POSITION PAPER The rise of customer-oriented banking- electronic markets are paving the way for change in the financial industry

Abstract The banking industry has been a pioneer in adopt-ing electronic markets with exchanges, clearinghouses, and multilateral trading facilities having become the backbone of today’s globally integrated financial transactions. While most banks use the services of these electronic markets to handle interbank processes, they still strive for bilateral relations in the field of customer-facing processes. This position paper argues that the financial crises, the changing behavior of customers, upcoming innovations based on in-formation technology (IT) and financial services offered by non-banks are strong drivers towards more customer-orientation in the financial industry. A large variety of bank-ing IT innovations has emerged and illustrates that tradition-al banks are expected to have less power to impede competition at the customer interface and in consequence need to re-position themselves. Building on these develop-ments on the one hand and existing electronic market infra-structures in the banking industry on the other, the concept of a customer-oriented financial market infrastructure is pro-posed as a possible future solution. The impact is illustrated using a competitive analysis of the banking industry and analogies to the media industry where new entrants from the computing industry have caused disruptive changes. Besides describing the threat to existing banks, the position paper also discusses the perspectives for banks