In Germany, they are working on the creation of a national champion. A champion on fraud in the commodities markets, bad risk management, giving credit to those who can’t repay it. The issues with risk management are highly problematic. Risk management is the business of a bank.
The German idea is not new. The idea is to bring 2 banks with financial problems together. By some form of miracle, we see all problems gone. The customers have no longer issues paying off the loans, the fraud and manipulation are over? So all we see is that nothing is changed.
But there are things that they can change. You can terminate quite some staff. You can close the offices. But this is it. The banks cost savings will be there. But it will also force the banks to end the focus on the competition and be fully busy with itself.
Than we come to another big problem for the new German banking champion. This problem is, off course, the ict. This is a real problem for all old banks. Just recently the British Lloyds BAnk was not allowed to transfer 90,000 customers to its new ict platform. Due to a lack of safety.
So you see the problems.
I don’t believe for a second that this new German banking giant will become a success. The problems are not solved. The only benefits that this mega-merger will have: are the opportunity to lay off people and close branches.
But what will it mean for the economy? Fewer people have a job. Fewer shops remain open. So from that side, it is worse.
Let’s have a look at it. The new German banking champion will have to sell off real estate. Interesting. Because the global economy is cooling down. Credit gets more expensive. So selling of real estate becomes more difficult.
But there is some interesting thing about the banking business model. It is easy to make money. A bank can only go bankrupted when its customers are not paying back their money or they simply take the savings money to some other bank. All you need to do is to raise the prices for the most used banking products.
In Germany, they have another problem. N26, the success of the Fintech revolution, is offering a free account. A completely free account, app, and digital banking. With over 2 million customers this brings in some serious competition. Personally, I’m also a happy customer. Let’s face it. All accounts become more expensive and this one saves you money. If you are also ready to take this cost-saving simply click here and in a few minutes you are there.