No one is disrupting banks – at least not the big ones
Claims that “no one is disrupting banks” prompt a wide-ranging look at why large financial institutions remain so entrenched despite waves of fintech and crypto innovation. Commenters point to regulatory moats, the unique state-backed role of deposit-taking and credit creation, and consumers’ preference for safety over novelty as key barriers to true displacement, even as neobanks, payment apps, and private credit nibble at specific profit centers. Examples from Europe, India, Brazil, and developing countries show that real change is more likely to appear in payments, UX, or niche lending than in replacing core retail and wholesale banking functions.
Why big banks are hard to “disrupt”
- Regulation is repeatedly described as the main moat: banking licenses, capital ratios, AML/KYC, and supervisory regimes make entry costly and slow.
- Big banks often want heavy regulation because it locks in incumbents and makes new competitors uneconomical.
- Some argue that in practice disruption is often just “regulatory arbitrage” or skirting rules until regulators catch up.
- Attempts to get direct Fed “master accounts” (e.g., Reserve Trust, Custodia) faced strong resistance and, in one cited case, revocation.
How money and credit actually work
- Several comments stress that all banks create credit “out of thin air” via lending, constrained by capital and liquidity rules.
- Others note that anyone can create credit (IOUs, trade receivables); what banks have is a special legal/regulatory backstop when they misprice risk.
- There’s debate over how “magical” this is: some see it as an accounting trick that yields interest on created credit; others emphasize system-wide balance and interbank settlement via central banks.
Fintech and neobanks: real but limited disruption
- In consumer retail, neobanks (Monzo, Starling, Revolut, Nubank, etc.) are credited with better apps, instant notifications, fee pressure, and forcing incumbents to improve UX.
- Yet core deposit and lending power, especially at scale and in mortgages, remains with large incumbent banks.
- Some see better savings rates (HYSAs, brokerage cash accounts) and app interfaces as incremental competition, not structural disruption.
Crypto and alternative currencies
- Strong disagreement: some claim crypto was suppressed because it threatened banks; others say crypto has never been a credible threat and mostly fuels speculation, scams, and some criminal use.
- Long subthread on value: fiat vs crypto vs gold/diamonds; many note all money rests on shared belief, but government fiat is anchored by tax obligations and legal enforceability.
- Skeptics highlight volatility, lack of real-world use, and regulatory risk; boosters point to censorship resistance and global, low-friction transfers.
Payments, UX, and “what needs disrupting”
- Many users say they’re satisfied: banks safely hold money and enable payments; most people lack enough savings for rate differences to matter.
- Others are frustrated by slow interbank transfers, check holds, business-hour cutoffs, opaque transaction data, and poor tooling for detecting and cancelling fraud or subscriptions.
- Instant payment systems elsewhere (EU SEPA instant, India UPI, FedNow plans) are contrasted with slower US ACH and card rails; card networks’ fees are widely viewed as a separate, under-addressed oligopoly.
Global and sectoral angles
- Examples of more meaningful change:
- Mobile money and wallets (e.g., M-Pesa, WeChat Pay, AliPay, Brazilian neobanks) reaching unbanked or leapfrogging cards.
- India’s public payment infrastructure and regulatory “sandboxes” enabling new models.
- Private credit and securitization shifting large chunks of corporate and real-estate lending off bank balance sheets (disruption on the “fin” more than the “tech” side).
Trust, safety, and failures
- Recent collapses (SVB, Synapse/BaaS issues, various crypto blow-ups, meme coins) make commenters wary of entrusting core savings to fintechs or crypto platforms.
- Many explicitly say they want their bank to be boring, stable, and un-“disrupted,” and will only use fintech for small balances or specific conveniences.