Convergence is not consolidation which refers to the combination of companies, usually within the same industry, to achieve business efficiency. Convergence is a growing phenomenon in global business. It involves the blurring of the boundaries that traditionally separate industries and markets. Convergence will certainly be a dominant force with a significant impact on business in the near future. In the financial services sector, the convergence trend is driven by a number of key factors.
Deregulation is one.
The liberalisation of traditional regulatory controls opens the gate to a flood of new industry and non-industry players. As these barriers are removed, convergence is evidenced by cross-industry mergers such as that between Citicorp and Travelers Insurance, Winterthur and Credit Suisse, and Zurich and Kemper. Not only are the mergers getting bigger, but the merged entities are expanding into new markets, new products and new distribution channels. Another factor driving convergence is the customer. More specifically, customers empowered with technology.