The future of the bank

Jul 27, 2021 By Si Gyeongmin

The rapid advancement of technology has blurred the bank's future. Banks are usually vertically and horizontally integrated financial intermediaries. Vertically, they use balance sheets for maturity conversion and directly interact with customers on deposits and loans. Horizontally, the services provided by banks do not directly depend on the balance sheet, but they have synergies in information or communication with deposit taking or loan issuing. For example, payment information can help monitor loans, information from loans can help underwrite, and communication channels established with retail depositors make cross-selling of savings or insurance products possible, which increases bank income and helps diversify income.


Innovations in information and communications have posed two fundamental challenges to the banking business model. First, the entry of professional competitors focused on financial services poses a challenge to the horizontal integration of banks. Second, digital platforms compete with banks to directly contact customers, posing challenges to the vertical integration of banks.

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