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Organisational change and the computerisation of British and Spanish savings banks, 1965-2005 J. Carles Maixé-Altés and Bernardo Bátiz-Lazo Universidad.

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Presentation on theme: "Organisational change and the computerisation of British and Spanish savings banks, 1965-2005 J. Carles Maixé-Altés and Bernardo Bátiz-Lazo Universidad."— Presentation transcript:

1 Organisational change and the computerisation of British and Spanish savings banks, 1965-2005 J. Carles Maixé-Altés and Bernardo Bátiz-Lazo Universidad de A Coruña - Spain Bristol Business School - UK  EBHA 2006 WORK IN PROGRESS. DO NOT QUOTE Material for ‘BANCA’ students - Master in Banking & Finance University of A Coruña Spain Prof. Dr. J. Carles Maixé-Altés

2 Summary Our aim –To present findings to date (this is very much research in progress!) –Explore the potential attractiveness of mechanization (including the use of computers) within the move from a retail branch-based organizations to M- form. Research to date involves –Organisational changes associated with the automation of financial intermediaries in Spain and the UK. –A international comparison in two distinct competitive environments of a successful and an unsuccessful group of savings banks. –Archival research on the evolution of savings banks helps to ascertain how participants in bank markets developed capabilities to compete.

3 Early computing at the Trustee Savings Banks Computers TSB: manual operations until 1967 then 23 English TSB - use bureau service offered by Post Office (four ICL 4 equipped centres) 4 largest Scottish TSB - 33joint purchase of Burroughs equipment TSB Computer Services is established in 1972 (brings in house former bureau service) By 1982 the TSB has the most advanced database of client information in the UK But in spite of high level of computerization, the share of the retail banking remained low

4 III. Spanish Confederation of Savings Banks (CECA) and tecnological change Competitive collaboration transformed shared experiences, and in turn, the creation of critical mass to effectively contest bank markets The corner stone of technological change and market contestability in Spanish savings banks was CECA’s Organization, Automation and Service commission (COAS)

5 ATM networks in Spain (1984-90) Network198419851986198719881990 6000 (Savings Banks)1 3151 7553 0503 9545 6059 432 4B (Banks)7087951 0301 4211 6813 000 Servired (Banks)-3574955631 2652 000 Total2 0232 9074 5755 9388 55114 432 Source: CECA and Tirado and Nieto (1991), pp. 121-22. The idea of a computer link was one of COAS’ strategic principles since the early 1970s. An example of the implementation of this principle was facilitating scale to individual savings banks by creating networks of payment systems around CECA. Notable examples include ATMs and EFTPOS from 1980 onwards.

6 Savings Banks ATMs in Spain (1986-2000) 19821983198419861988199019921994199619982000 Number of machines 2008001 3153 0505 6059 43212 27114 14916 54821 49724 836 Number of withdraw (millions) ---77144240284362328383922 Value of withdraw ( € millions) ---4 5089 16516 51620 93928 06725 26129 12557 383

7 Debit and Credit Cards in Spain (1989-2004) 1990199520002001200220032004 Debit Cards Number (millions)18.322.331.232.032.3 27.5 Value of sales (€ millions) 22 37639 18274 74077 4618716494 03382 791 Credit cards Number (millions)7.08.314.317.620.923.833.7 Value of sales (€ millions) 6 42513 07527 56834 5984062348 73375 397

8 Achieving Scale through Co-operation in Spanish Savings Banks, 2005 Note: Number of Savings Banks in brackets

9 Adoption of IT applications in Spanish savings banks (1968-2005) Period Technology and Operacional Functions Emergence (1968-79) ● SICA (Savings banks electronic clearing): previous development using first National Phone Company data transmission network (1968). ● BankAmericard (1971), by Banco de Bilbao ● Cheque guarantee cards (1973-88): first project of ‘Tarjeta 6000’ (savings banks card) ● Primeros proyectos para la domiciliación de recibos (1973-9) ● Mecanización de las nóminas de los empleados de las cajas (1974-6) ● Domiciliación de la nóminas de clientes de las cajas (desde 1979) ● Visa España (1979). First payment network: 56 banks, savings banks and cooperative banks) ● 4B System (1979). Second payment network: Banesto, Banco Central, Banco Hispano Americano and Banco Santander). Member of International Visa ● Euro 6000. Third payment network: 35 savings banks, centralized by CECA ● Auto 6000 (1979): fuel cheque

10 Difusión (1980-95) ● SWIFT: international access (1980/1988) ● CCI (1980-4) and CTB (1984- ) Bank and Savings banks organization for clearing operations and operative services ● Debit card ‘tarjeta 6000’ (1981) ● ATM - off line: 1981-89, 47 savings banks ● Savings banks European project (1984-88): ATM service (CECA, IPACRI (Italy) and TSB (UK). EUFISERV (1990): a international company for ATM development. CECA adapted their ‘tarjeta 6000’ and connected with VISA and PLUS networks ● RJE, IFI and TAF (1985-87): desarrollo previo a la union de ordenadores de la CECA y cajas de ahorro usando bandas magnéticas y transmisión por lotes. ● Credit card (1985), ‘tarjeta 6000’ ( Savings banks-CECA) and Servired (1985): Visa system ● Central de Recibos de la CECA (1986): normaliza el sistema de domiciliación de pagos ● EFTPOS (1986). Las primeras propuestas se habían dado en 1981 ● ATM – on line: 1987, CECA and savings banks ● SITO –Sistema de Intercambio y Tratamiento de Operaciones (1988): union de ordenadores on line entre todas las cajas (el proyecto se había iniciado en 1974-78) ● Savings banks 6000 Network agreement with 4B Network (1989) and Servired (1994) ● First generation of smart cards: TIBC (banks and savings banks) ● EDI Electronic data interchange for savings banks (1995). First study in 1982 (videotext, cash management, EDI) ● Home Banking (1995) utilizando la via telefónica Period Technology and Operacional Functions

11 PeriodTechnology and Operacional Functions Communication and network architecture (1996-2005) ● Seguridad lógica ● Canal financiero en Internet ● Canal banca telefónica ● Adaptación al Euro ● Reporting financiero: aplicación NIC ● E-Procurement ● E-ESCA: formación en internet ● Arquitecturas alternativas al mainframe de IBM ● SEPA sistema de pagos europeo ● The Joint Forum – Basilea II ● Version WEB del SBP ● WOSA-XFS-JXFS:normalización de dispositivos de autoservicio

12 Cajeros automáticos en España y Reino Unido (1984-2005) 198419851986198719881990199520002005 Reino Unido 6 8158 84510 33012 39213 98017 34420 93333 00046,461* España Red 6000 (Cajas de ahorro) 1 3151 7553 0503 9545 6059 43215 29224 83634 663 Sistema 4B (Bancos) 7087951 0301 4211 6813 000 9 67718 64319 597 ServiRed (Bancos) -3574955631 2652 000 Total2 0232 9074 5755 9388 55114 43224 96943 47954 260 Fuentes: CECA, AEB, Bátiz-Lazo y Maixé-Altés (2006) y Bátiz-Lazo (2007) (*= 2003)

13 Conclusion  Competitive collaboration can enable the creation of inter- organisational processes and procedures to distribute otherwise inaccessible information.  How similar/different was the process of transformation from retail branch-based system to an M-form organization in UK and Spanish savings banks? –What was the role of CECA and the TSB regional boards? –To what extent did computer technology facilitate migration? –What was the role of financial (i.e. accounting) information to determine performance?


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