Deregulation, new technologies, changing customer needs, and more aggressive competitive behavior set the tone of the retail banking industry in the second half of the 1990s. In a time of rapid change, most players see their profits come under pressure. But for the strongest and most successful competitors, such an environment may provide opportunities to increase profitability. Many retail banks—those institutions serving individuals and small corporate customers—are thus striving to manage their business even more professionally and are keen to learn from international industry leaders. For those that aspire to be world class, there are core competencies in which it is necessary to excel, no matter whether they operate in Europe, America, or Asia.

What can European, US, and Japanese banks learn from each other? Very little, most bankers would probably have replied up to now, pointing to the varying regulatory structures in the different geographies. While European banks have always been able to offer a complete range of financial services, government regulations have limited what US banks could offer, especially in the securities business, which was largely the preserve of specialists. The broader array of products open to European...