The global banking crisis has given rise to a Manichaean view of banking - retail banking good, investment banking bad. Yet it was not so long ago that public anger was directed against the banks for the way in which they ran their domestic retail operations; underpaying, overcharging, excess profits, lack of competition. In the authorities' view, these banks had to make big profits to survive shocks and to give the Treasury supercharged tax revenues.
Now that the banks are going to be forced to fall back on their retail operations, it is a good time to rethink the domestic business model. This does not have to be the same for all banks. Competition could return through a diversity of the kind of service offered, rather than through more banks all offering more or less the same services.
