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Information technology innovations and commercial banking: A review and appraisal from an historical perspective

Author

Listed:
  • Bernardo Batiz-Lazo

    (Open University Business School)

  • Douglas Wood

    (Manchester Business School)

Abstract

Technological innovation in general and information technology (IT) applications in particular, have had a major effect in banking and finance. Following Garbade and Silber (1978), this research reviews the effects on banking organisations with reference to front office or external changes as described by the nature of product and service offerings. Following Morris (1986) and Quintás (1991), the research also considers innovations in the back office or internal (operational function) changes brought about to banking organisations. Outstanding IT-based innovations are considered and grouped into four distinct periods: early adoption (1864-1945), specific application (1945-1965), emergence (1965-1980) and diffusion (1980-1995). The research then discusses the potential impact of more recent innovations (i.e. electronic purses, digital cash and Internet banking). As a result, the research provides an historical perspective on the main drivers determining adoption of technological innovation in retail banking markets.

Suggested Citation

  • Bernardo Batiz-Lazo & Douglas Wood, 2002. "Information technology innovations and commercial banking: A review and appraisal from an historical perspective," Economic History 0211002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpeh:0211002
    Note: Type of Document - pdf; to print on HP/PostScript/Franciscan monk; pages: 42
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    References listed on IDEAS

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    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. Swank, Job, 1996. "Theories of the Banking Firm: A Review of the Literature," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 173-207, July.
    3. Joaquín Maudos Villarroya & José Manuel Pastor Monsálvez, 1995. "Prestación de Servicios Bancarios en las Cajas de Ahorros Españolas: Cajeros Automáticos versus Oficinas," Working Papers. Serie EC 1995-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    4. Robert DeYoung, 2001. "The financial performance of pure play Internet banks," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 60-78.
    5. Walker, David A., 1978. "Economies of scale in electronic funds transfer systems," Journal of Banking & Finance, Elsevier, vol. 2(1), pages 65-78, June.
    6. Stuber, Gerald, 1996. "The Electronic Purse: An Overview of Recent Developments and Policy Issues," Technical Reports 74, Bank of Canada.
    7. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
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    Cited by:

    1. Bojinov, Bojidar, 2016. "Challenges for ensuring the information security of commercial banks," MPRA Paper 75772, University Library of Munich, Germany.
    2. Majid Karimzadeh & Mohammad Reza Sasouli, 2013. "Contribution of Internet Banking toward Profitability of Banking in India," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(6), pages 57-69, December.

    More about this item

    Keywords

    Banks; competition; IT innovation;

    JEL classification:

    • N - Economic History

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