Banking in Euroland

While the introduction of the Euro in January 1999 is already producing dramatic changes in European wholesale financial markets, its effects remain muted in retail markets. This will change. Just as in wholesale markets, the single currency will greatly alter the way financial services are provided to individuals and business in Europe. Increased competition will come not just from existing banks and financial firms in other Euro countries. Banks headquartered outside Europe and nonfinancial firms in retailing, telecommunications, and information processing industries will find opportunities in Euro retail finance as well. As in wholesale banking, the Euro will serve as a powerful catalyst for transformations already underway in the global financial services industry. Banks that do not invest in technology and expand their customer base to recover the costs of converting to the Euro will find that their competitors have already done so.