Starting a banking business has meant high fixed investment costs in technology, hardware and software, in brand creation etc, although once running, business causes relatively low marginal operating costs. Thus getting bigger, acquiring new clients and market share has been crucial for all retail banks. Also the optimal use of equity capital has pushed for increases in size and volumes.
However, the impact of size on costs is far from being a trivial and straightforward issue. There is plenty of academic research on this topic, but this literature has failed to reach any consensus on the optimal size of a banking institution. Optimal size may depend on possibilities to outsource.