Foreign players must first earn client trust but then, by controlling costs and providing greater flexibility in the personalisation of their private banking services, they should start to see profitable volumes of business as the market gradually develops. While often small, local institutions, these banks have huge clout. A key driver of change for the savings banks sectors is the capital requirement. Conversion to joint stock company status is one solution to the capital problem. A major challenge for savings banks is how to convert the many benefits of mutual status into marketable product attributes.
Mutuality is threatened also by the gradual withdrawal from bank ownership by governments.
Privatisation is one outcome of this trend. Dis-intermediation, for example, has effected the current development of mutual funds business in Italy and Spain. Increasing private pension provision is another expected outcome. In terms of assets business, dis-intermediation and EMU are likely to see banks corporate customers make increasing use of larger capital and money markets. In one of the most comprehensive Web-based financial services study to date, Lafferty Information and Research Group named InsWeb, the online insurance marketplace, as the No.1insurance Web site in the nation.