> Germany has huge numbers of banks compared to other countries and so the system is inefficient.

That's not really true. While there is a huge number of banks, most of them are either co-op banks (Raiffeisen- and Volksbanken) or Sparkassen, and while they are all separate legal entities, all the banks from either of those groups run on their respective common infrastructure (Ficudia & GAD IT and Finanz Informatik).