Summary

Retail banking in Europe has gone from being based on a range of limited products and lack of competition, to the development of new personalized IT-based products. In the future, consolidation, convergence and geographic scope will continue to increase and technology will allow the industry to offer increasingly sophisticated, integrated and customised services at lower cost of delivery. Brand differentiation, excellent marketing skills, and superior customer value propositions will provide key sources of competitive advantage. Wealth product and services will continue to grow in importance. The outlook for customers in Member States which welcome inward investment and competition should be good as they will see both increased choice and a lowering of cost driven by the increased competition. Conversely, Member States who seek to hinder such an approach will deprive their customers of the opportunities of innovation, choice and cheaper products. For banks that take the comfort and security of continued protected domestic markets for granted the implications are serious. On the other hand, for banks with an eye to creating distinctive and exportable competitive advantage and whose brand can travel, erasing European borders from their minds is an exciting new opportunity.

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The Past

Retail Banking in Europe has traditionally been based upon local branches offering a limited range of products all of which were manufactured in-house. There was limited competition between retail financial service providers with customers typically staying with their bank for life. As with all characterisations, this is something of an over simplification but in essence it does describe what retail banking looked like in Europe until very recently.