applications of information and communications technologies (IT) in particular. This research reviews those effects on banking organizations with reference to front-office or external changes (product and service innovation) and back-office or internal changes (operational function) brought about to banking organizations. Following Fincham et al . (1994), Garbade and Silber (1978), Morris (1986) and Quintás (1991), IT-based technological innovations are considered and grouped into four distinct periods: early adoption (1864-1945); specific application (1945- 65); emergence (1965-80); and diffusion (1980-95). The research then discusses the potential impact of more recent innovations (i.e., electronic purses, digital cash and Internet banking). The research provides a historical perspective on the main drivers determining adoption of technological innovation in commercial bank markets.
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A b s t r a c t
The central role of information processing in
banking leads to an expectation that bank-
ing and finance companies will be strongly
affected by technological innovation in
general and applications of information and
communications technologies (IT) in par-
ticular. This research reviews those effects
on banking organizations with reference to
front-office or external changes (product
and service innovation) and back-office or
internal changes (operational function)
brought about to banking organizations.
Following Fincham et al. (1994), Garbade
and Silber (1978), Morris (1986) and
Quintás (1991), IT-based technological
innovations are considered and grouped
into four distinct periods: early adoption
(1864–1945); specific application (1945–
65); emergence (1965–80); and diffusion
(1980–95). The research then discusses the
potential impact of more recent innovations
(i.e., electronic purses, digital cash and
Internet banking). The research provides a
historical perspective on the main drivers
determining adoption of technological
innovation in commercial bank markets.
A u t h o r s
Bernardo Bátiz-Lazo
(b.batiz@open.ac.uk) is Director
of Research Degrees at the Open
University Business School (UK).
A former derivatives trader and research
analyst, since 1991 he has been active
in teaching and researching comparative
financial markets, the absorption of
information technology in banking
and the strategy of financial institutions
in Europe and North America.
Douglas Wood
(dwood@man.mbs.ac.uk) is the
National Westminster Professor of
Banking and Financial Services at
Manchester Business School (UK).
His main interests have been in financial
economics and national and inter-
national financial forecasting. He has
written two major surveys on pan-
European banking, is a member of the
foresight panel on financial services,
editor of the finance volume of
Blackwell’s New Encyclopaedia of
Management and chairman of CIS’s
Environ Fund advisory panel.
INTRODUCTION
Table 1 summarizes two dimensions of
technological progress in retail bank-
ing. These dimensions describe the
nature of change brought about by
technological innovation on bank
organizations’ external (product or
service) activities and internally on
their operational functions. Although
other dimensions might offer a more
comprehensive treatment of innov-
ation in financial services, the dimen-
sions portrayed suffice to provide a
historical perspective on the adoption
of technological innovation in com-
mercial bank markets. Initially, change
induced by innovations in information
and communications technologies
(IT) reduced price differentials in
geographically distant markets. The
next stage saw the emergence of
specific IT applications that modified
the relations between previously
isolated departments of banking
organizations. Over time, IT applica-
tions produced alterations throughout
the whole organizational structure in
terms of internal operations and with
respect to bank–client relationships.
In brief, Table 1 outlines key tech-
nological innovations in banking as
grouped into four distinct periods:
early adoptions, specific application,
emergence and diffusion.
The dimensions of technological
innovation in commercial banking
portray the internal structure of banks
as being determined by a combination
of changes in banks’ external environ-
ments and advances in information
technology. Pugh (1973: 28) was one
of the first contributions to document
widespread empirical support on the
effect on organizations of the environ-
ment, size relative to competitors and
technology adoption. According to
this view, managers are passive over the
breadth of choices that will modify the
effectiveness of skills, procedures, cap-
abilities and other internal resources
over transactions in open markets. This
suggests that, on balance, managers
respond to external change by adjust-
ing the boundaries around which their
organization is drawn. Hence, the rate
at which new ways of doing things can
be internalized is contingent on the
organization’s circumstances. How-
ever, empirical studies do recognize
that, despite the limitations imposed
by the context in which organizations
perform, managers have plenty of
leeway to make their influence felt
in the pursuit of competitive advan-
tage (Pugh 1973). In other words,
the research considers that bank
managers have little influence over
the development of technological
innovation while, simultaneously, the
actions (or omissions) of managers in
banking organizations in adopting
technology are considered critical in
determining how technological
innovations modify competition in
bank markets.
A Historical Appraisal of Information
Technology in Commercial Banking
BERNARDO BÁTIZ-LAZO AND DOUGLAS WOOD
Copyright © 2002 Electronic Markets
Volume 12 (3): 1–12. www.electronicmarkets.org
RESEARCH
Keywords: JEL classification: banks (N24), technological change (O33), strategy (L10)
Table 1. Dimensions of IT innovation in commercial banking, 1846–1995
Use of Technology in the Organization
Impact on the Provision
of Retail Finance
Early Adoption
(1864–1945)
Specific Application
(1945–65)
Emergence
(1965–80)
Diffusion
(1980–95)
Innovation in service
offering
Reduce inter-market
price differentials.
Conversion from
branch to bank
relationships.
Automated bank
statements.
Cheque guarantee
cards.
Growth of cross-border
payment.
ATM introduced.
Supply of non-
payment products like
insurance, mortgages
and pensions.
Operational function
innovation
Increased coordination
between head office
and branches.
Reduce cost of labour
intensive activities (ie
clearing system).
Automation of branch
accounting.
Real time control begins.
Growth of alternative
distribution channels,
such as phone banking
and EFTPOS.
Source: Morris (1986), Quintás (1991), own estimates
In what follows, the discussion of technological innov-
ations that altered the provision of nancial services will
cover external changes over methods of undertaking trans-
actions (between customers and bank) and changes up to
the point at which customers service activity enters the
banking system. The discussion will also cover technology-
induced changes in internal procedures. In particular,
changes over operational functions and process innovations
are explored. These changes and innovations will be identi-
ed, rst, as changes in national payment systems, that is,
changes in distribution of cash and coins between the
central bank and individuals rather than bank assets as
substitutes of cash balances. Second, changes in the delivery
of deposit lending and settlement transactions. Third,
changes in the storage and retrieval of accounting
information.
