Banks are not being destroyed. They are being sliced apart. The most interesting provocation in a recent BTG Pactual note, based on a Bain study, is that traditional banks still make plenty of money, but no longer control the same territory. Their share of the addressable market for banking revenues has reportedly fallen from about 95% in the early 2000s to roughly 80% today — and could decline to 65% by 2030. This is not an immediate existential crisis. It is a slow erosion of privilege.
The threat is not just fintech. Large banks survived the first digital wave reasonably well. They improved their apps, accepted free accounts, lived with no-fee credit cards and adapted to instant payments. They had capital, cheap funding, trusted brands, customer data and massive client bases. Many lost fee income, but preserved credit, relationships, insurance, investments and balance-sheet power. The new wave is more dangerous because it does not try to replace the whole bank. It targets the margins.
AI lowers operating costs, improves risk analysis and automates services that were once protected by human scale. Stablecoins challenge cross-border payments, settlement and parts of the transactional infrastructure. Private credit shifts lending intermediation away from bank balance sheets. Digital platforms capture the customer relationship and push the bank behind the curtain. The risk is not that consumers wake up tomorrow without a bank. It is that they use banks less precisely where banks make the most money.
For decades, the biggest bank also looked like the strongest bank. Now size has become a more ambiguous advantage. Scale still matters: it lowers funding costs, expands distribution, supports technology investment and gives institutions the capacity to survive crises. But it can also mean legacy systems, too many committees, slow products, too many branches, too much bureaucracy and too much fear of cannibalizing old revenue pools. A bank can be large enough to dominate the past and too heavy to capture the future.
The irony is that banks complain about unfair competition — and they are partly right. Fintechs and non-banks often operate under a lighter regulatory burden. They do not carry the same prudential structure, face the same capital requirements or need to absorb the full cost of being systemic. They can choose the most profitable pieces of the value chain. But that same regulation also protected incumbents for decades. The regulated perimeter was expensive, but profitable. Now part of the profit is escaping outside it, while the cost of remaining inside remains high.
That does not mean banks will disappear. Trust, liquidity, data, balance-sheet capacity and the ability to survive stress still matter enormously. In moments of market pressure, investors and clients quickly rediscover the difference between a beautiful app and an institution capable of lending, absorbing losses and maintaining access to funding. The bank remains critical infrastructure. But being critical infrastructure no longer guarantees capturing all the value created around it.
The future may be less universal than banks would like. The winning institution may not be the one that offers everything, but the one that becomes indispensable at something: credit, payments, infrastructure, data, distribution, custody, risk or trust. The universal bank is not dead. But the privilege of being universal has become too expensive. The moat has not disappeared overnight. It is being crossed by bridges built outside the bank.
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