Why You No Longer Need a Big Bank

Finance Tips

For generations, people have entrusted large, institutional banks with their money. It was always believed that big banks with many in-person branches were the most efficient and safest place to keep your money and work within the financial system. Yet now, thanks to the help of new technological innovations and startups, big banks aren’t the only reliable option anymore.

Thanks to technology and customer-friendly startups, you don’t need to succumb to a big bank for your financial needs.
Thanks to technology and customer-friendly startups, you don’t need to succumb to a big bank for your financial needs.

In fact, with these new, tech-based solutions taking market share from the industry leaders, big banks might be on their way out altogether. Let’s look at a few of the reasons you no longer need a big bank.

Technology makes in-person branches obsolete

It was only a few decades ago that the idea of banking without an in-person branch would have been ludicrous. After all, how are you going to deposit your checks or withdraw cash when needed? But in just a few short decades, technological innovations driven by the internet and smartphones have made it so easy and secure that in-person bank branches are no longer a necessary feature for consumers and businesses. It appears that these technologies have made it easier than ever to bank from the comfort of your own home.

Some of these advances include:

  • Ubiquity in credit card and other non-cash payments – Cash is a thing of the past. Today, you can use your credit card to make purchases anywhere, anytime.
  • Fee-free ATMs – Even if you need cash for whatever reason, the institution of free ATMs means you don’t have to go to the bank to withdraw money. Certain banks might even offer rebates on all ATM-related fees.
  • Mobile check deposits – Deposit your checks using the camera on your smartphone. Now that’s convenience.
  • Automatic bill payments – Gone are the days of sending a check to pay your bills or having to go to the municipality to settle your accounts. Now, you can set up auto-payments through your bank to pay your bills every month without worry.

Challenger banks to the rescue

Big banks tend to gear their product offerings toward the ultra-wealthy, as most of their money is made from this customer base. This leaves smaller businesses and consumers left to fend for themselves, dealing with high fees and poor support.

Luckily, a new trend has seen challenger banks come into the market to provide better services to businesses and consumers. Currently, challenger banks like N26, OakNorth, and Monzo provide their customers with better services than their institutional banking counterparts. In fact, it’s estimated that challenger banks could exceed $578 billion in valuation by 2027.

Why are challenger banks better? Here are just a few reasons:

  • Better customer service – Big banks are notorious for long waiting times and poor customer service. On the other hand, Challenger banks utilize automated chat and online service features that make the banking process much better.
  • Lower fees – Institutional banks have gotten away with squeezing customers on fees for decades. But thanks to challenger banks, you don’t have to deal with exorbitant account fees any longer. Challenger banks are mostly digital retail banks that utilize technology to reduce costs and save customers money.
  • Online and mobile interfaces – Challenger banks are technology companies first. Meaning, their online and mobile interfaces are intuitive and easy to use for anyone.

The digital currency revolution?

Digital currencies could make centralized banks obsolete over the next decade.
Digital currencies could make centralized banks obsolete over the next decade.

With digital currencies beginning to take shape, the question now becomes: Will banks become obsolete altogether? Digital currencies stem from decentralized networks, which don’t require any traditional banking services. Funds can be sent directly between users without the need for banks at all.


This is even more apparent in the world of decentralized finance (DeFi), which disrupts many business areas that would previously have required banks. Take, for instance, lending and borrowing. Instead of approaching a bank for a loan, consumers can receive loans through DeFi services, all without registering for an account or even providing their personal information (as long as they have the necessary collateral). Lenders can do the same, and because banks and their fees are not necessary, lenders can receive a higher rate of return on their deposits. But be careful. The DeFi industry is still extremely new and relies almost entirely on open-source computer code, which, to date, has had a history of fraudulent activity.

Move over big banking; it’s technology to the rescue

Technology has improved almost every industry since the turn of the last millennium. Now, well-established big banks are getting to see firsthand what happens when they are pitted against smaller, more customer-friendly, and tech-savvy competitors. While big banks still offer in-person services, bank branches are becoming less important by the day. Both challenger banks and digital currencies, in many ways, already provide better options with lower fees.

So, the next time you think about opening an account with a big bank, stop to think if you are really going to get the most out of your banking services. You might be better off going with a smaller challenger bank instead.