In the retail banking sector, size is a factor which increasingly matters, whether measured by the assets, market capitalisation, share in the market for a particular banking service or the number of customers. The key arguments for banks to achieve a certain size include the advantages of scale and scope as well as the possibility of creating synergies. Moreover, bigger banks can afford advanced information technologies, which in turn provide a platform for innovative solutions in transactions and customer service. A certain size is also a prerequisite for global expansion and development of a global strategy. This why many banks today aim at fast growth resulting in a quantum leap in size.

This objective is best achieved by external growth through strategic alliances, mergers and acquisitions. Strategic alliances in banking are typically formed with a view to increased sales, new channels of distribution, new product launches or the promotion of the banks in question. M&A deals are concluded out of motivations relating, respectively, to operations, marketing, finance, and personal issues. Mergers and acquisitions result in a considerable consolidation of the banking sector on the national, regional and international scale. This process is very intensive in Europe, which is witnessing the emergence of strong regional bank groups (HVB Group, KBC) as well as global banks headquartered on the old continent (HSBC, USB, ABN Amro, ING, Deutsche Bank).

While mergers and acquisitions constitute the fastest and most spectacular method of securing growth, they also pose a challenge, and their results do not always come up to the expectations. Organisational growth through M&As may be jeopardised by problems such as differences in company cultures, leadership problems or inconsistent implementation of the chosen market strategy. However, size seems to be one of the key conditions to achieve competitive advantage in the retail banking services market. The banks are consequently faced with the "get bigger or get out" dilemma.