Darwin & the Banking Industry

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Darwin & the Banking Industry

When the evolutionary dust clears, we can expect to see fewer but stronger financial institutions, according to analysts who've applied Darwin's laws to the American banking system. "America doesn't need 12,000 to 14,000 depositary institutions," says Joseph Labriola, managing director of Fitch Investors Service Inc., a New York-based financial rating agency. Adds Christopher Mahoney, associate director at Moody's Investor Service: "Ten years from now, we'll have half as many holding companies and half as many banks employing about two-thirds the number employed today."

Such consolidation will change the face of banking. For starters, …