RELATIONSHIP BANKING AND COMPETITIVE ADVANTAGE - EVIDENCE FROM THE USAND GERMANY

American banks have spent the past decade shifting away from relations hip banking toward product strategies based on high turnover. They hav e invested heavily in information technology and embraced an unstable, part-time labor force as a means of reducing costs. In the process, t hey moved away from many of their traditional sources of competitive a dvantage and encouraged customers in both the retail and wholesale ban king segments to turn to other financial providers and other financial instruments to meet their banking needs, Banking institutions in Germ any, in contrast, have been able to maintain a stable share of that co untry's financial services market by investing in the human resources and organizational capabilities necessary to pursue business strategie s based on relationship banking. American depository institutions can realize the benefits of relationship banking if they commit themselves to creating stronger internal labor markets and reducing employee tur nover.