Commercial and investment banks and insurers are at war - and the pursuit of "bigness" through merger, rather than "betterness" through value-added services is the quickest route to downfall.
This was the overall sentiment expressed at a presentation by Professor Anthony Hourihan, a professor in Management of Financial Institutions at University College, Dublin and a management consultant in executive education, particularly for leading international banks.
Speaking at an ABN AMRO organised event focusing on the impact of the Internet on the financial services market, Hourihan cited such ill-advised mergers as Deutsche Bank`s recent attempts as an example of why bigger is not necessarily better in the financial services sector. Threats such as new entrants, substitute products and services, and an increasingly aware and demanding customer base mean that banks and other financial institutions need to develop their core competencies in the areas of risk and relationship management in order to stand a chance of weathering the current market paradigm shift.
"Most current mega mergers between large scale commercial banks and insurers are a serious waste of financial and managerial resources," Hourihan noted, saying that banks should instead be shifting the focus internally to achieve integration between organisational structure and culture, human resources and management processes.
Other fronts of the "war", according to Hourihan, are deregulation, securitisation, globalisation, disintermediation and technology, and it is on the strength of the latter that he projected that by 2010, mid-sized banks and financial institutions will be the industry pacesetters, due to their agility in adapting to and implementing new technologies.
"We need more passion and courage in the financial services sector if we`re going to win," Hourihan evangelised, likening bankers to the Indiana Jones` of what was once a safe and steady industry.
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