At the heart of those issues is the potential for worldwide computer problems at the turn of the century caused by hardware and software programming. Many computers and software programs use only two characters to represent dates, which may cause them to confuse 2000 with 1900. Another issue prompting the recent surge of bank mergers is less regulation of the financial services industry, Fraser said.
Bank managers have the opportunity to expand geographically which they didn t have before.
Geographic diversification provides economic stability, he said. As an example, Fraser cited the Texas oil bust during the late 1980s, which caused the failure of some of the state s major financial institutions that were not geographically diversified. Another cause of recent mergers, Fraser said, is growing competition among banks. Merging gives banks larger size and economies of scale so they can afford to keep up. Banks larger size may benefit customers, Fraser said, by offering nationwide access.