The research, therefore, offers a summary of major
IT-based innovations and an analytical framework with
which to structure a historical review of how IT innovations
were adopted in bank markets. This historical review
denes participants in bank markets along the lines of Klein
(1971: 206), Baltensperger (1980: 1), Swank (1996: 193)
and Radecki (1998: 4). Following these contributions the
basis for nancial intermediaries (rather than open markets)
supplying nancial products and services is considered to be
the existence of transaction and information costs. As a
result, the research identied commercial banks as organ-
izations with the capabilities, resources and competencies
for retail nancial mediation. In other words, organizations
able to accept deposits without explicit payment of interest
(sight accounts) and which create assets that are generally
acceptable means of exchange (paper and electronic
payment instruments). The discussion thus emphasizes how
the performance of organizations dealing in low-volume
but high margin (i.e. retail) transactions changed through
the applications of new information and telecommunica-
tions technologies and resulted in product and operational
(process) improvements. Where appropriate, however,
the discussion will also offer examples in corporate and
investment banking.
Alongside the general review of the absorption of IT
innovations by banking organizations, particular attention
will be given to IT innovation in United Kingdom (UK)
bank markets in general. The UK, and England in particu-
lar, is used as the benchmark because the UK hosts the
worlds largest international banking centre and also has a
large and highly competitive wholesale banking market. As
a result, the UK tends to lead and has preceded other
developed countries in the introduction of changes regulat-
ing nancial markets (Bank of England 1991). UK partici-
pants in bank markets also seem to have adopted many
key technology innovations before counterparts in North
America (Bátiz-Lazo 1998: 277). Focusing on UK
bank markets also provides an opportunity to explore
whether technological change enhanced the importance of
computer systems within the strategic compass of com-
mercial banks and provides some insight as to whether IT-
related change has increased the potential for transparency
in bank markets.
We proceed as follows. The next section considers the
effects of outstanding IT-based technical innovations as
grouped into four distinct periods dened as covering early
adoptions (18641945), specic application (194565),
emergence (196580) and diffusion (198095). The
section also considers the potential impact of more recent
innovations in payment systems, the so called electronic
purses and Internet banking as well as their likely effects
on competition within bank markets. The nal section
discusses the implications of IT-based change for the
corporate strategy of commercial banks.
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
2
INFORMATION TECHNOLOGY INNOVATION AND
BANKING
Early adoption period1 (18641945)
Although particularly important news could be transmitted
by special procedures such as mirrors, beacons or, in the
case of the Battle of Waterloo, by carrier pigeons, more
formal improvements came from the introduction of
telecommunications into bank markets. This occurred in
1846 when the telegraph reduced stock price differentials
between New York and geographically dispersed regional
stock markets (Garbade and Silber 1978: 823). The 1866
introduction of the trans-Atlantic cable equally enabled
greater integration of securities trading in New York and
London (ibid.: 827). Greater integration took place as the
completion of the cable reduced the time delay in executing
a trade in New York that had been initiated in London. The
completion of the cable effectively reduced the time to
complete a transaction originating in the UK for execution
in the US from six weeks to only one day. According to
Garbade and Silber (1978), early innovations such as the
introduction of the trans-Atlantic cable were accompanied
by statistically signicant evidence that the introduction of
even limited forms of telecommunication substantially
reduced or even eliminated foreign exchange and security
price differentials between geographically distinct markets.
However, evidence has yet to develop to support the
possibility that market integration increased or continued
during the years that followed each new communication
innovation, as well as to support the degree to which
integration continues to emerge after each adoption.
Evidence in Garbade and Silber (1978) suggests that the
adoption of new forms of communication accounted for
(proportionally) smaller reductions in price differentials.
Their evidence suggests that the adoption of telegraph or
telephone communications primarily produced the same
kind of effect, with subsequent adoptions leaving inform-
ation asymmetry among market participants relatively
unchanged. However, greater use of telegraph or telephone
facilities also resulted in both internal and public price-
related information becoming homogeneous. Banks could
link head ofce with branches in different locations, allow-
ing more centralization and the balancing of supply and
demand of loanable funds across their network rather than
at each area centre. They could also ensure the uniform and
rapid dissemination of public price information to security
dealers and bank branches. Unsurprisingly statistical
evidence of enhanced market integration was strongest for
early developments, because these tackled the pricing
anomalies and serious information delays that characterized
the transmission of nancial information prior to the intro-
duction of telecommunication applications (ibid.: 831).
The early introduction of telecommunications into bank
markets did little to modify front-ofce procedures the
way in which transactions between customers and bank
were conducted. For instance, the amalgamation process
that swept UK banking after the introduction of limited
liability banking during the late nineteenth century resulted
in nancial intermediaries with nation-wide retail branch
networks. However, it was not until the 1950s that UK
commercial banks actively pursued the aim of becoming
depository institutions for excess funds or began to develop
non-deposit products for mid-income customers (more
below).
During the early adoption period, bank customers
entered the banking system directly through retail bank
branches or indirectly through agency representatives
(such as savings banks, mortgage specialists and even retail
outlets). Telephone exchanges between bank managers and
customers were used as early as the 1890s but in spite of
this, service remained largely unaffected by technology
with the front-ofce relationship controlled locally though
asynchronous, analogue systems such as paper-based
records and pass-book control.
At the time, nancial intermediaries practised little in
the way of systematic product and customer group divers-
ication. Head ofce accounting control was based on the
aggregate outcome from decentralized discretionary
authorities for all but the most important relationships. The
main function of the centre was to manage cheque clearing
and relations with the central bank and to engage in treas-
ury operations. Head ofce was also in charge of policing
performance through nancial control and draconian
inspection methods. Long-term relations of individual
customers with the bank retail branch were needed to
secure services such as loans or establish credit ratings and
as a result, managers of retail bank branches were persons
of independent authority and standing in their local
communities. Meanwhile, individual banks performed
international transactions such as clearing bills of exchange
through networks of correspondent banks abroad rather
than through open markets.
At the end of the 1930s the rst tabulating machines
were purchased to address the growing volume of trans-
actions and enhance working conditions and productivity
of senior staff (Wardley 2000: 839). This trend was
reinforced by the purchase of additional adding and listing
machines that supported the growing network of branches
and agents. However, the potential of these machines, as
well as punch-hole accounting machines, as mechanisms
for recording and updating transactions were not fully
exploited until after the late 1940s and early 1950s.
Increasing the size of the branch network and divesting
under-performing agents then became a priority. Perform-
ance indicators primarily measured growth in size (such as
assets per employee and investment referrals) rather than
efciency or effectiveness (such as nancial protability and
credit risk exposure). Moreover, during this period, nan-
cial performance of the branch network and individual
retail branches was examined only at random and when
specically commissioned by the Board or the Finance
Committee. Customer service was more likely to be deter-
mined by personal relationships than objective facts. This
Electronic Markets Vol. 12 No 3
3
was reected in the appointment of large customers to bank
area or regional boards.
