Total deal volume hit a record US.3 trillion in 2015 — up 64 percent over 2014. Regulatory and competitive pressures are making it hard for most banks to grow revenues and profits. banks — Bank of America, JPMorgan Chase, and Wells Fargo — accounted for nearly two-thirds of deposit growth and virtually all the net growth in debit cards, which is a good proxy for consumer checking accounts ( Given their scale, these players can significantly out-invest other banks in brand marketing, data analytics, and digital products and services. banks are confronting significant profitability problems. Returns on equity for 74 percent of banks with billion to 0 billion in assets were below their long-term cost of capital (approximately 10 percent) in 2014. banking sector an attractive hunting ground for potential foreign acquirers and for activist investors.

banking industry has largely sat out the impressive surge in mergers and acquisitions activity of the last few years. banking is obsolete, and the industry’s profitability has been weak for nearly a decade.

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However, consolidation can yield significant cost benefits.

For a typical regional bank with retail and commercial businesses, 30 percent of total costs are variable by volume, 35 percent are driven by the branch network, and another 35 percent are “scalable” costs driven by organizational complexity.

Net interest income has been flat in the post-2007 era, thanks to the low interest rate environment and flat yield curve.

Digitization and new regulations have also driven down volumes and margins across capital-markets and sales and trading businesses.

Key Corp plans to drive significant cost savings via an 11 percent consolidation of branches.

Then it intends to reinvest part of the cost savings into online and mobile solutions and digital channels — where transactions are growing significantly faster than branch transactions — as well as in strategic partnerships to improve automation, regulatory compliance, and customer experience.Noninterest income has also been flat, due to a series of postcrisis legislative initiatives that adversely affected fee-based revenue in deposit taking, credit cards, and payments.Ongoing scrutiny from the newly created Consumer Financial Protection Bureau has driven down pricing and ancillary revenues in consumer-facing businesses such as mortgages, deposit banking, credit cards, student lending, auto lending, and unsecured lending ( Banks have also ceded market share to nonbank players in businesses such as subprime lending, asset management, proprietary trading, and wealth management.Improving the bottom line is likely to be difficult because the top line isn’t growing much.Overall revenues have been under pressure since their 2007 peak at the crest of the previous business cycle.Consolidation can help control costs by shedding excess branch capacity, as well as by spreading fixed regulatory, legal, compliance, and other organizational costs over a larger base.