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Why banks don’t die

The Finanser | Chris Skinner | Nov 11, 2020

Banks dont die - Why banks don’t die

Have you noticed how people talk about disruption more and more, and note the collapse of companies like Blockbuster, Kodak, Nokia and Thomas Cook? In fact, there are more companies entering and leaving the stock market lists than ever before, with the average tenancy now under two decades compared to six decades or more in mid-1950s.

A 2015 McKinsey study found that the average corporate life span has been falling for more than half a century by analysing Standard & Poor’s data, which shows a company’s survival was 61 years in 1958, 25 years in 1980, and just 18 years in 2011.

Change is faster, the challenges bigger, the need to adapt greater and the environment far harder than ever before.

So sad, but companies are not built to last forever. They come and go with the flavours, tastes and the needs of society.

But this is not true for banks.

Banks last forever.


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This is well illustrated by a comment from challenger bank Varo, who are seeking a national bank charter in America.

Varo is betting that looking more like a traditional bank will pay off in the long term. “It’s really the only long-term sustainable route if you want to be around 50 to 100 years from now,” said Colin Walsh, chief executive of Varo.

Banks don’t die. They may be zombies, failed, broken, wrong, stupid, dumb or whatever other words you want to use, but you can’t kill them.

The main reason this is the case is because they are protected by governments. Left or right governments want strong and stable banks to ensure a strong and stable economy. Therefore, they protect these treasured assets like no other companies. For this reason, banks live forever.

They can be acquired …

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