Your bank or mine? – Consolidation on one side, disruption on the other?

While takeover on ABN Amro is far from over, there is a growing consensus in the community that this is the first movement of a consolidation in the banking market in the euro area. It should be noted that this trend is just starting almost 8 years after the introduction of the euro in 1999. Probably, the fact that financial movements between different countries within euro-land is still very low has been a good reason for not doing this consolidation sooner. The initiative of establishing a SEPA (single euro-payment area) has probably been on the other hand a clear signal, that could prove strong enough to initiate the aforementioned continent-wide herd effect. All in all, we are witnessing the impact of a political decision in an heavily regulated industry.

What strikes me in comparison is that there has been very few “cross-currency” mergers in the banking industry so far. In the same time, candidate-behemoths like PayPal have been able to snap cross-currency payments from traditional players. My point is that even though cross-border payments are still very low compared to domestic transfers, I won’t shock anyone by anticipating that they should continue to grow in the future thanks to the Internet. Since financial institutions seem to be very slow at moving from their domestic operations to seize synergies on wider scales, I think there is plenty of room for new companies to take the currently small and underserved market of cross-currency financial movements. Every signs of a market ready for disruption, don’t you think?

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