The Nature of Banking and its Future

It can be argued that since the time of the medieval Florentine bankers, the nature of banking and general services used to facilitate commerce has changed very little. Technology is often credited with revolutionizing the banking industry; in reality, technology has been used, for the most part, to pour old wine into new bottles. Each new generation of technology is applied to the legacy of banking services to automate labour-intensive processes, accelerate the speed of transactions, attract new customers, authenticate parties in a transaction, augment profit margins and a host of other traditional banking measurements. Technology has led to a greater sophistication of banking and investment products, making them more complex and harder to understand by potential customers, in many cases resulting in having to educate customers before they will subscribe to new banking products. Paradoxically, although the cost of operating technology-driven products continues to reduce through commoditization, a portion of this saving is lost by the increase in the cost of sales because of the additional education and longer sales cycle. This interrelationship between technology, cost, customer and sales leads institutions to compare the task of providing banking services to the activities of manufacturing companies.