Remember when big banks looked ripe for disruption? Back in 2019, people—including me—thought upstart neo-banks like Chime and SoFi were going to eat their lunch. These challengers had a slick, digital-first business model and, unburdened by legacy costs like branches and tellers, were poised to undercut the slow-footed incumbents in everything from loans to investment services. It didn't work out that way.
A widely shared Wall Street Journal piece this weekend, titled "America's biggest bank is everywhere—and it isn't done growing," reveals how JPMorgan emerged from the pandemic and the recent regional bank crisis richer and more influential than before. Meanwhile, JPMorgan's big bank rivals—Citi, Bank of America, and the gang—are also flourishing while their would-be disrupters struggle to stay alive. As the Journal notes, this has come about in part because the industry giants have an implicit backstop from the U.S. government, which "encourages people and businesses to move their money to them in times of stress creating a feedback loop that makes big banks bigger."
