Bank at your `virtual branch in the wall'

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In 2010, the global banking industry will be controlled by a handful of customer-friendly financial conglomerates. Banking services will be provided via PCs and telephones, cash dispensers will become "virtual branches in the wall" and, unless they pull their socks up, today's high street clearers will be soundly beaten by the "new banks" such as M& S and Virgin.

These were just some of the conclusions of 10 senior industry figures asked by the Centre for the Study of Financial Innovation (CSFI) to set down their vision of the banking industry in the new millennium.

Herb Aspbury, head of Chase Manhattan's European operations, said there was bound to be consolidation in the industry. "There are far too many of us, trying to do exactly the same things with exactly the same counterparties. One way of dealing with the excess capacity is to keep merging with one's competitors," he said.

There is unlikely to be a cross-border merger of "any great magnitude" in the near future, said Mr Aspbury. However, when the cross-border merger wave does start, Chase will certainly play a part in it. "There is scope for co-ordination between Chase and a European bank," he said, adding, "We [Chase] look at everything."

Peter Birch, who last week stepped down as chief executive of Abbey National, also predicted consolidation would sweep through the financial services industry over the next 10 years. He said the distinction between banks, building societies and insurance companies would become increasingly blurred, resulting in the emergence of a few large banking conglomerates.

For Mr Birch said the key question was not whether consolidation would take place, but whether the traditional players would continue to provide banking services. According to Mr Birch, new entrants into the industry, such as the supermarkets, would succeed in winning sizeable chunks of market share.

Some of the industry figures consulted by CSFI believe banks as we know them will virtually disappear. According to Peter Cochrane, head of research at BT, "the modest ATM [cash dispenser] of today could well become the virtual branch-in-the-wall of tomorrow". If today's providers of banking services are going to survive, they must change and move on, Mr Cochrane said.