Banks and Consumers

BANKS AND CONSUMERS
III Consumer policy through service – the services
offered by private commercial banks
1 A focus on the customer –
milestones in business with
retail clients
Until the end of the 1950s, the private
commercial banks traditionally did business
almost exclusively with the corporate
sector and with small and medium-sized
enterprises (SMEs). Then the German
economic boom, the rapid rise in disposable
income among broad sections of the
population, and the resulting “German
savings miracle” gave rise to a wholly new
and extremely attractive target clientele.
The banks’ previously exclusive client base
was opened up for good and the term
“universal bank”,
AFTER 1960, RETAIL
which in the past
BANKING OPERATIONS had stood first and
WERE SYSTEMATICALLY foremost for the
EXPANDED AND
variety of services
INTENSIFIED.
on offer, took on a
new, wider meaning:
private commercial banks became “banks for
everyone”. The most obvious sign of change
was the efforts by banks to attract retail
customers no longer just as investors, but
as borrowers, too.
That banks consciously promoted their
new services to non-clients as well as existing
customers was considered downright
revolutionary at the time, yet it reflected their
view of themselves as “money and lending
entrepreneurs”. After 1960, retail banking
operations were systematically expanded and
intensified. The introduction of standardised
personal loans, the switch to cashless wage
and salary payments, the breakthrough of the
investment mentality and the maintenance
of securities accounts are just a few of the
milestones in this evolution. After radically
increasing their number of branches and
broadening their range of services, the
private commercial banks were able by the
end of the 1960s to offer their services to
private households virtually everywhere
in Germany. Since then, retail banking has
joined corporate banking as a mainstay of the
private commercial banks’ business. Today,
private commercial banks compete for clients
with domestic and foreign institutions in all
areas of the ever more varied retail banking
sector. The most important fields in which
competition takes place are the product
range (including traditional lending and
investment products), account maintenance
and payments processing, the quality of
advice and service (which is determined
mainly by staff skills and qualifications), and
price.
Since entering the marketplace, the
private commercial banks have found
themselves faced with particular competitive
challenges: for many decades, regulatory
strictures have prevented mergers between
private and public-sector banks, thus
precluding the associated economies
of scale. This makes it that much more
necessary for private commercial banks
to develop lending and deposit-taking
22