Big banks are pulling back from the heights of their global ambitions for retail banking.

Why it matters: The globalization dogma says bigger is better, and that more markets offer more opportunities for making money. But increasingly, the international mega-bank model is getting clunky, more expensive — and less popular.

Tech disruption is driving competition — and costs — to new levels, especially in payments and lending.

• Digital competitors like Dave, Monzo and Venmo litter the web and have no costly branches.
• Investors are paying attention. Banking app Dave, launched in 2017, said on Monday it would merge into a SPAC at an expected equity value of $4 billion.

Meanwhile, traditional banks are unwinding retail banking purchases made in the pre-cloud era.

• HSBC is the latest, selling its unprofitable U.S. business to Citizens Bank and Cathay Bank.
• BBVA also recently sold its underperforming U.S. retail business to PNC. And Citi announced in April it's selling its Asia retail business.

What they're saying: "What we’re seeing today would have been a surprise 10-15 years ago," says Greg McBride, chief financial analyst at Bankrate.

• "There are limited synergies in running a global consumer business. It's all about local scale," says Jan Bellens, EY's global banking sector leader.
• That's because many products don't translate across national boundaries. Mortgages, for one.

The intrigue: International banks are increasingly looking for cost savings, like shedding underperforming assets, and using that to invest in digital banking platforms, says Wedbush analyst Peter Winter.

• To adapt, legacy banks have also gotten into bed with fintechs.

Case in point: Signature Bank and Customers Bank both struck deals for their customers to use blockchain-powered real-time B2B payments platform TassatPay.

What to watch: The re-globalization of banking — driven by cloud-based fintechs unburdened by old technology or brick-and-mortar infrastructure. They'll be best positioned for expansion, Bellens says.

The bottom line: Consolidation in traditional retail banking is expected to continue.

• A former Santander executive told the FT in December that the Spanish bank had been "outmaneuvered" by BBVA’s U.S. asset sale, and that Santander "should have lined up such a favorable exit itself."