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An historic look at banking innovation

An historic look at banking innovation

WSBI-ESBG News & Views magazine interviews J. Carles Maixé-Altés of the Universitat de La Coruñas to look at history of innovation by savings and retail banks.

>> See: Previous editions of WSBI-ESBG 'News & Views​'

>> Learn more: WSBI-ESBG position on innovation

​​To start, we understand you are visiting us here at WSBI-ESBG offices as part of your research. Tell us more.

It was obvious that after a period of studying the savings and retail banking sector at a Spanish as well as international level, I would end up coming here, where a lot of information on the sector is stored. During the few weeks I spent at the WSBI-ESBG joint office, I had the opportunity to examine in more detail the role of the World Savings and Retail Banking Institute (previously called the International Savings Banks Institute) from 1945 until now. I also study in more detail the theme of the adoption and the distribution of ICT technologies in the savings and retail banking sector as well as the cooperation between the institutions.

After having been in contact on a national level with CECA, the national confederation of Spanish savings banks and other financial institutions such as Caixabank, it was a logical step for me to acquire more information on an international level. That is the reason why I contacted WSBI and why I could access an archive that is a goldmine for researchers.

​Who were the pioneers in Europe when it came to adoption of information technology and how did these pioneers implement ICT in their institutions?

The Nordic countries, the Germans and, surprisingly, a few of the Spanish savings banks started the evolution. They were interested in automatisation of back and front office processes with the help of computers. That started in the 1950s with the first generation computers, and accelerated in the sixties with second and third generation computers (mainframes). In the second half of the decade, the teleprocessing networks were highly important and the banks started establishing links between the head office and the branches by means of a combination of computers and telephone lines. In the 1970s, we need to mention the role of the EFT, the Electronic Fund Transfers, as well as the “Cash Dispensers” – only to withdraw money – the first bank cards and, a little bit later, ATMs – Automated Teller Machines offering more services than just the withdrawal of money.

It is important to mention the highly intense collaboration among Spanish savings banks. That stimulated new initiatives in the field of ICT, projects where organisations of various countries worked together. That cooperation later also extended to the negotiations with the equipment manufacturers, the manufacturers of the computers. In these early days, the savings banks needed to use a specific software, developed by their own IT-people. That meant that the technicians of the savings banks worked “hand in hand” with the technology firms. Thanks to that collaboration, they obtained competitive advantages in the retail banking sector, compared to the commercial banks.

Finally, just before the internet era (middle of the 1990s), “Home banking” and “Bank by Telephone” gained a lot of importance. Banks started to use a three-fold channel with video, text and telephone. A lot of European savings banks used the advantages of the networks of teleprocessing and the clearing networks, two big drivers of the development before the internet.

​And finally, we arrive at the current time, where we have a big choice of possibilities in technology and communication, which we need to manage and use to the maximum to increase profitability and efficiency.

​What does WSBI mean for you?

From my point of view, WSBI is like a “hub” to use the terminology of information networks. It is an institution where various contributions come together. It is a place where synergies can be exchanged, not only at a technical level but also on a practical level with groups that are specialised in various areas of retail banking and technology. It also has the advantage of having direct contact with the institutions in many different countries and with experts of the technological and banking sectors, as well as various organisations, universities and public institutions.

This organisation makes it possible to gain access to the inter national sector of retail banking. It is like a watchtower that gives you a broad overview of the sector. In other words it is like the centre of a knowledge network.

​Why should one carry out these kind of historical investigations?

Studying the trends in a certain sector of economic activity at a certain moment of its history can help a lot to understand the current situation of the sector. It is probably the most efficient way to understand the crisis that we have experienced and it allows us to construct our future on a solid basis. WSBI has always dedicated a lot of attention to the study of history of the savings and retail banks. On 27 May of last year, for example, it organised a Financial History Workshop on the theme “Savings in a world without interest?” where you talked about the causes, the impact and consequences of low interest rates on savings and retail banks from a historic point of view.

​What are the main aspects of the research that you are doing? What are your objectives?

The core of my research is the study of the processes of introduction and distribution of ICT in the savings and retail banking sector. In short, the analysis of the long evolution that has transformed these banks into service-oriented companies. 

Another research to be conducted – and where it is necessary to involve new researchers – is the study of the work of WSBI in developing countries (Asia, Latin America, and Africa). There are various areas of investigation such as the training of executives, the design of products and financial education. 

Finally a central theme that needs to be researched is the role of WSBI in the politics aimed at decreasing the level of financial exclusion. A great example of this is the WSBI programme “Making small-scale savings work”. This initiative tries to decrease the distance between the different social groups. There is an extremely long evolution that started in the 1970s and over time, WSBI has participated in various development programmes under the auspices of the United Nations and the EU. This is an area that remains to be researched.

​What are the main objectives of your research?

To study the role of technological change in the retail banking sector, from the diversification –mainly the 1980s and 1990s – to the specialisation of services and of the human resources, all this with the objective to increase efficiency of the management of the electronic channels. Also, to be able to evaluate, from a historical point of view the determining factors of the current crisis in retail banking and to consider the possible solutions for the future.

​What main advantages does digital revolution provide for the retail banking sector?

​It increased the access to banking products for many companies – in particular SMEs – and for citizens in general. It also forced the savings banks to re-invent themselves, to look for new business areas and to improve their interaction with the society.

ICT is an important asset to improve the relationship with the client. They make access to products and services much easier and allow for a more individual contact with the client. On the other hand, with ICT comes also a higher level of competition from within and from outside the sector. Many of these competitors put forward their client proximity, a traditional advantage of the savings banks.

About Professor Maixé-Altés

J. Carles Maixé-Altés is a professor in the Department of Applied Economics at the University of La Coruňa. Professor Maixé-Altés is specialised in bank and financial history with a particular interest in savings banks. In more recent years, he also focused on the study of the introduction and the dissemination of ICT in the retail banking sector. 

​He has published various books and articles in specialised magazines. His most recent publications are the book Innovación y compromiso social. 60 a  os de informatización y crecimiento (“La Caixa” 19502011”); the book Techno logical Innovation in Retail Finance, International Historical Perspectives, edited with Bernardo Batiz-Lazo and Paul Thomes (London-New York, Routledge, 2011) and the article Managing Technological Change by Committee: Adoption of Computers in Spanish and British Savings Banks (circa 1960-1988), Revista de Historia Industrial, 47-3, 2011 (with B. Batiz-Lazo) 

He was born in Tarragona and obtained a Master’s degree in Modern and Contemporary History and in Economic Sciences at the University of Barcelona, where he also obtained a doctorate in Economic History (cum laude) in 1992.

>> See: Previous editions of WSBI-ESBG 'News & Views​'

>> Learn more: WSBI-ESBG position on innovation

Communication - institutional & commercial; Financial History; Innovation Hub; Innovation