Bernardo Batiz-Lazo

An Historical Appraisal of Information Technology in Commercial Banking

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 Quintas (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 adopt...

Banking on change: information systems and technologies in UK high street banking, 1919–1969

This paper explores the automation of the supply of financial services on the British High Street. Its aim is to provide an historical perspective to highlight the longevity of organisational change in the financial sector and to emphasise its remarkable continuity: UK clearing banks and building societies had very specific problems and adopted particular responses. It also indicates the close correspondence of organisational change with assessments by senior bank staff of both technological opportunities and the reception to change of bank customers. Office mechanisation (from the introduction of office equipment and “mechanical banking” in the inter-war years to its culmination with computer technology in the late 1950s and beyond) was introduced alongside the development of new capabilities. Technological change eventually offered others the potential to compete in bank markets. However, time and again, and despite a broadening of the range of financial institutions which provided competing services, technical change associated with long-standing experience resulted in a strengthened competitive position for already established participants.

Strategic alliances and competitive edge: insights from Spanish and UK banking histories

This research assesses the success of collaboration agreements through changes in competitive strength rather than the longevity of the transactions or the formality and visible structure of the agreements. To establish competitive strength, as development and renewal of capabilities, the research proceeds through the review of the alliance between the Co-operative Permanent Building Society, the Co-operative Wholesaling Society, Scottish Co-operative Wholesaling Society and Co-operative Insurance Society (1943–65). This cooperative agreement allows insights into the strategy of non-banks and nonfinance participants aiming to enter British bank markets. The research also considers the rather different process at Spanish savings banks, with a particular focus on IT outsourcing (1977–95). Cases in the UK and Spain form an historical argument and are used to demonstrate how the implementation of strategy is as important as strategic visioning to achieve competitive advantage in bank markets.

Emergence and Evolution of ATM Networks in the UK, 1967-2000

Research in this article traces the origins of a process of competitive change in British retail financial markets by looking at the emergence of cash dispensers technology, how it transformed into automated teller machines (ATMs) and how proprietary ATM networks gave way to total interoperability of cash withdrawals through a single common switch. Cash dispensers were an industry-specific innovation developed by British manufacturers (e.g. Chubb and De La Rue) which were, in turn, overtaken by US (e.g. NCR) and German (e.g. Siemens-Wincor) manufacturers. However, as the ATM became a global technology some of the leading providers (i.e. Burroughs, IBM and NCR) kept manufacturing and even their main design facilities in Scotland. The evolution of this technology illustrates changing boundaries of the banking organisation, the challenges faced by financial intermediaries to adopt on-line, real-time computing and highlights the role of network externalities in financial markets. From a business history perspective, the ATM, electronic funds transfer and other retail payment media have largely been neglected by British historians and management scholars. Yet the success of automated cash dispensers as a distribution channel in retail banking epitomises a shift in bank strategy, namely how applications of computer technology moved from being potential sources of competitive advantage to being a minimum requirement for effective competition in retail finance. This article thus promotes the idea that the history of technology must consider its users, their strategies and business models inasmuch as business histories of the late twentieth century will be incomplete without attention to developments in information and communications technologies.

Strategy, competition and diversification in European and Mexican banking

This article identifies whether top managers in banks’ parent companies are highly involved in the design of strategy and examines how management styles influence (or reflect influences) on diversification decisions within bank markets. Alongside this assessment, the research ranks the main concerns to design strategy in banking within an international setting (including the role of information and telecommunication technologies in the design and implementation of banks’ diversification strategies). Results emerging from triangulating responses suggested that, on balance, top managers in bank markets are predisposed to integrate around purely strategic rather than purely financial targets or than a combination of strategic and financial performance. Management of diversity does not seem to be time invariant with results suggesting that information technology management played a secondary role in the design of bank strategy but at the same time, information technology applications were perceived as an important force to modify competition in bank markets.

The Development of Cash-Dispensing Technology in the UK

The success of currency dispensers in the 1960s was the technological precondition for the now omnipresent automated teller machines (ATMs). An examination of the three earliest separate instances of cash-dispensing technology not only illuminates the history of this device but demonstrates how users-in this case banks-shape and direct technological change.

Management of core capabilities in Mexican and European banks

This research considers the way banks have altered their strategies as regulatory change (i.e. deregulation) and information technology (IT) innovations created more opportunities for service delivery and extended the range of potential competitors and forms of competition. These external changes provided new diversification and growth opportunities but also modified prior expectations about the way managers defined and controlled their bank’s core capabilities in pursuing current and potential business. The main research instrument used was a one hour, semi‐structured interview; and in total 55 managers of commercial banks, investment banks, management consulting firms and regulators from Mexico, Spain and the UK participated. Qualitative and quantitative analysis established that the great majority of banks responded to changes in growth opportunities through diversification moves but with no clear link to core capabilities. IT management played a secondary role in the design of bank strategy but at the...

The auditors' reporting duty on internal control: the case of building societies, 1956-1960

In this article, informed by corporatist theory, we explore the transition from ‘fraud detection’ to ‘statement verification’ (Chandler, Edwards, and Anderson 1993, 452) in terms of the audit objectives of building societies in the late 1950s. The study proceeds by analysing negotiations between the Institute of Chartered Accountants in England and Wales and state authorities, such as the Treasury, the Chief Registrar of Friendly Societies and the Board of Trade. These discussions eventually resulted in a change in the audit procedure applied to building societies (as documented in the Building Societies Act 1960). We show how the regulatory change allowed chartered accountants to discontinue outmoded practices under which auditors rather than directors had been expected to take responsibility for safeguarding the financial assets of building societies. Regulatory changes also resulted in auditors being required to assume a new duty; namely, to report on the system of internal control.

Competitive collaboration and market contestability: cases in Mexican and UK banking, 1945-75

Abstract In this article we explore the emergence and evolution of collaboration agreements among different types of intermediaries in the UK and Mexican financial systems. Collaboration in the UK looks at agreements between non-bank and non-finance providers aiming to modify their competitive capabilities and circumvent barriers to enter deposit markets. Collaboration in Mexican banking considered agreements between commercial banks and small regional banks during the period of 1945 to 1975. Agreements in Mexican banking are benchmarked against collaboration in the UK. As a result, research in this article sheds light on the success of collaboration agreements through changes in competitive strength rather than the longevity of the transaction or the formality and structural visibility of the agreements. Evidence documented here also helps in remedying a shortage of research around financial institutions in less developed countries and the economic and business history of Latin America, while providing an international comparison.

Organisational change and the computerisation of British and Spanish savings banks, circa 1965-1985

In this article we explore organisational changes associated with the automation of financial intermediaries in Spain and the UK. This international comparison looks at the evolution of the same organisational form in two distinct competitive environments. Changes in regulation and technological developments (particularly applications of information technology) are said to be responsible for enhancing competitiveness of retail finance. Archival research on the evolution of savings banks helps to ascertain how, prior to competitive changes taking place, participants in bank markets had to develop capabilities to compete.