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Comment by NikolaNovak | Hacker News Reader

I'm in Canada, originally from Europe; and to simplify, I never really "understood" regional banks. I was an exchange student in Minnesota and banked with... "Bank of Fairmont". Tiny city of 11k people, and it had its own bank. Seemed horribly inefficient and weird; and then when you left your home town you were in a load of headache. Of course that was 25 years ago, but still, when I hear there are 4,000 banks in USA (not branches; separate independent banks), I cannot help but ask... why?? Until recently, USA seemed way way way behind on convenience and efficiency; and the "fintech innovations" that are happening now seem built on ridiculously sketchy framework.

Understood that small regional banks exist and it'd be senseless and disruptive to kill them off now, but if we take them as a historical artifact that we must live with, what actual advantages, in clean-sheet model, do they have, that would counter-act the poster's main point?

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Because in before times, when you used to want to start a business or expand a business, or buy a home, and needed a loan, you had to go convince a bank employee to make that loan to you.

In those cases, a relationship between bank employees and the local residents mattered to establish trust between both parties.

Nowadays, a lot of high quality databases can do a lot of the work figuring out a borrower’s credit, so there is less need for those personal interactions, especially for something as simple as home mortgages.

Right, but is that different anywhere else in the world?

True, maybe it has something to do with state laws versus federal laws, or larger distances between population centers?

These days a regional bank will have robust online and call center services and probably refund any ATM fees.

Unless you need a ton of cash real quick (which is rare and getting rarer) it's perfectly convenient to keep using your regional bank even if you've moved across the country. If you do need the cash you call them and have them raise your ATM limit for a day. The overall amount of inconvenience per year is equal or less than dealing with some big stodgy national chain.

Canadian but also lived in the US. Have not lived in the EU.

For Canada, while geographically large population wise it’s very small compared to the US. The big Canadian banks are targeting a similar sized demographic to California.

I’m less familiar with Europe, but I’m guessing most nations still have prominent national retail banks, with some having an EU wide market? Those national retail banks would effectively be regional in the US.

> Those national retail banks would effectively be regional in the US.

But many are quite big.

There are ~40 banks with assets over $200bn in Europe vs 15 in the US.

small regional banks exist in Europe too.

They're historically related to having shareholders which are also local, or backed by local foundations, or have special relationships with the local businesses (like the ones in Italy that will take a wheel of cheese or balsamic vinegar as collateral). Not "bank of $city" tho.

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