Banking risks: here’s what could change for customers

The ongoing restructuring of the banking sector is set to reshape the balance of the Italian financial system, strengthening the national banking groups and creating a new competitive landscape with fewer, larger players.

But viewed from the customers’ perspective, mergers and acquisitions among banks reduce the number of players in the market, leaving households and businesses with fewer opportunities to switch freely between competing institutions. This poses risks to freedom of choice and diminishes customers’ bargaining power. And if competition tends to diminish, institutions are unlikely to pass on to customers, even in the slightest, the benefits arising from synergies, which will mainly accrue to shareholders through higher profit margins, with no chance of these being translated into more favourable interest rates, lower fees or better services for customers.

Bank mergers are not merely a matter for industry insiders; they have a tangible impact on savers’ pockets: they reshape the conditions for accessing credit and the costs of banking services for households, as well as for businesses. Dominant banks gain greater ability to influence market conditions without fear of an aggressive response from competitors. For SMEs, particularly micro-enterprises, which have fewer financing options, the risk is of becoming overly dependent on a single banking partner, with possible repercussions on their ability to invest and grow.

What’s more, bank mergers invariably lead to a series of service disruptions, as well as causing the inconvenience of forced IBAN changes and branch closures, thereby exacerbating the phenomenon of banking desertification. And when IT systems are migrated, with customers being transferred from the old bank’s IT platform to that of the new one, disruptions to branch services, online banking and payment cards are a daily occurrence, with serious consequences for customers: just think of the inability to use ATMs and make bank transfers and F24 payments for several days, or even just having to endure a few minutes’ downtime for those who trade.

In this regard, we would not want to be in the shoes of Mediobanca’s customers who, should the planned merger with MPS be completed before Intesa Sanpaolo’s bid is finalised, would face a double transfer – first to MPS and then to Intesa. Finally, the data of millions of account holders also comes into play in this banking game of Risk. Personal information that is now worth its weight in gold.