The role of retail banking in the U.S. banking industry: risk, return, and industry structure.(Industry overview)

Federal Reserve Bank of New York Economic Policy Review, December, 2007 by Clark, Timothy

* In recent years, retail banking has become a key area of strategic emphasis in the U.S. banking industry, as evidenced by rising trends in retail loan and deposit shares on commercial bank balance sheets and a continuing increase in the number of bank branches.

* This "return to retail" contrasts with the 1990s, when banks sought to diversify revenues, deemphasize branch networks, and target financial services to a broader range of clients.

* An analysis of this strategic shift suggests that interest in retail banking fluctuates in predictable ways with the performance of nonretail banking and financial market activities.

* The recent "return to retail" episode may be more persistent than past cycles because it is being driven almost...

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