The Ramifications of Banking Monopoly on Consumer Trust, Customer Satisfaction, and Industry Competition Dynamics

Abstract

The dominance of large banks in the banking industry has become an issue that affects the accessibility of financial services, the level of competition, and innovation in the sector. This research aims to analyze consumer perceptions of monopolistic practices in the banking sector and their impact on customer trust and satisfaction. Literature study is used as the main method in this research, by reviewing various academic sources and related industry reports. The results of the analysis show that consumers tend to have less trust in a banking system dominated by a few financial institutions, especially when they experience limitations to choose services that suit their needs. The dominance of large banks also results in low levels of innovation, as the lack of competition reduces the incentive for banks to develop new products and services. Limited competition leads to increased service costs and limited access for certain groups, such as Small and Medium Enterprises (SMEs) and communities in remote areas. The lack of diversification of banking services can slow down financial inclusion and widen economic disparities. This study provides insights for regulators and industry players to design more equitable and public interest-oriented policies. Policies that support fair competition, financial innovation, and increased service accessibility are needed to create a more inclusive and competitive banking industry.