Market Access Strategies in the EU Banking Sector — Obstacles and Benefits Towards an Integrated European Retail Market

Over the last years, competition in the European banking sector has intensified considerably. The following factors have been decisive for that evolution: the liberalisation of the European financial sector, technological progress as well as an amplified diversification of savings and assets.The introduction of the Euro goes along with an accelerated integration of the market for financial services and leads to a further increase in competition and structural changes in the banking sector (Deutsche Bundesbank, 1999, Galati and Tsatsaronis, 2001). However, timeframe and depth of this structural change vary noticeably between the different sections of European banking. While the money market and the market for wholesale products (wholesale banking) already form a common European market, there still is an extensive segmentation of national markets for retail products (retail banking). Responsible for this low degree of integration in retail markets are a number ofnatural barriers, such as language or culture, as well aspoliticallyinducedmarket accessbarrierssuch as regulations or taxation, which make cross-border trade in financial services more difficult (ECB, 1999a). Further deregulation and harmonisation towards an integrated European retail market are suitable to increase customer benefits by fostering product diversification and lower prices.