This article stresses how the United States is on the verge of experiencing a wave of bank mergers. The pandemic brought significant change in consumer behavior, which has made a shift in banking practices necessary to remain relevant. The rise of digital banking services such as mobile and online banking has become the new norm, making it important for banks to make large investments in technology to keep up with their competition. This will be costly, and the only way for smaller banks to survive is to merge with large banks. The article suggests that merging will be easy under Biden’s administration.Large banks like JP Morgan and Bank of America will merge to reduce costs and expand market share, while small banks will merge with larger ones to remain in business. Banks that do not adapt to changing consumer habits and invest in new technology are likely to face significant challenges in the future and go bankrupt.
https://www.economist.com/leaders/2023/04/20/why-america-will-soon-see-a-wave-of-bank-mergers
4 comments:
Really interesting post Elliot! Do you think the merging of banks is solely because of the technological advances in the banking world or other factors as well. I read an article discussing how consumer demand does play a huge part in bankers successes. At the same time though, banks rely on the economy to do well, in order to remain in a good standing of business.
Hello Elliot,
In my opinion, this is the future of banking. These consumer changes are caused by the covid-19 pandemic, increased technology, and the dying off of baby boomers who are the most common people to hold cash. Small banks will have to merge with larger banks otherwise they will not be able to sustain themselves or receive enough profit. My prediction is that these mergers will occur within the next 10-15 years. Our technology will be even more different than it is now and I expect banking to almost be completely online. Although we will still see cash being used for the next 50 years or so.
Overall, great insights.
I wonder how the emergence of the digital banking system FedNow will affect these small banks? With banking becoming more digitalized especially thanks to the pandemic, there is less of a need for small banks. This might mean small banks get bought by the large banks or ultimately they will dissolve.
I think this is a really interesting post! With the rise of technology in the banking system, banks are competing at relatively the same market rates, and sit at a pretty equal state across the board. If banks can combine their assets into one large national banking system, then they may be more beneficial in earning more profit, and dominating the banking system all together. I wonder if this will have an impact on the amount of benefits that customers of banks receive on their credit cards. For example, some banks draw in customers using good cash back and point incentives like travel points. If banks were to combine to larger institutions, I wonder if this would affect the amount of incentives that are provided to consumers.
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