However, technology has also allowed banks to assess the credit and other risks of customers previously deemed too risky and, then, to extend credit profitably to such borrowers. Some investment in bank technology has been largely defensive, with the gains captured mainly by customers who would otherwise have shifted to competing institutions. Retail internet banking and, for some smaller banks, ATMs, are examples.
But the use of even these defensive investments has often yielded benefits for banks from greater fees and from lower costs resulting from reduced check processing. I would be remiss not to note the more-direct contributions of technology to increased productivity in banking, the same kind of improvements that have occurred throughout our economy.