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Increased scrutiny over mergers involving the Big Four banks means future deals will likely take place between regional lenders or mutuals, according to KPMG.

Banking partner Martin McGrath told The Australian Financial Review that funding challenges could make acquisitions or mergers among the mid-tier players more difficult in the short term, but further consolidation could be on the horizon.

"I don't think [the ACCC will] change their position on mergers in terms of the Big Four acquiring these entities, but I wonder if two of these entities wanted to get together whether they'd frown on that. I would have thought you'd have a pretty good case."

Earlier in the year, ACCC chairman Graeme Samuel expressed concern at the state of competition in the banking sector.

"The risk is with four big banks, because of the diminished role of non-bank financial institutions, we end up with less than intense workable competition," he said.

"That means it is easier for the big banks to conduct their business with perfectly legal, tacit co-ordination of pricing."

He added that the ACCC was becoming "increasingly concerned" that the lack of competition would ultimately reflect in costs to consumers.

In keeping with these concerns Samuel said the ACCC is likely to block further bank mergers to prevent the sector from becoming even less competitive.

However, ANZ chief executive Mike Smith announced in August that the regulator's stance on bank merger would not stop the bank from trying to buy a domestic rival.

"We need to bulk up," he said. "I think the issue in Australia right now is competition and the anti-competitive dialogue or muttering or whatever it is that you want to call it coming from the ACCC.

"I thought they were there to actually look at deals and give a view rather than announce ahead of that what you can and can't do."

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