German banks to experience consolidation: study
The number of German financial institutions will fall sharply in the coming decades, a study published today by the management consultancy Oliver Wyman predicts.
Although not widely recognized by the public, the German banking system was on a long-standing "evolutionary path of consolidation", the Bank Report Germany 2030 warned. The report's authors estimated that ultimately only between 150 and 300 institutions out of currently around 1,900 German banks would survive. Oliver Wyman attributed this predicted outcome to a combination of factors including intensified competition from new financial technology firms (fintechs) and foreign banks, increased regulatory pressure on banks' business model, and a persistently low interest rate environment.
In light of these developments, the management consultancy concludes that too many finance-sector firms are competing against each other for a relatively-static amount of business in Germany.
The size of the country's banking industry was estimated to have remained stable at around 115 billion euros ( 143.5 billion U. S. dollars) between 2013 and 2016. However, circa 1,000 credit unions, 400 savings banks and a host of larger global institutions such as Deutsche Bank, as well as more specialized businesses were already crowding out the country's resulting tripartite banking landscape.
According to the report, "a continued stability of the earnings pool also means that growth possibilities in a German bank are limited and that higher risk-related costs can devour the savings of German banks very quickly."
Furthermore, German banks lagged behind their international competitors with regards to profit margins. The sec- tor recorded an average return on equity (after taxes) of only one percent in 2016, compared to nine percent at U.S. banks.
"The key challenge for German banks will be to find a sustainable business model for evolution, as well as disruption," the report suggested. Above all, this would imply training their organizations in "cultural flexibility" and improving their "ability to innovate".
British banks simplify SME account opening process9 hours ago | 1453 views | 0Team meeting A group of British banks have come together to simplify the account opening process for small businesses, working with trade body UK Finance on a checklist of details and documents firms will need for their applications. A Competition & Markets Authority investigation into the retail banking market recently identified the account opening process as a barrier to switching for some small and medium-sized businesses.
In response, 18 business bank account providers have standardised the basic set of information that they require customers to provide when opening or switching an account.
Working with the banks, UK Finance has created an online guide, including a streamlined checklist, out- lining the essential details and documents that most small businesses will need when applying to open an account. Anne Pieckielon, director, product and strategy, Bacs, says: "said: "As operators of the Current Account Switch Service, we welcome today's announcement and believe it is another important step towards simplifying the account opening and switching process.
"We know that small business owners are busy enough without the need to deal with further layers of time-consuming admin which, in many cases, could deter some from getting the very best deal from their business account."