Banks: Advisers or sellers of mortgage loans?

The financial sector has undergone major changes in recent years. From being sharply divided between various sub-sectors, financial activities within banking, insurance and mortgage credit have become increasingly integrated. Two different trends have emerged in this process: One of them is the conglomerate strategy in which the various sub-sectors are linked through joint ownership offering the customers all financial products in-house. The other trend is the focus strategy in which the financial institution sticks to its core business but offers its customers complementary products sourced from other financial institutions. This paper presents an analysis of the conglomerate strategy versus the focus strategy. A questionnaire sent to Denmark's largest companies reveals that the choice of bank and mortgage credit institution is not based on independent decisions. The paper raises the question of whether the financial service businesses are able successfully to balance their functions as sellers and advisers to the customer.