Is the “Primary Bank” Concept Dead?

There was a time when the idea of having a “primary bank” made perfect sense. One provider, one relationship, and one place for all your financial needs. But that time seems to be slipping away. A recent LinkedIn post by my connection David Horton sparked an important conversation about this shift, questioning whether the notion of a primary bank account is even relevant anymore. His insights about how consumers are spreading their financial lives across multiple providers reflect a deeper transformation in the banking industry—one that has been brewing for years.

Let’s unpack this seismic shift and explore what I think it means for banks, their business models, and their ability to remain relevant in a world where niche is becoming the new mainstream.

Why Consumers Are Turning Away from the One-Stop Shop

For decades, banks have pursued strategies to be the “primary” financial institution for their customers. Whether through perks like relationship managers, loyalty programs, or bundled products, the goal was always the same: to keep customers anchored to one bank for as many financial services as possible. But as Horton rightly points out, this strategy relied on two key assumptions:

1. Friction Would Keep Customers Loyal: Switching or onboarding with a new provider was historically cumbersome, with lengthy Know Your Customer (KYC) processes, paper forms, and face-to-face meetings. Most customers stuck with their primary bank simply because it was too much effort to move elsewhere. Additionally the services and products on offer were limited and generally the same across all providers.

2. Being Primary Means Greater Wallet Share: Banks believed that if they could capture the customer’s main account, defined by salary deposits, rent or mortgage payments, or utility bills, they could cross-sell and upsell more lucrative products like credit cards, loans, and investments.

Fast-forward to today, and both of these assumptions have been shattered. Open banking, digital identities, and intuitive user experiences have removed much of the friction from opening new accounts. Meanwhile, consumers have grown savvier, prioritizing functionality, convenience, and value over loyalty to any one institution. The result? People are spreading their financial lives across multiple providers to get the best solutions for their unique needs.

The Rise of Multi-Provider Financial Management

It’s not just the availability of more options that’s driving this shift, it’s the way those options align with consumer behavior and expectations. Today, people don’t think about banking as a monolithic activity. Instead, they approach it as a series of problems to be solved. Need budgeting tools? Download a fintech app. Looking for seamless international payments? Try Wise . Want competitive interest rates? Open an account with a niche digital bank like Revolut .

This unbundling of financial services is reshaping the landscape, and it’s clear that consumers are in control. They’re no longer limited to the one-size-fits-all solutions offered by traditional banks. Instead, they’re picking and choosing providers based on what works best for them, whether it’s a fintech app, a challenger bank, or an embedded finance solution built directly into their favorite non-financial platform.

This shift raises a critical question: Can traditional banks remain relevant in a world where customers are no longer loyal to a single provider?

What This Means for Banks

For traditional banks, this trend is both a challenge and an opportunity. On the one hand, the fragmentation of consumer financial management means that banks are losing their “stickiness.” On the other hand, it opens the door to innovation and reinvention.

1. The End of Universal Banking?

As discussed with my friend Sampsa Laine in the panel I moderated at the nordic Banking Forum this week, and as Horton notes in his post, “If you try to be everything to everyone, you will end up being nothing to anyone.” Banks that cling to the universal banking model may find themselves stretched too thin, unable to compete with specialized fintechs that focus on doing one thing exceptionally well.

The alternative is clear: banks must identify what they’re best at and double down on it. Whether it’s mortgage lending, wealth management, or small business banking, carving out a niche and excelling in it could be the key to survival in an increasingly competitive market.

2. The Embedded Finance Revolution

Embedded finance is one of the most exciting opportunities for banks in this new landscape. By providing banking services directly within third-party platforms, think payments embedded in an e-commerce site or loans integrated into a car-buying app, banks can remain relevant without relying on direct consumer relationships.

This shift from being a primary provider to becoming an enabler requires a significant change in mindset and strategy. Banks need to invest in APIs, partnerships, platform business models, and modular core systems that allow them to plug into ecosystems seamlessly.

3. Platformification and Ecosystem Thinking

The growth of platform-based models in banking offers another pathway forward. By creating ecosystems that connect customers with a range of financial and non-financial services, banks can provide value beyond traditional banking. Think of it as moving from a product-centric model to a customer-centric platform.

This approach not only keeps customers engaged but also opens up new revenue streams through partnerships and collaborations. However, building a successful platform requires banks to adopt agile, scalable, and cloud-native architectures, no small feat for institutions still grappling with legacy systems.

A Time of Transition

It’s worth reflecting on how much of this shift was driven by the industry itself. Over the past decade, banks have worked hard to improve the customer experience, remove friction, and give consumers more choice. Ironically, these efforts have made it easier for customers to leave.

But this isn’t necessarily a bad thing. Consumer choice is driving innovation, forcing banks and fintechs alike to raise their game. And for those willing to adapt, there’s a huge opportunity to redefine what banking looks like in the 21st century.

Final Thoughts

The concept of a primary bank account may be fading, but that doesn’t mean banks are obsolete. It does mean, however, that they need to rethink their role in consumers’ financial lives. Whether through niche specialization, embedded finance, or platform business models, the banks that succeed will be those that embrace change and focus on delivering value where it matters most.

As Horton aptly put it, “Niche is the new mainstream.” The challenge for banks is figuring out what their niche will be—and how they’ll execute it better than anyone else.

What’s your take? Is the primary bank concept truly dead, or is there still a place for it in this new, fragmented financial landscape? Let’s keep the conversation going.