Many of these technologies are too expensive unless costs can be spread over a large number of customers. Mergers are often necessary to allow banks to introduce and maintain the technologies customers increasingly demand. Laws which had prevented many banks from operating in more than one state recently have been removed or overridden. The advent of interstate banking and branching means more opportunities for banks operating in different states to merge with each other. One effective method of controlling risks inherent in bank lending is to diversify operations across different geographic regions and different types of customers.
Mergers can help diversify such risks.
Broader array of products. Mergers may give banking institutions an opportunity to offer a broader array of services. A merger of two banks with different expertise can result in a combination more to the liking of customers looking for one-stop shopping. An in-market merger is one that takes place between two banks operating in the same geographic area, typically a city or metropolitan area. The merged institution often ends up with more than one branch in the same neighborhood and as a result may close overlapping offices.