The characteristic provision of nancial services in retail
markets was to change with the commercial use of com-
puter power. According to Locke (1999: 5) and Leslie
(2000: 49), the most important IT applications had their
origins in US government-sponsored research in the rst
half of the twentieth century. Interactive IT applications
would never have existed without a long and expensive
gestation period in which computer power and telecom-
munication applications were devoted to help the US gain
the initiative in science and technology. Indeed, the UK
experience with computer hardware development would
tend to conrm Leslie and Lockes view of a defence-based
technology push behind the development of highly sophis-
ticated hardware and software as well as the networks that
linked computers together. For instance, the rst stored-
program computer in the world was developed in 1948 by
academics at Manchester University (Anonymous 1998).
However, the reduction of local autonomy in the cluster
of technology companies, such as Ferranti and ICL who
sponsored the research, reduced the funding available to
Freddie Williams and Tom Kilburn and they were thus
unable to continue with their project.
In brief, early adoptions of telecommunications and
computer applications had greatest impact in organized
high value wholesale bank markets, that is, those activities
that had traditionally been furthest away from high volume,
low value retail bank branch transactions. Banks began to
absorb the new lower-cost technology on the back of a
growing market for retail bank services, which expanded as
middle-income individuals became a growing proportion of
the population. However, it was government-sponsored
research in the US rather than bank initiatives that provided
the driving force behind the original innovations that
would result in interactive IT applications during the
1970s.
Specific application period (1945–1965)
The second wave of IT innovation in retail nance began
in the late 1950s and lasted up to the late 1960s. Banks
introduced computers both to keep up with growth in
business volume and, at the same time, to solve some very
specic problems in bank operations. They also took the
opportunity to automate existing standing practice in
specic departments (e.g., BBC 1995, Morris 1986, Seeger
et al. 1974). The introduction of computer power relied on
US-based suppliers of accounting machines such as IBM,
Xerox and Burroughs (later Univac and Unisys). Initially,
computer manufacturers responded quickly to the demand
for hardware but failed to make much concession to users
software requirements (Fincham et al. 1994: 153), or to
recognize the new strategic possibilities reduced inform-
ation costs provided. The lack of ready-made software
products forced user organizations to devise their own
solutions to this problem until the emergence of high-level
programming languages emerged from joint collaboration
of users and computer manufacturers (ibid.).
At the time, banks aimed to develop the capacity to
handle more complex and higher level service tasks with
their existing high street skills and resources. This resulted
in the branch network quickly turning into the main point
of contact with retail customers while, internally, there was
a growing need to supply top management with prompt
(i.e. quarterly) nancial information. A process-directed
automation thrust dominated the specific application period
and aimed at undercutting the cost of administrative tasks
such as the labour-intensive cheque clearing system. During
this period, the typical nancial sector computer installation
consisted of a central mainframe (ibid.: 154), dedicated
to sequential batch processing of computer readable
instructions dealing with separate processes such as
providing a service for handling customer transactions,
standing orders and other clerical procedures. Computer
applications were therefore concentrated on back-ofce
operations (Morris 1986: 77), because controlling a
growing mountain of paperwork provided the potential
for economies of scale. There was also an incentive
to automate at the individual branch bank level and to
improve market-wide processes.
By 1965, most major banks in the US and UK had been
introduced to electronic data processing and many of them
had seen the arrival of their rst computer installation.
Towards the end of the decade, with the introduction of
a second or third computer, a major redistribution of
organizational responsibilities followed. Organizational
change tried to solve the apparent paradox between greater
efciency associated with automation (i.e. greater central-
ization) and enhanced service offerings to customers
associated with devolution of discretion to customer-facing
staff at retail branches (i.e. greater decentralization).
Greater automation and improved communications such as
automatic internal switchboards resulted in the establish-
ment of central accounting units and in centralization of
customer account control so that retail bank managers as
well as regional managers lost autonomy to centralized
senior managers. Centralization on the back of computer
applications, therefore, created a space for a standardization
of service offering and the potential to reduce cost
structures of traditional activities.
The increasing complexity and volume of nancial
transactions eventually led to the development of Database
Management Systems or DBMS (Fincham et al. 1994:
154). The role of the DBMS was to overcome the
limitations of conventional ling systems by providing a
generalized, structured and integrated body of data that
could be read and updated in a controlled, efcient, and
reliable way (ibid.). Two key applications built on DBMS
and took place in 1968. First came an inter-bank voucher-
less payment facility called the Bankers Automated
Clearing System or BACS (Morris 1986). The second
innovation involved the installation of the National
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
4
Girobank, the automation of retail national and
international money transfer through forms handled by
Post Ofce outlets (Thomson 1968).
In 1968 major UK banks established their rst
computer-based intra-organizational network while aiming
to exploit the cost advantages of electronic data interchange
or EDI (see further Bátiz-Lazo and Wood 2001). This
network emerged in the form of an electronic transfer
system of payments (called BACS) to which non-clearing
banks could subscribe, but only through a clearing member
acting as agent. The BACS system grew to be the worlds
largest automated clearing house, with a total staff of
approximately 200 handling 262 million items by 1976
(Cooper 1984: 53). The development of BACS created an
inter-bank facility in an attempt to bring under control
rising costs associated with the huge growth of cheque
transactions during a period of fast economic growth and
the postwar recovery of consumer markets (Gardener and
Molyneux 1990: 84). Enabled by regulation in 1972,
BACS also aimed to create new sources of bank business by
moving wage payment away from cash and into bank
accounts. As a result, the use of standing orders, direct
debits and payroll credits became widely available in the
UK. In countries such as France, Germany and the US
pre-authorized transactions were not as widely established
and most electronic clearing was limited to Government
payroll credits (Price Commission 1978: 34).
Another important innovation in the UK money
transmission system during the specic application period
was the establishment of the National Giro Centre (later
Girobank) in 1968. Girobank was the rst full computer-
centred nancial intermediary (Thomson 1968: ix). Its
original purpose was to help update the Post Ofce by
making it the distribution channel for low cost transactions
(Girobank 1993). Internationally, the UK was a latecomer
to this service. Austria pioneered postal giro in 1883 and
automated giro systems in 1962 (Thomson 1968: 209).
Nonetheless, the UKs Giro Bank was a sign of things to
come with regards to:
Its specialization in terms of activity (money transfer) and
market segment (low-income banking and benet
payment);
Its creation of an alternative retail money transfer system
utilizing an existing non-dedicated distribution channel
already in place (Post Ofce counters);
The competitive challenge it offered through focused
operations that lowered costs to process payment orders
and bank cheques (12 and 20%, respectively).
