ABSTRACT

Banking is a service industry in the sense that it does things for people without producing a tangible product. It is generally held that in a progressive economy the service industries are condemned to an upward pressure on their costs. The basic cause of this is that in such an economy incomes, measured in real terms, rise due to increases in the quantity, and improvements in the quality, of mechanized operations. Industries whose processes cannot be mechanized easily are forced sooner or later, by competition, to pay higher incomes to their employees; but because they cannot offset this by resort to ever more labour-saving methods and equipment the unit costs of their outputs are bound to rise.