The impact of economic growth, increased consumer spends and regulation
The wave of economic growth, rise in consumer spend, and increased regulation, beginning in the late 70s, changed the conventional banking relationships. Main street companies discovered that they could borrow from the bond markets more cheaply than they could from banks, putting the 6 part of the 3-6-3 model under pressure. The launch of a stream of new products like interest-bearing checking accounts, credit cards, money market accounts, home equity loans, student loans, etc. made retail banking a part of every aspect of daily lives of customers. Banking became much more complex and, with the advent of technology, banks were increasingly required to launch new products and services leading to intense competition. The emergence of retail banking as an independent banking business has made the banking profession even more specialised and technology driven.
There are two factors here: banks realised that with size, they could disburse more loans than their capital base could allow, and deregulation allowed big banks to grow even bigger by acquiring smaller banks. Also, banks found that the easiest way to make more money is to charge customers more fees. In fact, by enhancing their creativity on charges and transaction fees, banks converted pricing into a science. The use of data analytics and machine learning has enabled banks to handle vast amounts of data and the corresponding complexity.