Succinctly, during the specic application period,
computer-based applications emerged and operated in
isolated departments of the banking rm. During this
period the rst IT applications in bankclient transactions
were introduced. Enhanced computer power allowed banks
to concentrate the processing of the growing volume of
paper-based transactions in central locations where labour
costs could be reduced through dedicated staff and
automation. This would suggest that greater use of IT
applications in banking reinforced the hierarchical and
volume driven ethos of nancial intermediaries serving
retail markets while promising product diversication on
the back of standardized service offerings and reduced cost
structures. At the same time, computer power enabled
managers of banks to look for more standardized (and
cheaper) labour while a new set of IT-related capabilities
began to emerge as a necessary condition for competition
in bank markets.
Emergence period (196580)
The third wave of IT innovations in retail nance emerged
hand-in-hand with advances in telecommunications.
During the emergence period, banks became one of the
worlds dominant customers for computer-based applica-
tions, far exceeding other sectors such as capital goods
manufacturers or transportation (Quintás 1991;
Scherer 1982). Between 1968 and 1980 banks emerged as
major customers of software and hardware as they
introduced applications that delivered signicant cost
reductions as well as increased business volume and variety.
The main difference between this and the specic applica-
tion period was that the impact of computers was felt
throughout the organization rather than in specic
departments. The ability to achieve higher quality and
lower cost in an unprecedented way established large
scale-economies in banking which were not offset by organ-
izational discontinuities (see Walker 1978).
Developments in hardware and software that found their
applications in the private sector in general and in banking
in particular, were further enhanced with the reduction of
government expenditure that had supported the space
exploration project. As a result, throughout the 1970s
many highly qualied individuals formerly working at
NASA moved to the IT arm of the major consultancies and
into investment banks and the treasury operations of
US-based commercial banks. Changes were also observed
in the recruitment strategies of banks outside North
America. In the UK, banks and non-bank nancial inter-
mediaries began to recruit high-potential university
graduates and prepare them for future positions as senior
staff. This was a departure from the traditional practice of
internal job markets that developed in the 1920s (see
Wardley 2000: 813). This practice involved the recruit-
ment and in-house training of low-skilled and risk adverse
individuals, who had few ambitions beyond the security of
job for life employment offered by banks and would
require little motivation (Parker 1981: 147).
Early adoption of EDI in the UK as well as the change in
recruiting practices were critical in securing the pre-
eminence of London-based banks throughout the growth
of euro-currency and euro-bond markets. In the Euro-
market, banks accept deposits and issue loans denominated
Electronic Markets Vol. 12 No 3
5
in currencies other than that of their country of origin.
Through Euromarket transactions participants minimize
their exposure to sovereign risk and, in the process,
segregate that exposure from currency risk. During the
emergence period IT applications helped to achieve greater
use of the Euromarkets by actively reducing the cost of
placements, reducing the distance between syndicates,
issuers, lenders and the secondary market; as well as
through improvements in banks trading rooms and
back-ofces. IT-led innovation was thus critical to re-
incorporate transactions in other nancial centres (more
below).
Other distinctive characteristics for banking organiza-
tions during the emergence period included the intro-
duction of full automation to branch accounting, real time
operation and control of branches by the central ofce. In
the UK, Clydesdale Bank was the rst to network every
teller and cashier position, ensuring that every transaction
had direct access to the banks online transaction-
processing services (Fincham et al. 1994: 1545). Con-
cisely, the immediate result of innovations during this
period was that customers were able to bank at any point in
the retail branch network while the previous arrangement
limited transactions to the customers own branch or
required telephone approval for remote transactions.
Indeed, the regional manager for a major UK provider
reported at the time that: the [banks] computer will
provide to all branches an on-line enquiry service.
Account balances and redemption gures will be immedi-
ately available ensuring a much speedier service to members
and professional contacts.2
Panel A in Table 2 illustrates the growth of one of
the most successful applications that emerged during the
emergence period. It took place in 1967 when Barclays Bank
(UK) introduced the rst Automated Teller Machine
(ATM) in the world (Barclays 1982), while IBM intro-
duced the magnetic stripe plastic cards in 1969 (Bátiz-
Lazo et al. 2001: 867). Together these innovations marked
the birth of electronic banking.
Barclays introduced credit cards to the UK by importing
systems (including computer applications) from Bank of
America (US) at the end of 1965 (ibid.: 865). Barclays
early adoption of ATMs was no coincidence because cash
withdrawal through ATMs is a major use for credit cards.
Indeed, the emergence of the ATM marked the beginning
of self-service banking as services previously provided by
the bank teller could be performed on a 24-hour schedule
and at the customers convenience rather than during
banking hours. As shown in Panel B in Table 2,
ATMs expanded rapidly in the UK and elsewhere as other
institutions followed Barclays lead.
Noticeable changes in bank internal organization started
to take place alongside the growth of a complementary
distribution channel in the form of ATM networks. Banks
realized that universal provision of ATMs involved a large
scale investment in marginal or loss-making infrastructure
and a heavy drain on nancial resources and IT skills. Banks
then increasingly sought critical mass through strategic
alliances.
For example, the Co-operative Bank was notoriously
slow to introduce online systems. Only in 1987 was the
bank able to offer online banking rather than the pass-book
system through its agencies in Co-operative stores. To solve
the IT problem, the Co-operative Bank pursued several
collaborative solutions. One was to become a founding
member of the LINK Group in 1984. The bank had
50 ATMs in its 78 branches but, through LINK, bank
customers could access around 400 ATMs. This number
grew and by 1995, LINK allowed access to over 8,500
ATMs in the UK alone, with the Co-operative Bank con-
tributing 119 ATMs (managed by IBM under a £13 million
outsourcing contract signed in 1994). Hence, 30 years
after the introduction of the rst ATM, the absurdity of
terminals connected to different networks located side by
side and long after terminal density had reached saturation
point, eventually resulted in a single interconnected
network in 1999 for the UK.
During the emergence period, the introduction of
management information systems or MIS also took place
(Fincham et al. 1994: 155). These systems initially aimed
to use the computational power of transaction-processing
capabilities to provide regular reports and analyses of
business activity. In this way MIS offered increased scope
for monitoring control and planning of operational
procedures. Although MIS increased line management
productivity, MIS systems proliferated throughout the
organization but without any fundamental change in the
nature of managers activities (idem).
