Technological innovation and the US banking industry: Innovation in the US retail and wholesale banking sectors

In this paper, case studies of ''best practice'' retail and wholesale banks are used to explore the influence of technological change on the banking industry. The impact that specific technologies are having on the retail and wholesale sectors is discussed. Briefly, the evidence shows that there is tremendous pressure on the banking industry to restructure at the current level of technology and competition. Retail banks are looking to client-server, open systems, groupware, workflow software, and imaging technology to restructure and consolidate their operations. Wholesale banks are using information technology to support specialized fee-income generating strategies. Nonetheless, in both the retail and wholesale banking sectors, nonbank financial service providers such as pension funds, insurance companies, money market funds and mutual funds are gaining market share. As these competitors expand their role, I find that the financial services competitor with the best strategy and technology is increasingly no longer a traditional bank. Copyright (C) 1996 Elsevier Science Ltd