A vast number of nontraditional banks are already entering some European retail banking markets. To help incumbent banks better understand the new entrants’ rationales and competitive platforms, and hence assess potential threats and develop appropriate responses, we can group these nontraditional banks into five categories:

1. Product range expanders such as insurance companies, building societies, and independent mortgage companies. These competitors leverage large captive customer bases by cross-selling an expanded range of financial products. All pose a threat to traditional banks, insurance companies in particular, because they can "lock in" property and casualty and life payouts to customers into customer deposit accounts in the insurer’s own banking operations.

2. Core business supporters—nonfinancial companies offering products in order to foster customer loyalty, increase sales of core nonfinancial products, and understand customer buying behavior. Prime examples are automotive and telecommunications companies, retailers, and post offices. Since making money on banking products is not their chief objective, these players often introduce "irrational" pricing.

3. Global product specialists that attack specific product markets with the aim of dominating them globally. This category includes the largest mutual fund companies (for example, Fidelity) and investment banks, as well as MBNA, Visa, Amex, and General Electric...