Deregulation (2)
August 22, 2009 – 1:35 amImpact of IBBEA. The IBBEA is expected to restructure the nation’s banking industry. The large multistate bank holding companies that are currently being formed are increasingly concentrating the volume of payments being processed through fewer channels. This gives the banks opportunities to achieve economies of scale and technological efficiencies in their back offices.
Nationwide branching provides significant cash management benefits to companies in terms of efficiencies in collection, concentration, and disbursements. Using a bank with countrywide branches means that cash flows will no longer have to be managed through complex collection and concentration structures; and the mail float associated with disbursements will disappear because all deposits and disbursements will be treated as local items. Efficient interstate banking may be one of the major motivators in moving the payments industry toward greater use of electronic payments.
It seems unlikely, however, that the United States will have a true nationwide retail banking system in the near term. This is partially due to the extreme fragmentation of the banking industry. Those few banks with a coast-to-coast presence (albeit limited in terms of branching) have also had to deal with massive conversions of legacy systems to uniform platforms.
The mergers of the last decade have either been to consolidate existing regional strength, such as Wells Fargo/First Interstate/Norwest and Fleet/Bank of Boston, or to complement core competencies, such as Deutsche Bank/Bankers Trust and J. P. Morgan/Chase. Even though expansion of territory has been achieved in some of the more recent mergers, and several banks now have a significant retail presence in multiple states, such as Wells Fargo, Bank One, Wachovia, and Bank of America, no one bank can claim to be truly nationwide.
Taken From : Essentials of Managing Corporate Cash
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