Recent banking headlines have been mixed. Despite post ing huge profit numbers, banks were forced to significantly cut resources to secure future competitiveness in an ever-changing business environment. Retail banking for big universal banks, however, contributed a stable and a still growing source of profits. The stability isn’t so surprising in this equation—retail banking mostly remained as it had been: A large, relatively recession proof and nicely profitable part of the banking institutions—however, retail banking’s role as a primary driving force behind profits was new for some countries.
Despite all the positive aspects, today’s species of retail banks is more endangered than it might be expected. Several trends— each one perhaps easy to disregard, but together posing a sizeable challenge—are facing the industry. Most importantly, competition is increasing: Between the existing market players (as technology extends their reach), from large, international players entering local markets—which can be seen by the increasing number of M&A activities around the globe—and from new entrants such as supermarket banks. Not only are more players competing for business, but more specialized players are emerging focusing on certain customer groups, on certain products and/or on certain processes. |
