The postbank bank

In the last 30 years, the issue of the competitiveness of our banking system, of the desirability of fiercer competition between our main banking operators, of their stronger opening to the market and the comparison with foreign operators, has always been at the center of the political debate in the economic-financial community. A little more than thirty years ago, as banking acquired a more corporate nature, a decisive process of formal and then substantial privatization of the large public banks was undertaken. At that time the process of concentration began, which involved many local entities, but also a good part of the large privatized credit institutions. It was believed that national banks had to reach an adequate size to compete in the European arena. At the same time, there was the fear that too rapid an opening to the market would lead to stability problems for our banks, which were clearly undercapitalized and unaccustomed to competition; on the part of many there was concern that, in the absence of adequate defense, our banks could be the object of acquisitions - some called them "raids" - by the main foreign credit groups.

In this era, strong ties and intertwining of a structural and personal nature still persisted in our financial and insurance system, considered a useful tool in order to defend the ownership and control of Italian banks. Italy was considered the kingdom of cross-shareholdings and interlocking directorates, so much so as to evoke a system of "circular ownership".
When we were hit by the strong economic-financial crisis, in the second half of the 2000s, the banks were however accused of not having been able to react quickly enough, in particular in the area of lending, also due to the lack of adequate level of competition. In the first measure taken by the newly appointed Monti government, called at the end of 2011 to resolve the by now ongoing crisis, banking governance was implemented - by banning interlocking directorates between competing banks (and insurance companies) - in the hope that this corrective would generate sufficient incentives to induce banks to compete also in terms of the disbursement and cost of credit.

After the crisis, the aggregation processes have resumed, and today the panorama of the Italian banking sector has changed significantly, showing a much higher level of concentration, so that it has reached the European average. This did not prevent numerous banking groups, including large ones, from entering a profound crisis, from which they have not recovered. The public intervention has made it possible, albeit with high costs, to protect depositors and shareholders at least in part, but the Italian banking system continues to show signs of weakness, in terms of profitability, efficiency and cost level, as also shown by the last report of the Bank of Italy. It seems difficult to identify the next development trajectories that will characterize national banking institutions, but the banking model, as we know it in Italy, seems destined to fade, also due to competition from new intermediaries and FinTech companies.
Paradoxically, however, the pandemic and the concentration process could favor the changes that banks need to face the new forms of competition in a radically changed economic and social context. On the one hand, the pandemic has forced banks to strengthen the offer of online services, through increasingly integrated platforms. The increased focus on digitization could allow banks to reach a growing percentage of customers with a wider range of services without having a dense network of branches, to generate higher returns and help improve cost efficiency. On the other hand, the current concentration process, if not excessively unbalanced in terms of market power, could contribute to increasing the solidity of the main banks and allow them to make the high investments necessary for technological adaptation, and better respond to the challenges generated by competition from FinTech companies and non-bank intermediaries, whose activities are based on more technologically efficient business models and with fewer regulatory restrictions.