In summary, during the emergence period technological
change spread to many internal aspects of banking organ-
izations and permeated bankclient relationships. These
changes started to modify how, when and where customers
could enter the banking system but banks had yet to reect
their new potential as multi-delivery channel organizations
in their service offering and in their ability to direct all their
information to any point of customer contact. It is during
this period that the convergence of telecommunications
and computer power resulted in true IT applications as the
emphasis of technological innovations shifted from data
processing to communications. At the same time, cost
effective supply of nancial services rather than customer
value creation continued to predominate the design of
banks internal organization and strategy development.
Diffusion period (198095)
The diffusion period of the information revolution in
commercial banking saw the spread of IT to all aspects of
banks internal organization and market relationships
thanks to the introduction of personal computers (PCs)
in clerical and managerial roles. During this period,
consumer-oriented innovations were widespread as
information technology nally provided support to all
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
6
Table 2. Growth of ATMs in the UK and elsewhere, 197495
Panel A. Bank branches and ATMs in the UK, 197494
Year Branches ATMs
1974 14,908 N/A
1984 14,058 6,106
1989 13,131 12,253
1994 10,724 15,180
Source: Collett and Maher (1997)
Panel B. Cash dispensers and ATMs in four OECD countries, 198895
1988 1989 1990 1991 1992 1993 1994 1995
Number of machines per million inhabitants:
Belgium 85 92 94 105 109 119 313 360
France 206 231 255 284 305 325 356 395
UK 245 275 296 314 324 328 342 358
US 296 306 321 331 342 367 418 467
Number of transactions per inhabitant:
Belgium 5.7 6.8 7.1 8.1 8.8 9.1 11.9 14.2
France 8.0 9.0 10.0 11.0 12.0 13.3 14.2 15.7
UK 13.2 15.4 17.3 18.8 20.2 21.3 22.9 25.2
US 18.4 20.6 23.2 25.3 28.2 29.8 31.8 36.9
Average value of transactions (USD)*:
Belgium 94.4 94.2 113.2 117.4 113.2 110.3 125.2 137.5
France 75.3 72.3 81.4 83.4 95.5 77.0 76.5 81.3
UK 68.0 65.0 77.0 81.0 84.6 72.5 74.6 77.3
US 66.0 64.7 66.0 67.0 66.9 68.2 67.2 67.7
Source: Bank for International Settlements (1989, 1996)
* Converted at yearly average exchange rates
points of contact between customers and bank, prompted
by major overhauls of incompatible legacy systems under-
taken in response to the perceptions of a major Y2K threat.
PCs offered a exible way of providing and enhancing
computer resources for a wide range of applications.
Simultaneously, widely available packaged software reduced
the need to devote in-house resources for the development
of general application systems. Incorporating, standardizing
and exploiting IT-based innovations became a key issue
in banks long-term strategies. Moreover, IT applications
offered banks greater anticipated advantage thanks to
expectations of enhanced control of nancial and strategic
resources.
Within organized markets new and powerful applications
developed to handle the security required by high-volume
payments. IT-related change became critical to support the
unprecedented increase in the speed, quantity and quality
of information about cross-border transactions in organized
markets such as those taking place in the Euromarkets.
Reforms in the US during the mid-1970s effectively
allowed US-based off-shore activities and by end of the
decade New York regained its position as a signicant
international market place. The 1980s also saw the
emergence of Tokyo, Hong Kong, Bahrain, Nassau and
Singapore as secondary nancial centres specializing in
non-European-currency denominated bonds like Australian
dollars and Korean wons.
A very important event for organized markets was the
lending crisis in the less-developed countries (LDC-debt),
which originated between 1978 and 1982. First, banks
were forced to make substantial provisions against bad
debts, triggering the need for banks to become more
selective in lending and forcing regulatory authorities to
re-examine capital adequacy levels. Second, big non-bank
corporations based in industrialized nations found them-
selves with better credit ratings than banks which, in turn,
Electronic Markets Vol. 12 No 3
7
allowed them to nance directly from markets rather
than through traditional intermediaries (bank disinter-
mediation). Banks were pleased to arrange this process
since it eliminated a burden on their capital. At the
same time, in emerging and non-industrialized Western
economies governments turned to domestic debt markets
to nance the increasingly burdensome service of foreign
debt.
The result of these processes was tremendous growth
(in terms of issues and nancing) of organized markets.
According to Hayes and Hubbard (1990), between 1965
and 1967 lead managers in eurobond markets placed an
average of ten issues per annum (each of $300 million
dollars approximately). By 197678 lead managers placed
an average of 70 eurobond issues per annum (equivalent to
approximately $3,000 million dollars). Between 1982 and
1986 lead managers had an annual average of 500 issues,
each valued around $40,000 million dollars.
Meanwhile, the most important consequence of the drive
towards mass delivery of retail nancial services during the
diffusion period was that banks effectively moved from
being places of decentralized personal relationships to ones
run by institutional managers.3 During the diffusion period,
banks began to create relationship databases instead of
using skilled personnel at all points of contact with
customers (BBC 1995). For example, Lesley Taylor (Head
of Direct Banking, Royal Bank of Scotland) claimed that
current technology allowed one person to develop in three
or four weeks the skills that previously required ve years
in the job (BBC 1995; Morris 1986: 97). Information
technology applications, therefore, promised higher organ-
izational exibility to those banks that could effectively
implement technical changes.
The second effect of technical innovations on banks
approach to business during the diffusion period pertained
to distribution capabilities. The branch network retained its
primacy almost entirely as the point-of-sale for nancial
services, with most transactions accomplished by non-
branch service channels. This trend was facilitated by the
advent of digital communications technologies and
networks, which allowed the performance and reliability
required for organization-wide integration of data
resources as well as more effective extra-organizational
networks.
The integration of services around digital networks
(ISDN) and greater use of electronic data interchange
(EDI) protocols were at the heart of new distribution
channels such as electronic fund transfer at point of sale
terminals (EFTPOS), telephone transfer systems and smart
cards. Card technology evolved to provide individual
customers with border-less services, primarily under the
member-owned VISA and MasterCard International
networks.
Table 3 illustrates the growth in the adoption of point of
sale terminals and in turn, this growth reected how
IT applications were used instead of cash registers and
telephone credit authorizations. Other innovations
included cheque verication terminals and fund transfer
terminals.
New distribution channels allowed banks to supply more
services and this had dramatic effects in banks cost struc-
tures. The move from more to less expensive distribution
channels was possible because the same information or
transaction could be delivered in a number of ways. How-
ever, not all substitutes for branch-based service enjoyed
immediate success (McNamara and Bromley 1997).
