With the end of another year, as normal, the mind turns towards the year ahead. That, and a little bit more crystal ball gazing made me think about where the industry is going in the long term.
The trends over the last few years are clear – the big 4 are dominating the landscape even more than they used to, the second and the third tier seem unable to compete and are being swallowed up by the big 4 and the credit unions seem to either be subsisting or disappearing.
Longer term, it appears likely that the mid-sized institutions will disappear entirely, leaving the behemoths to dominate the landscape and the tiddlers to be largely ignored.
Pity. It will make the big 4 even more arrogant (and firming them up in the “too big to fail ” category) and effectively freezing any foreign competitors out. The only way for an international bank to get in, then, will be to buy one of the four. The ANZ remains my favourite for this to happen to, but I cannot see it over the next couple of years as overseas balance sheets are stretched at the moment and shareholders are unlikely to accept shares in an overseas bank in exchange for their Australian ones.