'The universal banking model is dead,' Antony Jenkins, Barclays’ chief executive, told the FT in December. 'It is not all about capital. It is also about investment in technology [...] We believe that technology is going to drive competitive advantage in this industry and you can’t afford to invest in technology in every place — so you have to pick where you have that competitive advantage.'

Given that technology within the finance industry has been changing rapidly for the past hundred years, why is this now suddenly an issue? Why did the introduction of the ATM in 1968 in Dallas, Texas, not threaten banks to the same extent?

One clear issue is the current state of large banks today, having using M&A as a competitive response to the challenge of building a national branch network. Each individual sub-bank would have developed their own proprietary system. Large banks such as RBS are the product of many different entities, which have merged together but often not been fully integrated at the back-end. Banks have many different systems which make it challenging to carry out basic tasks. Having a single view of customer, a single compliance platform, is difficult.

Furthermore, as well as geographic expansion, clearing banks had the challenge of offering a wide variety of products. HSBC claims that it 'provides a comprehensive range of financial services to around 52 million customers through its global businesses: Retail Banking and Wealth Management, Commer'. Clearly, dealing with such a wide range of products, geographies and customers is a great challenge from a technology perspective.

The competitive challenge to the universal banking model is to have a range of monoline providers each offering individual products and focussing on that product alone rather than offering a complete set of products and cross-selling or subsiding once a clearing relationship with an underlying consumer has been established. Centralised investment in risk management and technology without legacy platforms and a stronger ability to innovate given this focus (see:  Clayton Christensen The Innovator’s Dilemma) mean that these monoline providers will arguably have a strong competitive advantage.

Increasingly, therefore, it can be argued that simple access to the clearing system will not allow banks to cross-sell such a range of products as was previously possible, now that the barriers to entry have been significantly lowered to the provision of new products.