Increasing Competition between Financial Institutions

The combined forces of regulatory, technological and general economic changes are causing the financial services provided by commercial banks, savings and loan associations (S&Ls), mutual savings banks and credit unions to blend together. Commercial banks are diversifying their assets toward higher percentages of mortgages and consumer loans, and thrift institutions are seeking authority to diversify their loan structures. Moreover, mounting pressures are working toward, and have partially succeeded in, changing the authority of thrifts to include third-party payment accounts similar to commercial bank demand deposits. As a result of this increased similarity these institutions are becoming more directly competitive with each other.