The Great Consolidation of the U.S. Banking Industry is an expression used to refer to the wave of mergers and acquisitions that began in the late 1990s and early 2000s. This trend saw the number of banks in the country shrink from roughly 14,000 in 1994 to less than 6,000 in June of 2020. This played out across the banking landscape, with community banks and large regional banks merging, being acquired or shuttering altogether.

What sparked the wave of consolidation is a matter of debate, as actors in the industry offer different perspectives. Many cite reasons such as increased competition due to deregulation, increased consolidation of customers, and changes in technology as drivers of the trend. Despite the various explanations, The Great Consolidation had a profound effect on the U.S. banking industry and continues to reverberate today.

The booming cryptocurrency industry has also impacted the banking sector, as it grew from a $200 billion market capitalization in 2019 to $1 trillion in 2020. This created increased competition for banks and other financial institutions, as crypto companies began to encroach on their turf. And yet, over the past two years, traditional banks and financial institutions have also embraced cryptocurrency and its related technologies, leading to further industry consolidation.

The final nail in the coffin for some banks in the U.S. came in the form of the COVID-19 pandemic, which is having an unprecedented impact on the global economy. The fallout from this far-reaching crisis has been felt throughout the banking sector. This includes the closures of major banks such as Bank of America, JPMorgan Chase, and Wells Fargo, whose combined assets total more than the 25 banks that failed in the financial crisis of 2008.

It is clear that the Great Consolidation of the U.S. banking industry has been a lengthy and complex process. In some ways, it can be traced all the way back to the 1990s, but its effects have become more pronounced in recent years. The combination of increased competition from the cryptocurrency industry, market forces, and the economic hardships of COVID-19 has resulted in the closure of major banks and an acceleration of industry consolidation. Although these events have resulted in a smaller banking landscape, the era of the great consolidation is likely to be remembered as an inflection point in the industry’s history.



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