How Technology Has Impacted Banking And Investing

Most people don’t think of banks as pioneers of new technology.  After all, the business of managing money has been more or less the same for hundreds of years.

In the consumer device segment of the technology market, new technology comes fast and furious as new device models eclipse their ancient counterparts after only a couple of years.

Related: Why Senior Discounts Are Vanishing From Our Banks

The banking industry simply doesn’t move this fast but that doesn’t mean innovation doesn’t happen.


I might not have been around to witness the early days of the ABM but I have certainly been appreciating these devices over the last decade or two.  What started out as a simple cash dispensing machine has turned into a self service wonder.

One of the greatest and sometimes overlooked features of an ABM is the option to use another language.  Banks simply wouldn’t be able to hire staff that speak four or five languages across their entire branch networks.

Related: Why More Banks Are Extending Hours, Opening On Weekends

Supporting multiple languages makes banking accessible to hundreds of thousands of customers and keeps them away from brick and mortar branches where costs are higher.

Two features of ABMs that I had never used before visiting the UK/Europe were the ability to top up my pay as you go phone and to even pick up theatre tickets!

Online investing and banking

Where the ABM revolutionized the physical banking experience, internet banking and brokerage services changed the virtual banking experience.  Bill payments, transfers, trading and transaction details are now available to clients any time.

Besides the convenience factors, online platforms have been a great benefit to consumers.  Since it is easier to build a virtual presence than a physical one, more competition entered the retail banking and brokerage market.

ING Direct, Questrade, Qtrade, ICICI Bank and iTrade helped bring about no fee bank accounts and $6.95 trades.  Costs for retail banking and brokerage services decreased.

Related: How To Bank Online Securely

Mobile banking and wireless payments

The latest wave of innovation is all about mobility.  The online banking and brokerage experience has now moved onto your phone which enhances convenience on many levels.

Banking apps can now link into your phone’s GPS to give you location based information such as nearest ABMs and branches.

Mobile and wireless technologies are more of an evolution in my mind as they haven’t drastically changed the market as much as past innovations.

Wireless payment technology over RFID (Visa PayWave, MasterCard PayPass) is up to twice as fast as using cash or debit cards.  Fees might not be dropping but consumers are getting back another very valuable commodity, time.

Related: 3 Must Have Security Tools to Protect Yourself Online

Service bundling

Many may not realize it but technology plays a huge part in giving companies the ability to offer cheaper bundled services for customers.  Telecommunications companies started the practice of bundling several years ago and now banks are catching up.

Do you have a chequing account, credit card and overdraft service?  Your banking fees could be reduced by 30%.

Have a mortgage and a brokerage account?  You can qualify for discounted trading fees of $6.95.

Technology makes these offers possible by allowing companies to collect and process vast amounts of data.

Faster trades

The average retail investor won’t care too much about how fast their trades are executed but brokers, institutional investors and hedge funds do.

Executing trades a few milliseconds faster on an exchange can make a big difference when you are doing thousands or even tens of thousands of trades a day.

Related: Why I Became A DIY Investor

Getting the best price possible for your clients helps them save money while the broker who’s placing the trades will get more business.  There are other arguments that high speed trading can lead to higher costs for investors however.

Fiber optic communications, fast computing power and purpose built applications all contribute to executing trades quickly.

While the pace of technology change in the financial sector might be slow relative to other areas, it still has a very significant impact.

Whether we realize it or not, innovations in technology for the banking sector affect us every day.

Andrew is a Canadian personal finance and investing blogger who recently moved to London, England.  He has a background in technology and a passion for travel.  His blog, She Thinks I’m Cheap aims to help Canadians build wealth by sharing facts, stories and advice.

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  1. Bryan Jaskolka on July 19, 2013 at 5:35 am

    I agree that technology has certainly changed the way we manage our finances, but I can’t help think of the negative ways first. With card skimmers and more criminals finding new ways every day to take advantage of this technology, I often wonder if we weren’t just better off walking into a branch during regular business hours like the good ol’ days.

    • Andrew @ She Thinks I'm Cheap on July 19, 2013 at 5:27 pm

      True, but I wonder if there are fewer violent bank robberies now. One of the biggest factors is time, we simply have less time these days to spend in a branch. It seems like the market has determined that speed and convenience is more important that security.

  2. FI Journey on July 19, 2013 at 6:43 am

    Interesting to think about. I agree with Bryan as far as thinking negatively first. The way “$7 trades” are marketed to the general public now, I can’t help but think that the opportunity to gamble in the stock market from the privacy of your computer isn’t the best thing for our population as a whole.

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