Banking in Italy has long been too fragmented, gloomy and localized. Hence, they are costly for consumers, inefficient and poor lenders, and the obstacles are formidable. They lack scale of economies and competition and there is hardly any investment in technology. To open an account, one has to go through and fill out endless forms. According to a survey conducted by consultancy firm, Capgemini, Italians pay on average around 250 a year as commission. Besides, the Italian retail banking is in a regretful state. Consolidation in the banking sector is need of the hour going by appallingly Italian banks' extraordinary high fees even for basic transactions.
On the banks' front, consolidation enables them to make bigger cost savings and higher profits, on the other it also translates into lower charges for customers. So on the whole, consolidation would benefit consumers and also the entire ailing economy. The euro's launch in 1999 necessitated banking consolidation. Bank experts expected a merger boom after the introduction of the common currency. In 1997, there were 270 European banks which would consolidate into 5-6 big players. However, the consolidation was taken place in a hysterical manner. The former governor of Bank of Italy, Antonio Fazio had acted against sector consolidation during his 12-year tenure.
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