The Dynamics of Banking and Insurance

Abstract

Abstract Banking and insurance share an origin but have distinct evolutionary paths. First, this chapter traces the history of both sectors from their shared origins to the transformations brought by industrialization, crises, and state regulation. Then the chapter compares the dynamics in both industries focusing on risk, regulation, and societal and technological changes. Managing risk is the main dynamic that shaped both banking and insurance from the very start. Regulation introduced external risk management and turned out to be the single most influential dynamic. Shifts in social strata significantly shaped product offerings and uptake from the 18th century on, as lower-income households became able to save up. Recently, digital access further ‘democratized’ financial services. In the final part, the chapter assesses the future of the insurance and banking industry in light of the dramatic changes of the early 21st century, suggesting that the traditional distinction between the two is becoming less useful. This is not so much due to their convergence but to the addition of alternative providers both from within and from outside the financial sector.