The most consequential question in financial services today is deceptively simple: who, exactly, is building the modern bank? It is the question that Tearsheet Managing Editor Sara Khairi poses in the latest installment of her biweekly "Letter from the Editor" series — a recurring column dedicated to connecting ideas, questioning assumptions, and tracking structural shifts across both established and emerging corners of the financial services industry. That the question requires asking at all is itself a signal. For most of the twentieth century, the answer was self-evident. Banks built banks. Today, the answer is anything but.
The architecture of retail and commercial banking is no longer the exclusive preserve of chartered institutions with century-old balance sheets and marble lobbies. Over the past decade, a sprawling coalition of technology companies, payments specialists, infrastructure providers, and regulatory-technology firms has quietly assembled the plumbing, the interfaces, and increasingly the licenses that define what banking looks and feels like for hundreds of millions of customers worldwide. The traditional bank, in many markets, has become one node among many in an ecosystem it once monopolized entirely.
This shift did not happen overnight, nor did it follow a single narrative arc. In payments, companies like Visa and Mastercard have long occupied a structural position between consumers and their banks — but the past several years have seen that intermediary layer grow dramatically more complex, with real-time payment rails, account-to-account transfers, and embedded finance propositions eroding the primacy of the card network model itself. In lending, credit decisioning has migrated from loan officers using judgment heuristics to algorithmic engines trained on behavioral, transactional, and alternative data. In compliance, the manual review processes that once employed armies of analysts are being systematically automated through artificial intelligence and machine learning.
The neobank wave that crested in the early 2020s demonstrated, at scale, that customer acquisition and interface design could be decoupled from the underlying balance sheet. Institutions like Revolut and Wise built tens of millions of users not by constructing new banking infrastructure from scratch, but by assembling it from modular components — Banking-as-a-Service (BaaS) providers, application programming interface (API)-first core banking vendors, and regulated partner banks carrying the prudential risk. The result was a customer experience that often surpassed incumbents in speed, simplicity, and mobile-first design, even when the regulated entity behind the scenes was a conventional chartered institution.
Incumbent banks have not been passive observers to this restructuring. Many of the world's largest financial institutions have invested heavily in their own technology capabilities, whether through internal engineering buildouts, strategic acquisitions of fintech firms, or deep partnerships with cloud infrastructure providers. The European Central Bank and the Bank for International Settlements have both noted the accelerating pace of technology adoption within supervised institutions, alongside the growing systemic relevance of third-party technology providers — a concentration risk that regulators across jurisdictions are only beginning to address coherently. The European Banking Authority has similarly flagged the governance and operational resilience questions that arise when critical banking functions are outsourced to a small number of dominant cloud and software vendors.
What Khairi's framing surfaces, implicitly, is a deeper tension between form and function. A modern bank may look, on its customer-facing surface, like a sleek mobile application with instant notifications and zero-fee foreign exchange. But beneath that surface, the chain of entities performing regulated functions — holding deposits, extending credit, processing payments, managing fraud — may involve half a dozen separate firms operating under different licenses, in different jurisdictions, under different supervisory frameworks. Who is "building" that bank depends entirely on which layer of the stack you examine. The answer changes depending on whether you are looking at the brand, the balance sheet, the core system, or the customer relationship.
The regulatory dimension of this question is not academic. As BaaS arrangements have proliferated, supervisors in the United States, the United Kingdom, and across the European Union have grown considerably more assertive about accountability and compliance standards at every link in the banking supply chain. The era of regulatory arbitrage — in which a nimble technology firm could offer bank-like services while sheltering behind a partner institution's charter — is contracting rapidly. Regulators are demanding that the firms doing the building accept a commensurate share of the regulated responsibility.
What This Means for the Industry
The question of who builds the modern bank is converging toward a more nuanced answer than either the pure-fintech disruptors or the traditional incumbents would prefer to acknowledge. The most durable banking propositions emerging today are hybrid constructions — entities that combine regulated balance-sheet capacity with technology-first operating models, deep compliance infrastructure with product velocity, and global ambition with local regulatory credibility. The builders who will define the next decade of financial services are those who understand that neither the charter nor the code is sufficient on its own. Both are necessary. The institution that masters the combination of the two will not merely participate in the modern banking landscape — it will define it.
Written by the editorial team — independent journalism powered by Codego Press.