The Bank Branch Is Dying. Banking Is Not.

For years, the banking industry’s favourite question has been whether fintech would eventually replace traditional banks.

Perhaps we have been asking the wrong question.

The more interesting question is: which parts of a bank are actually worth preserving?

An interview published by Corriere della Sera with Roberto Parazzini, CEO of Deutsche Bank Italy, offers an unusually clear answer.

Deutsche Bank’s strategy in Italy is moving away from the traditional idea of a generalist bank built around branches and towards something much more specialised: wealth management, entrepreneurs, relationship managers, corporate advisory and even investment-banking services for mid-sized companies.

At first sight, this sounds like another banking restructuring story.

It isn’t.

It may instead describe where banking itself is going.

The great unbundling of banking

Think about what customers historically needed a bank branch for.

Cash withdrawals. Deposits. Transfers. Payments. Statements. Currency exchange. Investment orders. Loan applications. Mortgages.

Technology has progressively removed the physical branch from almost every one of those transactions.

Parazzini makes essentially this point: the branch is no longer the natural unit around which banking should be organised.

That matters enormously.

Because once the branch disappears, something else becomes visible.

A large proportion of traditional banking was never sophisticated financial advice. It was distribution infrastructure.

Banks owned the places where financial transactions happened.

Digitalisation destroyed that monopoly.

Today a smartphone can perform in seconds transactions that once required buildings, employees, paper forms and opening hours.

And fintech accelerated the process dramatically.

But here comes the paradox.

The easier banking becomes technologically, the more valuable genuinely difficult banking becomes.

Revolut and Deutsche Bank may actually be travelling in opposite directions

This is where the comparison with digital banks becomes interesting.

Fintech companies have been extraordinarily successful at attacking the most standardisable layers of finance.

Payments.

Foreign exchange.

Cards.

Transfers.

Simple investments.

Basic savings products.

These activities benefit enormously from scale, automation and excellent software.

The marginal cost of serving another digital customer can be tiny.

Traditional banks cannot easily win that game using thousands of physical locations and legacy technology.

So Deutsche Bank’s Italian strategy appears to move in almost the opposite direction.

Not towards millions of additional low-value interactions.

Towards fewer, wealthier and more complicated clients.

Entrepreneurs.

Families with substantial assets.

Mid-sized companies.

People facing decisions where pressing a button is not enough.

Selling a company.

Buying another one.

Restructuring ownership.

Entering another country.

Managing liquidity after an exit.

Organising family wealth.

Financing expansion.

Finding an investor.

These are not easily commoditised transactions.

They are problems.

And people pay considerably more to solve problems than to execute transactions.

The most important sentence may be “bank for entrepreneurs”

Deutsche Bank describes its ambition in Italy as becoming a bank for entrepreneurs.

That distinction deserves attention.

An entrepreneur does not neatly divide his financial life into the boxes banks traditionally created.

Corporate banking here.

Private banking there.

Investment banking somewhere else.

Wealth management in another department.

For the entrepreneur these are frequently the same economic problem.

Suppose someone owns a €50 million company.

The company receives an acquisition offer.

Immediately the owner may need corporate valuation, M&A advice, tax structuring, financing analysis, negotiation assistance, wealth management and succession planning.

The distinction between “corporate client” and “private client” suddenly becomes artificial.

Deutsche Bank’s answer is interesting precisely because it tries to reconnect those pieces.

Even more interestingly, it is extending investment-banking-style advisory to mid-cap companies that historically could have been too small for a global investment bank.

That is potentially a very large market.

Europe is full of successful family-controlled companies that are too sophisticated for ordinary retail banking but too small to command continuous attention from major investment banks.

There is an enormous advisory space between the two.

AI will make this distinction even sharper

Artificial intelligence is likely to accelerate the same process.

Routine financial work will become cheaper.

Portfolio reporting.

Basic research.

Document analysis.

Credit screening.

Compliance checks.

Customer support.

Financial modelling.

Parts of investment analysis itself.

The immediate conclusion is often that banks will need fewer people.

True.

But incomplete.

AI reduces the economic value of information processing.

It does not automatically eliminate the economic value of judgement.

An entrepreneur deciding whether to sell the company built by his family over forty years does not merely need a spreadsheet.

He needs someone capable of understanding valuation, markets, taxation, financing, family dynamics, negotiation and risk simultaneously.

AI may dramatically improve that adviser.

It does not necessarily eliminate him.

This creates a fascinating banking barbell.

At one end:

almost completely digital banking at enormous scale and extremely low unit cost.

At the other:

highly personalised financial advice for increasingly complex clients.

The uncomfortable place may be the middle.

Traditional generalist banking with expensive infrastructure, mediocre digital services and insufficiently differentiated advice.

That is where margins could become increasingly difficult to defend.

Europe has another problem: scale

There is a second part of Parazzini’s argument that deserves even more attention.

He expects European banking eventually to enter a third consolidation phase capable of producing perhaps four or five institutions large enough to compete globally with American and Asian groups.

That prediction may sound ambitious.

But the direction is becoming increasingly difficult to ignore.

European banking remains fragmented by national borders despite operating under a monetary union.

Europe has a common currency.

It has the ECB.

It has common banking supervision.

Yet it still does not have anything resembling a genuinely integrated banking market comparable with the United States.

Most consolidation remains domestic.

The European Banking Authority reported that the value of EU/EEA banking M&A jumped sharply in 2025, but domestic transactions continued to dominate.

That contradiction is remarkable.

Europe wants globally competitive banks while continuing to organise much of banking around national markets.

Something eventually has to give.

The renewed UniCredit-Commerzbank story is therefore much more important than one takeover.

If Germany ultimately accepts the principle that a major German bank can become part of an Italian-led European group, a psychological barrier may have fallen.

The real European banking union will not exist when another regulation is published in Brussels.

It will exist when Europeans stop thinking of Deutsche Bank as German, UniCredit as Italian, BNP Paribas as French and Santander as Spanish — and start thinking of them simply as European financial institutions.

We are not there yet.

But bigger banks are not automatically better banks

There is an important warning.

Consolidation creates scale.

It can reduce duplicated technology spending, compliance costs, infrastructure and capital inefficiencies.

But size does not automatically create innovation.

And it certainly does not guarantee better customer service.

Europe should therefore be careful not to replace fragmented national oligopolies with a continental oligopoly.

Four or five enormous banks may compete more effectively with Wall Street.

They may also create institutions that are even more complex, politically important and difficult to challenge.

Scale solves one problem and creates another.

The objective should therefore not simply be bigger banks.

It should be better banks with European scale.

There is a difference.

The fintech revolution did not kill banking

This may ultimately be the most important lesson.

Fintech was often presented as a revolution that would destroy traditional banking.

Instead, it is forcing banks to discover what their real economic function is.

A payment is increasingly software.

A transfer is software.

Foreign exchange is increasingly software.

Basic portfolio allocation is increasingly software.

A bank account itself is becoming software.

But capital allocation, complex financing, corporate transactions, international structuring and trusted financial advice remain something else.

Technology is therefore not eliminating banking.

It is removing the parts of banking that never required a banker in the first place.

That distinction changes everything.

The bank branch may indeed be dying.

The bank may not be.

It may simply be returning to its oldest function:

understanding capital, understanding risk and helping people make difficult financial decisions.

And ironically, after thirty years of banks trying to become technology companies, the competitive advantage of tomorrow’s best banks may once again be something remarkably old-fashioned.

Judgement.

Roberto Balbino
Founder & CEO, Fintech SCB
Independent analyst of finance, economics, geopolitics and global markets.