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The global mega-bank model is getting more expensive and less popular

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."

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Canada's military joining firefighting efforts as dozens of wildfires rip through west

The Canadian Armed Forces are being called in to help combat dozens of wildfires in western Canada that have sparked evacuation orders and caused the deaths of at least two people, per CTV News.

What's happening: 172 wildfires are burning across British Columbia following the Pacific Northwest's record heat wave, per the BC Wildfire Service.

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