Archive for February, 2014

I Just Read This About Banking…Feel That It Applies to Many

Tuesday, February 25th, 2014

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