The year 2000 will be marked by enormous structural and technical changes in banking both domestically and globally. Almost all the current U.S. restrictions on the banking industry that are based on geography--where you can bank, where your head offices are, how many states you can operate in--and functional restrictions, such as whether you can mix banking and investment banking, and even banking and commerce, will become irrelevant. If regulatory reform does not keep up with these changes, we will end up with a system that cannot compete internationally, and the U.S. banking system will lose market share. Either we keep up, or we lose out. There are no other choices.
The year 2000 will be characterized by enormous consolidation of the banking industry, but simultaneously with that consolidation, an unbundling of the services that banks offer. Consider some of the realities that we must face: In the year 2000 the average age in the United States will be forty-five. Twenty percent of the work force will probably be working at home. The United States will have a severe shortage of skilled workers. There will be a big shortage, not in the managerial senior executive sector, but in the knowledge and applied information systems sector. All of these will be major factors in the structure of the banking industry in the year 2000.
Each of the consolidation problems will require major changes in the structure of banking. Currently we have a system that delivers the service of banking by putting a small building with a bathroom someplace where people pass by. That is the basic technology today. Between now and the year 2000, more and more people will be working