Innovation and Competition in the Retail Banking Industry: An Industrial Organization Perspective

Over the recent years, the development of mobile banking and Internet banking has had a considerable impact on competition in the retail banking industry. In some countries, the regulatory framework has been adapted to allow non-banks to operate in retail payments and compete with banks for deposits. Several Internet Service Providers or large retailers have started to offer innovative financial products to their customers. In this paper, we analyse how the industrial organization literature can be used to study recent innovations in retail banking and discuss some perspectives for future research.