Because understanding and satisfying regulations has a high minimum cost and scales slower than revenue. Consequently, in heavily regulated industries, it's mo

Because understanding and satisfying regulations has a high minimum cost and scales slower than revenue. Consequently, in heavily regulated industries, it's more efficient for extremely large firms to design and implement the necessary internal gymnastics, and amortize that labor cost over a large amount of business. Smaller firms still have to do much of the same (at some point, 1 person is the minimum in a role), but can't spread it over as large a customer base. Or, to put it another way, it's easier to merge your way into larger profit margins in heavily regulated spaces.