The future of wallets: How do bank failures reflect the evolution of financial institutions in the modern age?


Zenil Koovejee

The younger generation has increasingly embraced digital platforms like Apple Pay for their banking and purchasing needs, largely neglecting the traditional wallet and physical cards.

In the past week, First Republic Bank has become the next victim in a series of bank failures that have plagued the United States and the world. Being acquired by JPMorgan Chase just weeks after the Silicon Valley Bank’s collapse, First Republic’s troubling predicament has sent shockwaves throughout the financial industry and caused fear amongst individuals around the country.

“Banks are independent. So, in that sense, if you think about it from a macroeconomic perspective, banks have to follow a quiet reserve ratio. This means that banks have to keep some cash on hand and they can loan out a simple amount. Moreover, when banks collapse, it means they can not get the loan payments back,” said rising Business Major at BerkeleyHass Gyan Bhambhani (‘23).

A San Francisco-based regional bank catering to high-net-worth clients, First Republic Bank ultimately failed due to a numerous number of complex and intricately woven factors. For example, experts have cited the bank’s vulnerability to a rapid increase in interest rates. To explain, First Republic Bank attempted to persuade consumers to grow into more higher profitable products at a time when interest rates were historically low. This, coupled with account withdrawals of more than $100 billion, prompted First Republic Bank to fail

“As a business major, the collapse of First Republic Bank highlights the need for banks to be transparent about the extent of their uninsured deposits to maintain trust and confidence among their depositors,” said Bhambhani

Moreover, many students and organizations have started to question how the banking industry will evolve in both the near and far future.

“I think banking in 50 years will be mainly virtual. At my job, I get paid straight to my virtual bank account rather than receiving money. I also use Apple Pay more frequently than cash,” said Ryder Crespo (‘24). 

As the use of cash becomes increasingly obsolete, some experts predict that banks may become less necessary for day-to-day financial transactions. With the rise of digital payment methods, many individuals may opt to manage their finances through non-traditional means, which could potentially reshape the future of the banking industry.

“When I work, I ring up customers using cards more frequently than customers who use cash. Because of this, I think it is evident that in 50 years, banks will be less useful due to cash being used less,” said Fernando Rodriguez (‘23).

All in all, the collapse of First Republic Bank (among others) has brought attention to the intricate and fragile nature of the banking industry. Moving forward, communities in Pleasanton and beyond are expected to patiently observe and analyze any and all potential developments and witness the revolutionary evolution of our wallets, our lives, and the institutions that govern it all.