Cheaper processes were an insufcient condition for
reduced cost structures because technology opened the
way for banks to improve their cost structures provided
customers and agents changed their behaviour according to
banks expectations.
For example, growth of the most sophisticated EFTPOS
terminals was hampered by conicts between retailers and
banks about the inadequacy of cash and cheque handling
relative to the banks preferred electronic transactions. Also,
there were arguments about the division of costs and prots
in the shared systems reecting underlying differences over
who owned the customer, banks or retailers. As a result by
the end of the 1980s, EFTPOS had yet to full its potential
and develop into a major new source of prot for banks fee
income (Channon 1988: 317; Wood 1989: 3).
All types of nancial institutions invested heavily in the
integration and standardization of internal systems during
the 1980s. Progress, however, was uneven because banks
had traditionally operated through their own closely con-
trolled retail branch networks while the use of third and
second parties as agents were more popular in the building
society or insurance sectors. At the same time, high trans-
Table 3. Growth of EFTPOS terminals in four OECD countries, 198895
(Number of terminals per million inhabitants)
Country 1988 1989 1990 1991 1992 1993 1994 1995
Belgium 1,925 2,477 2,828 3,213 4,034 5,246 6,294 7,174
France 2,154 2,842 3,180 3,568 5,594 7,435 7,574 9,394
UK 426 1,311 1,916 3,299 3,806 4,639 5,993 8,647
US 183 200 240 348 450 759 1,440 2,107
Source: Bank for International Settlements (1989, 1996)
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
8
action costs resulted in low international interconnectivity
of payment systems. The established framework handled
urgent high value payment well, but achieving potential
economies of scale in small payments was deterred by some
countries lagging in the use of automated clearing systems,
regulation or concentration in bank markets (Wood and
Erturk 1996: 1516).
New technology allowed the introduction of new
services and in turn, new retail bank products brought
the bank service away from the branch and closer to the
customers by delivering customer information at the point
of sale. Banks had no proprietary hold on this technology
and at the same time, retailers started to offer their own
credit services with store payment (account) cards and
credit cards. A classic example of an originally non-nancial
rm offering nancial mediation services was the experience
of Sears, Roebuck & Company (see further Christiansen
1987 or Ghemawat 1984). In 1982 the US-based rm was
the worlds largest retailer (Ballarín 1985: 117). As part
of its diversication strategy, Sears purchased an investment
house (Dean Witter Reynolds) and a real estate broker
(Coldwell Banker). Sears tried to provide full nancial
services through in-store sites (called Sears Financial
Centres) by pulling together its new acquisitions with
previous nance business including own-brand credit card
(Discover Card) and insurance (Allstate Insurance Co.,
established in 1931). In other words, Sears tried to create a
one-stop department store by integrating:
customer information and administration;
different retail sales and nancial services within oor
space in stores;
customer support and sales of volume-oriented nancial
markets;
the strong brand name of Sears; and
Sears corporate culture.
However, by 1984 outsiders began voicing doubts about
the strategy (Ballarín 1985: 122). The expected synergy
had not materialized while the core retail operation had lost
competitiveness and market share. At the end of 1992, a
record $160 million dollars loss resulted in the nancial
services group being sold piecemeal for a total of $4 billion
dollars. The divestiture provided Sears with much needed
debt relief, reducing its outstanding debt to $17 billion
dollars.4
The divestiture of the nance side ended Sears attempt
to capture nancial products with retailing. It could be
argued that Sears was making the same mistake as banks by
delivering exclusively through branches (Crane and Bodie
1996: 115). Alternatively, it could be argued that conicts
in corporate culture were a barrier to synergy (Ballarín
1985: 122). However, either explanation was challenged by
the success of a more focused approach to retail nance by
retailers like Marks and Spencer or by the synergies with
branches and supermarket stores explored by US banks like
Wells Fargo or Banc One (Channon 1996: 5). In other
words, despite its failure to consolidate, Sears case was the
rst attempt to achieve a supermarket in nancial services
and the prime example for the blurring demarcations in
the functions of banks and non-nancial intermediaries.
Moreover, Sears entry strategy was not necessarily that of
a price cutter. Instead, Sears managers expected synergy to
develop by building nancial services around an established
customer base.
In brief, during the diffusion period IT applications
resulted in extending customer options in terms of channel
and location in engaging in nancial transactions with
their main bank but also competing banks. Together with
regulatory change and theoretical advances allowing
more detailed measurement of credit risk, technological
innovations put a premium on nancial information rather
than on transaction processing capability. Developments in
IT were instrumental in lowering entry barriers to bank
markets by providing scale benets to the smallest providers
through open membership and third part outsourcing.
Applications of IT also threaten to turn retail bank branch
networks into sunk (i.e. irrecoverable) strategic costs.
During this period IT developments augmented the range
of nancial services and product availability by increasing
the threat of substitution and by lowering the cost of me
too strategies. Moreover, during the diffusion period,
digitization and standardization of IT applications helped
to develop markets for second and third party processing.
Unfortunately, progress to achieve all potential opportun-
ities opened by technology was slow to come because,
although technology allowed new entrants to contest
markets for nancial services, these challenges took place
only in the most protable segments of bank markets (such
as credit cards or unsecured lending).
The rise and fall of the virtual bank (19952001)
Table 4 summarizes some of the most important recent IT
applications in retail nance namely ATMs, telephone
banking and electronic banking. Partial success of most of
these applications questions whether technological change
in the Digital Age5 (as opposed to those in the Information
Age6) offers new forms of competition and business models
in bank markets. Commercial banks have coped with tech-
nological innovation and accomplished intended objectives
with varying success. Technology has opened the way for
banks to improve their cost structures provided they could
induce customers to change their behaviour in the intended
direction. At the same time, there have been uneven effects
from the same technological innovation across distinct
geographies.
As noted by Pennings and Harianto (1992), the
propensity of banking organizations to adopt technological
innovation evolves around the tness between the new
application and the resources, capacities and capabilities
which organizations have accumulated over time. Banks
have had no proprietary hold on most of their technology
Electronic Markets Vol. 12 No 3
9
Table 4. Key technological innovations in electronic retail nance, 19792001
Year Name Characteristic Contribution
197985 Telephone banking (US, UK) Branch-less retail intermediaries Multi-channel distribution system for
banks based on an integrated customer
account and information system.
198896 Mondex cards (UK) Debit card with re-writable micro-chip Facilitate small-value retail trans-
actions with the potential to substitute
central bank issued notes and coins.
