The outside world is disrupting the very fabric of the business of banking.
The business as we used to know it over the past 50 years relied on several things:
Heavy and costly marketing and sales to acquire customers and build trust.
Locking in these customers so that switching to a competitor was hard*.
Investing in relationships with wealthy customers to provide custom advice, while at the same time treating the less-wealthy as a mass market, with one-size-fits-all products.
Generating repeat revenues through percentage and transaction fees, which resulted in banks’ preference for less frequent but high-volume transactions*.
Very costly investment in infrastructure: networks, back office, branches, compliance. This was an upfront investment that discouraged or blocked new entrants from the market*.
From American Banker, 22 July 2013. Author: MARIELA ATANASSOVA