Technology and the financial institutions industry: Evolution of electronic fund transfer systems *

This paper presents a discussion on the new environment for retail banking under the influence of changing regulatory structure, advances in technology, and shift in consumer demand for financial services. It is argued that the Electronic Fund Transfer Systems (EFTS) play a substantially different role than the past. In the previous period, the absence of price competition in the financial services industry, the early stage of technological development, and resistance of customers towards EFT systems, limited their usage only to a social strata which was younger, more educated and had an above average income. For this group, EFTS was a non-price, convenient device that Financial institutions offered them. EFTS plays an important role in the new environment. Its cost cutting possibilities will enable institutions to provide low priced services. Its telemation provides services at more convenient times and places to consumers. Its homogenization of financial services leads the participating firms in the industry towards a more comprehensive multi-purpose financial firm. The evolution of EFTS also has numerous security and human resource implications.