I am not a big fan of Kevin O’Leary. While hugely successful and popular on Shark Tank, he may be a bit too firm in his opinions and does not admit when he is wrong. However, on the matter of bank’s viability in 1-2 years, I agree with Kevin. But I believe this applies to all banks, not just small banks:

Here is why ‘Shark Tank’ star says small banks won’t be around in 24 months:

Kevin O’Leary, chairman of O’Leary Ventures and host of “Shark Tank,” weighs in on why Americans are having a harder time borrowing money and what that could mean for small banks. Source: CNN.com

I am quite sure we will see far fewer banks very soon, however, my reasons are a bit different:

Virtually every aspect of a bank’s business can be taken over by Fintech Startups: Banking, Credit Cards, Loans, Lines of Credit, deposits, money transfers/wires, and all else. Hence leading to over 50,000 fintech startups around the globe. Other than the obscure laws that make dealing with banks extremely difficult, there is nothing they do that cannot be replicated. And remember, your $250k is insured by the Federal Government, which can apply to a digital fintech startup.

Banks have over-digitized themselves, basically walking themselves out the door. If you have recently gone into a bank, it looks like a morgue. The people who are there, hate being there. Teller desks have been relocated, through a maze of desks, to the very back of the bank, with one very sad teller working (at best). All of this done to discourage you from going into the bank.

Customer support is awful and banks are slow in adopting real AI. You are talking to un-trained folks, with minimal skills, simply people to answer the phones. This all leads to very low customer satisfaction. Banks got particularly worse once they were paid tons of money by the government to distribute the PPP loans during the pandemic, adding headcount yet declining service quality.

Banks are no longer delighting you. They are like they were a decade ago. Other than scanning checks and deposits and use of mobile, banks are not attempting to be your financial partner, but rather a very expensive and highly replaceable utility. Charging very high fees for doing nothing and in the case of SVB and Credit Suisse, disappearing overnight leaving thousands of clients in the dark.

I cannot find a single reason why banks will remain in business. The question is what should banks do to remain relevant? Would love to know what you think!

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