In the mid-1990s, there was a flurry of activity as new entrants arrived in the banking markets. Retailers, airlines and telecoms were all launching some form of financial offer. Banks responded by partnering, improving services or hoping the new players would just go away. Ten years on and these new entrants are still here but their threat has not disturbed the banking sector as widely as anticipated. However, it has created the deconstructed bank.
The deconstructed bank is the bank that splits itself into pieces to outsource areas that are not core competencies. This development is fuelled by vendors offering outsourced services and banks seeking to improve efficiency and reduce costs. The outsourcing of core operations is now becoming accepted and banks are taking out non-strategic processes, such as cheque processing, and even strategic processes, such as back office processing and administration. Banks are taking out customer contact processes through offshore call centre outsourcing. There are even discussions of them selling branches to operate as franchised operations.
