Universal banks:: The need for corporate renewal

In the past 10Â years, many universal banks -- i.e. large, diversified banking groups -- have experienced a dramatic decline in economic performance in many industrial countries. Some authors attribute this fall to increasing rivalry or the lack of focus of universal banks and have proposed alternatives such as the concept of 'core banking' or 'the functional approach'. In this paper we argue that these proposals are useful but incomplete: universal banks have to consider all the elements of corporate strategy, just like any other diversified company, including the positioning of each business unit in its market, the development of basic capabilities that will allow those units to differentiate themselves from competitors and sustain a competitive advantage, the relationship between each unit and the corporate centre, and the organizational structure that will support the universal bank.