How technology transforms banking.

From customer interactions to the back office, every aspect of financial services is being profoundly altered by technology. An overview of the forces at work.

Electronic technology is shaping the financial-services industry in ways that would have been incomprehensible just a decade ago. Who, in 1989, thought - or had even heard - about data warehousing, data mining, PC banking, smart cards or Web pages? Who envisaged banking via cell phone? Paying bills from a home computer? Banks shaving costs by pooling back-office cheque clearing, now a largely electronic activity with paper-based transactions headed for obsolescence?

And what lies ahead? More change, certainly, but predicting what banking will look like in 10 - even five - years' time is a pure guessing game.

"I can't even look a couple of years out," says Bob Dido, Royal Bank's chief strategy officer, electronic commerce. "We're now dealing in four-, five- or six-month time horizons."

Several major trends in the evolution of banking technology are evident, however.

As electronic banking gets ever more sophisticated, banks are hoping to replicate the personal touch customers have enjoyed in the traditional branch banking relationship by offering choice and putting a rich array of services at customers' fingertips. Soon we'll be able to bank from any spot on the globe, literally any time we wish, around the clock, 365 days a year. To do that we'll be using an array of fancy new gizmos (see sidebar, page 21).

The big challenge is to make this all work securely and seamlessly. It's beginning to happen.

Today's banking technology is costly, however. Extremely costly. Leaps of faith are needed, a belief that big investments will pay for …