Deregulation and technological change are transforming U.S. commercial banking from an
industry dominated by thousands of small, locally focused banks into an industry where a handful of large
banks could potentially span the nation and control the majority of its bank deposits. This paper
examines the comparative strengths and weaknesses of large and small banks in this new environment,
and outlines the strategic opportunities and threats that new technology – especially the Internet – pose for
U.S. banks. Although the number of small banks will almost certainly continue to decline, we conclude
that well-run small banks should be able to adjust their business strategies to the new environment and
profitably co-exist with large, globally focussed banks.