The Transformation of the U.S. Banking Industry: What a Long, Strange Trip It's Been.

This article examines the changes that underlie the transformation of U.S. commercial banking in order to forecast the industry's future under nationwide banking. The article emphasizes regulatory changes and technical and financial innovations as the central driving forces behind the transformation of the industry. Changes in the regulatory environment include the deregulation of deposit accounts, several major changes in capital requirements, reductions in reserve requirements, expansion of bank powers and liberalization of geographic restrictions on intrastate and interstate banking. Important technical innovations that have affected the banking industry include the advances in information processing and telecommunications technologies that facilitate the low-cost, rapid transfer of information and funds that fuel modern financial markets. Innovations in applied finance include those that have allowed the securitization of many traditional bank assets and have expanded the scope and volume of financial derivative activity.