Banking Innovation

Question 1

What are the key innovations throughout banking history?

Answer 1

12^th Century

Bills of exchange introduced in Italy

1659

Introduction of cheques in the UK

1728

The first ever overdraft

1965

The first use of a guarantee card to secure payment of a written cheque

1966

First UK credit card

1967

Introduction of the world’s first cast machine (ATM)

1968

Banks automated clearing service (Bacs) introduced

1980

The first telephone banking system launched

1987

First debit card introduced in the UK

1990

First ‘Cashback’ is introduced

1995

First internet only bank (virtual bank) appeared

1997

First online banking is launched

2003

Chis and PIN introduced

2008

The first contactless cards issues and first Faster Payment sent

2009

Bitcoin introduced. This was the world’s first virtual currency

2012

Launch of the first mobile banking and Pingit mobile payments service launched

2014

Paym goes into operation and Barclaycard Anywhere introduced

Question 2

What are the advantages and disadvantages of centralised and decentralised departments?

Answer 2

Centralised Systems and Departments

• Advantages: include economies of scale, a single set of files, better security, a focussed head office.
• Disadvantages: include local offices waiting for technical assistance, reliance on head office support.

Decentralised Systems and Departments

• Advantages: include self-sufficient offices, more accurate costing, tailored IT systems.
• Disadvantages: include possible lack of co-ordination between departments, risk of data duplication.

Question 3

What advantage is there to peer-to-peer lending and crowdfunding?

Answer 3

The New Economics Foundations (NEF), a think tank, believed that part of the usefulness of crowdfunded loans was due to the unsecured nature of the loans, which it said was particularly suitable for the SME sector where borrowers often lack suitable collateral. It said that, as a result, ‘borrowers who struggle to access bank finance, may be able to get credit and at lower rates than other sources of non-bank finance’.

Question 4

What is Big Data?

Answer 4

Big Data involves the collection and analysis of large amounts of data to find trends, understand customer needs and help organisations to focus resources more effectively. The 3 Vs:

• The volume of data generated is a key feature of Big Data.
• Velocity refers to the speed at which real time data is being streamed into the organisation.
• Processing varied forms of data requires significant investment in people and IT infrastructure.