It is the premise of this booklet, one of a series intended to apply economic principles to major social and political issues of the day, that a revolution in the banking and financial services industry is altering not only the fundamental nature of the services offered but the character of the organizations themselves. The purpose of the essay is to provide perspective on these important developments. It begins with a review of recent major changes in banking and financial services. The analysis concentrates on deregulation, although other aspects of the revolution are discussed, especially the growing competition from nonbank financial service firms and nontraditional financial service organizations such as Sears, Merrill Lynch, and American Express. Two major pieces of legislation crucial to these changes, the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Gart-St. Germain Depository Institutions Act of 1982, are discussed. In addition, the essay covers the implications of these changes for both consumers and producers of financial services and offers insight into the future structure of banking and the financial services industry. A glossary of key terms is provided at the end of the essay. (IS)