For most people, the answer is an obvious yes. We need somewhere to deposit salaries, make payments, access credit and keep our savings safe. But a more interesting question is whether we still need banks in the form we've come to know them.

Also bear in mind that modern banks have become arms of the state – closing down the accounts of those expressing politically edgy views or deemed to be risky from a reputational point of view.

Consider the case of the Sekunjalo Group, chaired by Iqbal Survé, which had all South African major banks close accounts linked to the company – citing reputational, commercial and legal risks. The same happened to the Gupta companies, whatever you think of them.

De-banking is becoming a “thing”: UK politician Nigel Farage had his bank account at Coutts closed, as did Flemish politician Dries Van Langenhove in Belgian – all for uncomfortable political views. We can disagree all we like with people like this, but we cannot celebrate what might eventually happen to any of us. Musician Ye had his bank account closed at JPMorgan Chase for what were deemed antisemitic remarks.

As the state seeks every greater powers over citizens, political winds will shift and what was acceptable discourse last year may become grounds for de-banking tomorrow.

There are some new banks emerging which suggest a different kind of banking future. This new generation of specialist banks is betting that the traditional banking model has become too large, too complex and, in some cases, unnecessarily risky. Rather than trying to compete head-on with financial giants, institutions such as Battle Bank and bitcoin-based Xapo Bank are taking a very different approach.

The banking industry has become remarkably concentrated over the last few decades. At one time there were about 35,000 community banks in the US. Today that number has shrunk to roughly 6,000 as thousands have been absorbed into national banking groups that now operate as sprawling financial services conglomerates.

Modern banks don't just safeguard deposits. They lend, trade securities, deal in foreign exchange, manage investments, sell insurance and operate massive derivatives books. That complexity creates multiple sources of revenue, but it also creates multiple sources of risk.

Investor Doug Casey argues that many banks have evolved into highly leveraged financial trading houses. Some large institutions maintain derivative exposures that dwarf their equity capital, while the traditional banking practice of funding long-term loans with short-term deposits leaves them vulnerable when interest rates rise or depositors rush for the exits. The collapses of Silicon Valley Bank and First Republic Bank in 2023 illustrated just how quickly confidence can evaporate when those risks collide.

Rick Rule, founder of the newly launched Battle Bank, believes banking has drifted too far from its original purpose. "We won't solve all the world's banking problems," he says, "but we'd like to serve about 500,000 customers exceptionally well."

Rather than trying to be everything to everyone, Battle Bank focuses on a relatively narrow range of services. It matches the duration of its assets and liabilities, reducing the liquidity mismatch that has undermined many banks. It avoids speculative derivative trading, using derivatives only occasionally to hedge interest-rate exposure.

In other words, it offers 100% collateral rather than the roughly 10% required for traditional banks. That hugely reduces the risk of failure.

Battle Bank also benefits from operating without an expensive branch network. Rule estimates that this alone saves about 1.5% in operating costs, savings that can be shared with customers through higher interest rates and lower fees. Technology, developed over five years before launch, replaces much of the traditional banking infrastructure. The strategy appears to be resonating: Battle Bank reportedly opened with a waiting list of 23,000 prospective customers.

One of its more unusual offerings is lending against physical precious metals. Rather than selling gold or silver to raise cash — potentially triggering capital gains tax — customers can borrow against their holdings while retaining ownership of the underlying assets.

Battle Bank also allows customers to hold deposits in 20 different currencies, reflecting Rule's view that many savers want protection against the possibility of currency instability rather than being tied exclusively to the US dollar.

A different but equally disruptive model is emerging in the digital asset space. Xapo Bank, based in Gibraltar, combines conventional banking services with bitcoin custody, allowing customers to hold both traditional currencies and bitcoin within a regulated banking framework. For investors who already hold digital assets, it removes much of the friction between the crypto and traditional financial systems.

These institutions are not arguing that banking itself is obsolete. Rather, they suggest that banking is becoming more specialised. Instead of giant universal banks attempting to meet every conceivable financial need, customers may increasingly choose banks designed around a specific philosophy: conservative balance sheets, digital assets, precious metals, multi-currency savings or wealth preservation.

Traditional banks are unlikely to disappear anytime soon. They remain central to the global payments system and continue to perform an essential economic function. But as technology lowers the barriers to entry and customer expectations evolve, the future of banking may belong less to the financial supermarket and more to the specialist. The question is no longer whether we need banks — it's whether we need them to look the way they always have.

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