In the US, small local banks are everywhere. There's an entire ecosystem that matches capital to start a bank with experienced management teams that run the bank (not just anyone can be an executive at an OCC chartered bank). There are SaaS providers that do the heavy IT lifting. And, of course, specialist lawyers. They open a local bank, build it to a certain size, and (usually) one of the regional or super regional banks comes and picks them up. Lather, rinse, repeat. Not unlike what you see in SV with startups.
The situation in Germany with the "Sparkasse" and "Volksbank" is a bit different. They have a special legal form, preventing takeovers from other banks. But the local Volksbanken (or Sparkassen, I guess) can merge with each other. If that process in the end also leads to a "too big to fail" status at some point in time, I cannot predict, but I doubt it.
"Big banks have most of the money" and "Big Banks have gotten bigger" has absolutely nothing to do with "Are there small banks". I was talking to some folks I know in this world this week about a small bank they're starting, so it's not 2000 we're stuck in. I get "Big Banks are Bad" is the horse you want to beat, tho long dead, but there's plenty of room in this thread to shoehorn your pet gripe where it would be at least remotely on-topic.
The quote, that is the title of this comment thread (we're discussing a specific thing here, the quote in question, mind you, not which banks are good and bad) was a whole lot more applicable in the past than it is today.
Yes, sure there are small banks. But if you walk around any major city or drive around any major residential area, nearly all the banks you see (and in reality, nearly all the banks people actually bank at) will not be a match for the main point this quote is making.
That's because the banks that nearly all of us interact with now, are so large, and so politically connected and interwoven with our core financial structures, that it's actually impossible for almost anyone living to have a bank at their mercy due to the amount of money they owe the bank.
So the quote, once widely understandable and applicable, is slowly starting to make less sense to the average reader.
Just in my suburb of a major city, within, say 5 miles of me, physical banks that aren't the top 5: a bunch of small banks (Southstate, Cadence, MemberFirst, FirstCitizen, OZK, Unity National, Southern First, First Horizon, City National, Hyperion), at least 6 credit unions (usually considered 'small banks': Delta Community, Navy Federal, Emory, Associated, American Postal, Peach State), banks that are 'small but something else' (BestBank (bought by First Citizen I think), associated with Kroger, Woodforest National associated with Walmart) and 4 regionals (Truist, Synovus, Regions, Ameris (which is a rollup of 4 or so small local banks around here)).
How do they stay in business I wonder since noone sees them and noone banks there? What was your point again?
Apparently in the UK, the largest four banks control 75% of all current accounts (en-us: checking account ). Admittedly a smaller market, but even more centralised.
