Despite the global economic slowdown of the past few years, consumer banking services have kept pace in terms of total revenues and profits compared with banks’ other lines of business. A sample of large US and international banks with diversified business shows that retail banking products and services profits accounted for $184bn, representing an average of 54% of the total for 2003.

US institutions in this sample grew their consumer banking revenue organically by about 9% in 2002-2003, and this trend is set to continue. As the recent surge in US mergers and acquisitions is expanding the revenues of consumer banks even further, concentration and volumes will foster profitability. Given their renewed investments in branch automation and delivery channel technologies, TowerGroup estimates that IT spending by US consumer banks will grow by more than 5% in 2004.

Mr. Guillermo Kopp is director of the Financial Services Strategies & IT Investments practice at TowerGroup, a leading research and consulting firm focused exclusively on the global financial services industry. He can be reached at gkopp@towergroup.com.

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