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Not Everyone Wants a Relationship

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Submitted By beijinglg
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Not Everyone Wants a Relationship
By Rick Spitler and Sherief Meleis
Some banking customers — just like consumers who shop at Wal-Mart or fly on Southwest Airlines — are happy to trade style or comfort to get their business expedited on attractive terms.
Related Charts
• Discount Banks Pursue the 'Other Half' of the Market
• Winning Formula
• Transforming the Generalist Retail Bank

For one view of what the future of the banking industry may look like, consider the airline industry, where Southwest Airlines Co. has ascended to dominance in just 30 years.
While "full-service" carriers like American Airlines Inc., Delta Air Lines Inc. and United Air Lines Inc. focused on building elaborate jet fleets and "hub" systems at major regional airports, Southwest adopted a discount fares strategy based on older inner-city airports and a zeal for efficiency. To control costs, for example, Southwest re-used plastic boarding passes and handed out peanuts instead of hot meals — and passed along the savings to its customers.
Today, Southwest's market capitalization is roughly seven times that of the nearest U.S. legacy air carrier. Overall, discount carriers have claimed 25% of the U.S. commercial passenger market, according to the National Institute for Aviation Research, based at Wichita State University. That share is expected to soar to 40% over the next few years.
This is a harbinger of things to come in retail financial services. Operating with superior efficiency and offering various combinations of high yields on deposits, low rates on loans and low service charges, a number of large banks already fit the "discount" mold. And they are strongly outgrowing their traditional rivals.
For example, between 1998 and 2003, the 58 discount institutions identified in a recent study of large U.S. commercial banks (more than $1 billion of deposits) by Novantas LLC grew

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