Formalize ways of collecting broad
array of information from customers.
198998 DigiCash (NL) Electronic only medium of exchange
and unit of account
Payment systems and products that
depend exclusively upon high-speed
communications done through
computers
19952001 Security First Network Bank (US) First intermediary working through
the Internet
Technology opens new opportunities for
bank growth and offers managers of
banks possibilities to achieve high
organizational flexibility.
Source: own estimates
and this has been notably the case with the technology
fuelling the growth of the latest applications (such as
Internet banking or middle-ware solutions). Some
established participants in bank markets have responded by
offering non-traditional services like holiday travel (e.g.
Midland and Thomas Cook) and real estate agencies
(e.g. Lloyds Black Horse Agencies). However, the vast
majority responded through new service offerings in core
areas and by increasing the diversity in their products
in terms of markets and customer groups. A few banks
such as HSBC, BBVA, BSCH, ABNAmro, Deutsche Bank
and Citigroup also increased their geographic scope,
often on a narrow range of activities. However, many
banks found little joy in cross-border retail growth. For
instance, most major UK banks (i.e. Lloyds, Barclays
and NatWest) divested foreign operations as they failed
to match the returns available in home markets.
Participants in bank markets have thus tried, through
technology, to increase their share of customers nancial
spending by integrating retail and nancial services
into one-stop shopping. They have generally sought
to expand scale sensitive volume-oriented sales and differ-
entiate on the basis of their brand name and corporate
culture.
As suggested by empirical research documented in
Bátiz-Lazo and Wood (1999: 25), focus on traditional
markets and the creation of new customer groups within
geographical markets, reects commercial bank managers
preference to accept a degree of cross-subsidization in
return for the increased stability of multi-relationship
customer bases. Although managers of banks expect soft-
ware and hardware developments to enable close control of
their banks main prot drivers (ibid.: 25), only a handful of
participants in the world have developed IT applications
that provided detailed and reliable protability reports that
discriminate effectively between alternative strategies
(Holmsen et al. 1998: 85). Diversication and greater asset
size, therefore, are a solution to managers inability to track
key economic drivers for individual distribution channels,
service/product offerings, customer group and individual
customers.
Concluding that greater diversication and scale are the
way forward for nancial service organizations in general
and banks in particular, is reasonable given that managers of
banks have failed to take full advantage of opportunities
created by IT innovations. However, there is an apparent
paradox when greater diversity and asset size, mainly a
product of acquisition rather than organic growth, are
pervasive despite technological change, because the
expectation that IT innovation should result in greater
specialization being the typical business model for partici-
pants in bank markets.
The successful use of digitalization by wholesale payment
systems and the potential for retail transactions to follow
suit, led many (e.g. Browne and Cronin 1999; Taylor
1998; Koerner and Zimmermann 2000; Zimmermann
and Koerner 1999) to conclude that the virtual bank
would be the typical organizational form for nancial
intermediaries. Although the virtual bank is still a broadly
dened concept, there is some general assumption for
virtual to reect a tendency towards the prominence of
non-proprietary, computer-based networks that enable a
total digitalization of nancial transactions. As a result,
non-nance providers would acquire a low sunk (i.e.
irrecoverable) cost capability to disintermediate established
providers in bank markets. Table 5 summarizes elements
which explain the apparent inability of IT innovations to
engineer increased specialization.
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
10
Table 5. Competition in bank markets and technological change, 19952001
(Likelihood the virtual bank will be the typical organizational form in banking)
Dimensions of IT Innovation Limitations for electronic-only retail
commercial banking
Potential for electronic-only retail commercial
banking
Innovation in service offering
Each new technological innovation accounts
for (proportionally) smaller reductions in price
differentials.
Bank customers remain unwilling to pay for
interfaces for the new technology, while
merchants expect to share the revenue of
new payment media through lower
commission charges.
Defection rates remain low thanks to the
inertia of bank customers, which, historically,
has been high. 6
Unknown brand name and associated high
marketing expenditure (to attract long-term
core deposits).
Greater price transparency.
Greater convenience to customers (including
congenial resolution of complains through elec-
tronic media).
Each customer segment interacts with the bank
through the most cost effective distribution
channel.
Innovations (such as smart cards and digital cash)
that circumvent banks proprietary networks with
alternative distribution or payment systems.
Creation of new customer segments and improved
relationship banking.
Operational function innovation
The possibility of scale economies make it
very hard for potential entrants to catch up,
even with technically better systems.
Continued importance of contextual non-
standardizable elements to assess risk
The potential for fraud, money laundering
and systemic failure requires supervision,
regulation and minimum capital requirement.
More specialized (and expensive) labour force.
Enhanced financial performance due to reductions
in overhead expenses, which are not offset by
reductions in revenue or increases in other
expenses.
Standardization of activities in payment and
lending services eliminate the uniqueness of
banks proven expertise and ability to control
losses from payment activities efficiently.
Access to a much wider base of depositors and
high rates of asset growth.
Source: Bátiz-Lazo and Wood (2001), Bátiz-Lazo et al. (2001), DeYoung (2001), McNamara and Bromley (1997), Group of Ten (1997),
Radecki (1998), and Sebastián (2001).
Although most of the elements in Table 5 have already
been discussed throughout this paper, Table 5 also suggests
other deterrents to the conclusion that the virtual bank
will be the typical organizational form for nancial inter-
mediaries. These deterrents include regulatory innovations
as well as banks position of advantage based on the trans-
ferability of skills between managing payment systems
and lending. However, Table 5 also indicates potential
strategies within retail bank markets. For instance, the
learning effects of the latest technologies have yet to be
exhausted. Indeed, systemic studies of Internet bank
performance are in need of making clear distinctions
between pure play and click and mortar approaches
(DeYoung 2001: 60). Another potential strategic course of
action could build on IT enabling the standardization of
activities in payment and lending services. Once again,
however, Table 5 suggests that the success of that course
of action could be limited because of the pervasive import-
ance of contextual elements in risk assessment (McNamara
and Bromley 1997) hinders the growth potential of
standardization.
In brief, payment systems still rely on bank deposit
transfers and central bank-issued money as a medium of
exchange. This suggests that in the foreseeable future the
complete substitution of notes and coins issued by central
banks by digital systems running in high capacity com-
munications medium through computers is unlikely. Trans-
actions involving e-commerce, m-commerce or WebTV
have the potential of re-introducing privately issued
currency, particularly in applications where customer hold
is high such as commuter transport. Computer applications
also have the potential to standardize lending decisions but
only when making managers judgement redundant for risk
assessment. Generally banks have been strongly positioned
as administrators of local and international payment systems
and the transferability of skills (between managing payment
systems and lending) gives banks a strategic advantage.
