Asset-backed securitization, for example, has been in existence for 15 years and only took off within the decade. Likewise, the explosion of ATMs is a relatively recent phenomenon made possible by advances in communication and computing power. Even the massive size of modern-day mortgage lending and servicing operations at banks reflects significant advances in financial technologies. Most generally, the advances made in computing and telecommunications make it possible for banks to directly market fee-related services in a manner not previously possible. Other of these revenue possibilities for banks reflect a relaxation of regulatory constraints.
Banks have more freedom to offer nontraditional products today than they did a decade ago.
Moreover, government deregulation has opened up the banking industry to previously unfelt market forces. As a result, banks face fierce competition from nonbank companies and other banks who can enter their territory. With increased pressure, banks have a greater incentive to exploit new sources of revenue. Unique characteristics of noninterest income Banks also seek to increase noninterest income because it is considered to have traits that make it different from interest income and thus desirable. In particular, noninterest income could lead a bank to be less risky if it leads to greater diversification.