Technological change: Is it different this time?

Lyndon Nelson

Banking has been constantly evolving and is often one of the earliest sectors to embrace new technology. This chapter will look at technological change from the perspective of the regulator – not only the implications of a banking business model in transition, but also in changing how the regulator itself goes about its business. These implications raise the question of whether this wave of change is different this time.

A bank is a highly complex organisation that plays a key role in the intermediation of funds within and between economies. Technological change has been a constant in banking, whether it has impacted the retail side of the business, such as the introduction of pneumatic capsules that allowed bank customers to withdraw and place deposits without getting out of their cars, or in the wholesale side with the first wire transfer of funds in 1870. Each change has brought both opportunity and threat to banks. For regulators technological change has not been so profound, with changes to the office working environment being the most significant – gone are the typing pools and in their place a more mobile workforce. In terms of regulators’ interaction with firms, that