In a world of consolidation and mega-mergers, the casualties are usually the smaller, local institutions. In many emerging markets the smaller players are often the engineers of their own downfall. Institutions that have been set up to exploit high inflation and out-of-kilter exchange rates are not well-equipped for more normal conditions and for normal banking. Local institutions are also often too small to make the investments in technology that have, up till now, been required. Japan's largest institutions say that one of the key reasons they are now merging is to compete with the global players in technology spending.
The internet should change many of the rules of the game. In particular, for banks quick enough to exploit the opportunity, the internet offers the smaller players a chance to compete not just in retail banking, but also insurance and wholesale finance.
The winner of this year's smaller bank award does so for its rapid transformation from dowdy also-ran to internet leader. On Bankinter's fast and slick internet site customers can open an account, order credit cards and do everything expected of a high-tech retail institution. In addition. clients can trade on 24 of the world's largest stock markets with fixed commissions, and small businesses can access a range of services relevant to them.