Amid greater competition from challenger
firms, conventional banks need to adapt if they are to cope.
However, the chosen option could be counter-productive, market
sources told IFLR.
Stronger merger control regulations mean
that traditional banks must be inventive if they are to deal
with new threats. As such many are currently favouring
investments in small tech and fintech companies. Yet in doing
so, they run the risk of their balance sheets swelling, as well
as any number of operational issues.
"Banks must focus on investing in fintech
to improve their business models," said a corporate development
head at a major fintech company. "This is much easier than
going through the integration process as a way to grow their
HSBC’s simplification initiative after the
financial crisis aimed to shrink its balance sheet, which had
grown by five times since the 1990s. All in all, this saved the
bank $4.7 billion by...