In the foreseeable future, this position is unlikely to be
seriously challenged just as central bank-issued currency is
unlikely to be replaced by digital currencies. However, the
expected growth in the volume of payment and banks lack
of proprietary control of technology suggest that potential
threats of entry to bank markets will persist. Indeed, at
the time of writing, there are still lessons to be learnt on
how best technology can be applied in the production and
distribution of retail nancial services.
Electronic Markets Vol. 12 No 3
11
DISCUSSION
This review set out to determine whether technological
change enhanced the importance of computer systems in
the strategic compass of commercial banks. One early
expectation was that banks strategic goals would seek to
change and look to modify the principalagent relationship
between bank and customer, so that clientbank relations
depend less on loyalty and service quality (i.e. idiosyncratic
investments) and more on nancial margin. There is
evidence to suggest that in a historical perspective,
technological innovation and, in particular, increasing
applications of telecommunications in bank markets such
as telephone banking, electronic cross-border payment
systems or wholesale payment systems, have effectively
modied the external and internal nature of the banking
organization.
However, the way in which future technological
innovation is likely to modify banking organizations, both
externally (product or service) and internally (operational
function), continues to be uncertain if only because it
revolves so much round the strength of customer hold and
the strategic determination of a range of potential contest-
ants for bank markets. Externally banks are challenged
to service the growth in the volume of payments through
e-commerce, m-commerce and WebTV but historical
evidence suggests that very few IT applications have led
to immediate transformation of business practices in bank
markets. Indeed, some of the most promising innovations
have failed signicantly. Smart new software applications
and innovative hardware interfaces which link new ways
of making payments (e.g. Mondex or VISA Cash) with
conventional payment systems are likely to co-exist and
inuence the way customers enter the banking system but
gestation periods are long rather than short. Banks will
continue to be pressed to resolve operational issues in terms
of individual customer risk and individual customer
protability while, at the same time, continuing to increase
size and diversity. The pre-eminence of conservatism
in consumption patterns for retail nancial services will
continue to limit the success of the most promising tech-
nological developments.
Internally, technological innovations have increased the
leverage of superior processing relative to capital and other
physical resources. Changes in technology have lowered
transaction costs for processing nancial transactions and
some banks have been very effective in implementing those
innovations. In the future, hardware and software are
expected to provide the platform that will improve banks
multi-channel management while reducing the cost of
coordination. However, at present, it is uncertain whether
the solution to banks operational problems will result in
no-change for the banking organization;
the creation of networks of stand alone product/service
groups, stand alone distribution channels and stand
alone treasury operations; or
a combination that allows product/service and channel
managers to negotiate deals independently.
Throughout the technology innovation process, banks
have shown that they lack full proprietary knowledge
and capabilities to successfully develop new technological
solutions. This suggests that alliances between banks and
technology providers have greater chances of success
than efforts unique to commercial banks or unique to
technology providers. Managers of banks are thus
challenged to excel in the implementation of these IT-
based strategies. Otherwise, poor execution will result in
few ex post options and low sustainability of competitive
advantage.
On the other hand, technology helped non-bank
providers to enter banking but in selected areas such as
credit cards and unsecured lending. Anecdotal evidence
suggested that technological change in general and
digitalization in particular, could have been instrumental
in reducing price differentials and increasing transparency
in organized markets as well as helping to create new
customer segments (through relationship databases).
Future eldwork should try to determine the true
extent to which technology has allowed managers of
banks and non-banks to segment relationships by
protability as well as providing the basis for the
development of new distribution channels (e.g. customer
group diversication). This assessment, however, will
have to determine how possibilities dealing with the
transfer of capabilities between lending and managing
payment systems encourages managers of non-banks,
who wish to take advantage of the growth in the volume
of payments, to create new capabilities as a way to sustain
entry in bank markets. Moreover, future research should
make clear distinctions in the nancial and strategic
successes between pure play and click and mortar
approaches.
In brief, the full move away from the branch-centred
organization into virtual banking will require new IT
applications, new managerial practices and new consump-
tion patterns within the banks most protable market
segments. Managers of banks (and non-banks wishing to
enter bank markets) are now challenged to design internal
systems that provide greater control of the protability
drivers and which enable their organizations to capture new
synergy.
ACKNOWLEDGEMENTS
Dr Bátiz-Lazo beneted from the nancial support of
Conacyt (Num. 82619) in the early stages of this research.
Research support from Jackie Fry, comments and sugges-
tions from Sally Aisbitt (Open), Chris Holland (MBS),
Robert Locke (Hawaii, Manoa), participants at the
Financial Information and Systems Annual Conference,
Twelfth Accounting, Business & Financial History
Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
12
Conference and anonymous referees are gratefully
acknowledged. The usual caveats apply.
Notes
1. Unless otherwise stated, this section borrows freely from
Cassell (1984: 6287) and archival search of the Board
Meeting Minutes (1941 to 1965), Minutes of the
Finance and General Purpose Committee (1941 to
1965), Minutes of the Annual General Meeting (1923 to
1962) and Notes to Meetings of the Board (1962 to
1976) from the Co-operative Permanent Building
Society.
2. Notes to Meetings of the Board from the Co-operative
Permanent Building Society, 19 August 1976.
3. With the effect that The banker as a man of stature had
been lost. (Interview with senior executive of Lloyds
Bank Group, 3 March 1995).
4. CFO, January 1994, pp 2633.
5. Starting in 1977, with the introduction of the Apple
personal computer.
6. Starting in 1948, with the invention of the rst
programmable computer.
7. Even for credit cards where the formalities of changing
suppliers are minimal customer retention rates have also
been high historically. See recent surveys for the UK
credit card market in Gilmore (2001) or Bátiz Lazo
et al. (2001: 875).
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Bernardo Bátiz-Lazo and Douglas Wood History of IT in Banking
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... El crecimiento de los pagos sin contacto y pagos digitales durante la pandemia de la COVID-19 podría haber transformado estructuralmente los sistemas de pagos minoristas con efectos duraderos tras la pandemia. No obstante, no se observan cambios estructurales a nivel minorista, lo cual tiene sentido considerando que los cambios tecnológicos en la banca minorista tienden a ser lentos (Bátiz-Lazo y Wood, 2002;Bátiz-Lazo, 2018). Además, ningún medio de pago distinto al efectivo ha surgido como un claro líder en transacciones al menudeo (9). ...
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