Journal Detail

Journal 23 – Retail Financial Services

September 2008

Within the financial sector the retail financial services area is one where innovations have been most evident. Financial institutions are increasingly recognizing and reacting to growing competition in this space, both from banks and non-bank players, and learning how to incorporate best practices from other retail disciplines. As this diffusion of ideas into the industry increases, so will the number of new and innovative services. This issue of the journal provides a comprehensive review of the developments made in the world of retail and the aspects that have been, or can be, applied within the financial services sector.

This issue of the journal is dedicated to innovations in retail financial services. As our readers are aware, within the financial sector the retail financial services area is one where innovations have been most evident. The future promises to be even more exciting. Financial institutions are increasingly recognizing and reacting to growing competition in this space, both from banks and non-bank players, and learning how to incorporate best practices from other retail disciplines. As this diffusion of ideas into the industry increases, so will the number of new and innovative services. In the world of retail financial services these are indeed exciting times.

There is no doubt that many of the most innovative ideas have been introduced by industry newcomers. However, a number of financial institutions have also developed highly revolutionary and profitable businesses in recent years. This issue of the Journal looks at a number of the most successful and innovative ideas in retail financial services and assesses the operational environment necessary for their development, execution, and success.

As in previous issues, we also have contributions from Nobel Prize winners on the pertinent questions facing our industry. In this edition we discuss the most pressing challenge, namely the current financial crisis. Prof. Edmund S. Phelps, who received the Nobel Prize in Economic Sciences in 2006 and is credited with developing the theory of natural rate of unemployment and the golden savings rule, discusses the implications of the current troubles on the wider economy and employment, something most economists have been grappling with in recent months. One of the founding fathers of modern finance, Prof. William F. Sharpe, joint-winner of the 1990 Nobel Prize in Economic Sciences, discusses what lessons can be learned from the crisis. He addresses the developments made in the quantification of risk, an area he is credited with developing, and assesses whether correct models of risk were applied by major financial institutions to value today’s highly complex financial instruments. The prognosis is, as expected, not too positive. The current crisis is deep and complex: who better to provide an assessment than these two exceptional economists?

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