BNP Amro?
Sharp, literalist viewers of AmazonBay will have noted that I had BNP Paribas and ABN Amro (see Economist link for background) getting together in the summer of ‘06… well perhaps I was a bit premature and while Chris has managed to help me out by putting ABN in play, BNP Paribas doesn’t look like they are going to throw their hat into this particular ring.
Of course, as I have previously stated, giant bank mergers were not the main point of my scenario but rather a likely and important backdrop to more profound changes and new competitive challenges set to arise in the financial services industry. This is not to question the logic behind the move to ever more gigantic banks or financial conglomerates, rather I wanted to point out a certain intellectual vacuum in the industry as seeing this as the only (as opposed to just the most obvious/immediate of many) logical strategic response to the march of automation and technology and concommitant economies of scale in financial services.
Indeed the problems that poor Chuck Prince has encountered at Citigroup (arguably the most ‘advanced’ global financial services firm in the pursuit of giganticism) highlights the potential problems inherent in this strategy.
Don’t get me wrong, I fully expect to see more consolidation - especially in Europe - now that the levee has been broken (pun intended) - but see this ultimately presenting more not fewer opportunities for disruptive innovation and new entrants into the financial services arena.
Update
Great link from Small is the next Big Thing, (via Lunch Over IP):
The problem is, the larger an organisation gets these days, the harder and more expensive it becomes to coordinate people working together. Business thinker Peter Drucker, the man who first introduced the concept of “knowledge workers” in the 1940s, once calculated that “ninety percent of what we call ‘management’ consists of making it difficult for people to get things done.” More recently, top tier consulting firm McKinsey grumbled about all the “internal joint ventures, co-heads of units and proliferating task forces and study groups” which waste everyone’s time trying to find their way around labyrinthine organisational structures.
