ABSTRACT
This chapter outlines the major transformations taking place in financial services markets and argues that technological changes are resulting in a shift within firms away from the "production" of services toward customer assistance, sales, and product development. The resulting reorganization of the division of labor is characterized by decentralization of both functions and decision-making responsibilities. Social and communication skills become increasingly important for all bank workers, even at the entry level, and the ability of employees to learn quickly in order to adjust to new products or the penetration of new markets becomes central to the competitive strategies of firms. In commercial banking, customers moved away from traditional bank borrowing toward the commercial paper and bond markets for short- and long-term funds. Banking deregulation, or liberalization, facilitated the changes while also intensifying competition and leading to new practices in banking.
