Back to the Future of Banking

Looking back at banking 20 years ago, it is clear that this industry became entrapped in “legacy” issues that resulted in slow action, poor risk decisions, and, ultimately, massive consolidation during a time of innovation and change in the economy.

“Banks,” as they were known back in the first decade of this century, acted primarily as financial intermediaries. They took in money from depositors and lent it out to borrowers. While it had been clear for many decades that the intermediary role of bankers was fast being squeezed, few executives in the industry were able to grasp the impact of Internet technology and increased entrepreneurial competition in the early part of this century. In addition, historians indicate that the banking industry’s long-established reputation for trust began to erode substantially over the past 20 years as more desperate efforts to maintain profit growth resulted in products, pricing and policies that ultimately were blatantly against the interest of consumers.

There were four major causes that led to the banking industry’s problems:


The Link