Retail banking in the Czech Republic – a comparison of consumer prices between 2011 and 2014

Abstract

The banking sector has been developing very rapidly in the past century. In Czechoslovakia as well as in other post-communist countries, the development differed due to specifics of the centrally planned system with a monobank and no official competition in retail banking. This specific factor influenced the development of the banking industry after 1990, when big banks used information asymmetry in individual parts of profit seeking (esp. income diversification). Growing competition, development of information technology and growing literacy of bank customers have decreased retail prices only after 2011, as shown by performed comparison of retail prices of banking services in the examined period. Using comparison of retail banking clients clusters the paper identifies factors of significant decrease of retail prices of bank services. We focus on discussing these factors, mainly growing competition, growing financial literacy, lowering transaction costs. This paper raises a very important question whether the “big four” on the retail banking market would keep their hegemony or the competition on this market would prevail. To answer this question is the aim of our next research.