How Regional Banks Are Competing With Big Tech in Digital Services
Apple, Google, and a growing roster of tech companies are offering financial services that overlap with traditional banking. Regional banks are fighting back with digital investment and strategic partnerships.
The competitive landscape for American regional banks has expanded well beyond other banks. Apple, Google, Amazon, and a range of fintech companies now offer products that directly overlap with services traditionally provided by banks — from payment processing and savings accounts to small business lending and personal financial management. For regional banks with assets between $50 billion and $500 billion, this creates a strategic challenge that technology investment alone cannot fully address.
The Big Tech Encroachment
Apple Pay now handles billions of transactions annually across the United States, and the Apple Card — issued in partnership with Goldman Sachs — has attracted millions of cardholders since its launch. Apple's savings account, which offered a market-leading interest rate at launch, demonstrated the company's ability to move quickly into deposit products. Google Pay, while pursuing a somewhat different strategy, has similarly expanded its footprint in payments and financial data aggregation.
Amazon's influence is more indirect but no less significant. Amazon Lending provides working capital to small businesses that sell on the Amazon marketplace, bypassing traditional bank lending channels entirely. Amazon Pay processes online transactions for merchants both on and off the platform. And Amazon Web Services, the company's cloud computing division, provides the infrastructure that many fintechs use to build their own competing products.
The common thread among these big tech entries into financial services is distribution advantage. Apple has more than 1.5 billion active devices worldwide. Google's search engine and Android operating system give it access to an enormous user base. Amazon's marketplace serves hundreds of millions of active customers. Regional banks, by contrast, typically serve between one and ten million customers within a specific geographic footprint.
How Regional Banks Are Responding
The response from regional banks has generally followed several patterns. First, virtually all major regional banks have invested heavily in mobile app capabilities over the past three years. Truist, U.S. Bancorp, PNC Financial, Regions Financial, and Citizens Financial have all shipped significant updates to their mobile platforms, adding features like digital account opening, AI-powered financial insights, and real-time payment capabilities.
Second, regional banks have leaned into open banking as a way to remain relevant within a broader financial ecosystem. Rather than trying to replicate every feature that big tech offers, banks like Truist have built API connections that allow their platforms to work alongside third-party fintech applications. This approach acknowledges that consumers increasingly want to use multiple financial tools — and that the bank that makes itself the most interoperable may retain clients better than the one that tries to be a walled garden.
Third, several regional banks have pursued strategic partnerships with technology companies to accelerate their digital capabilities. PNC's partnership with Visa for real-time payments, Regions Financial's collaboration with Salesforce for customer relationship management, and Truist's work with Atomic for digital onboarding are all examples of banks using external technology to close the capability gap with larger competitors.
The Relationship Advantage
Regional banks do possess one asset that big tech companies have struggled to replicate: deep, trust-based relationships with local communities and small businesses. A regional bank with decades of presence in a particular market knows the local business landscape, has personal relationships with commercial clients, and can offer the kind of nuanced lending decisions that algorithm-driven platforms often cannot.
The question is whether this relationship advantage is durable in a world where younger consumers are increasingly comfortable managing their finances through digital tools operated by companies they have never visited in person. Survey data consistently shows that consumers under 35 are more likely to prioritize app quality, fee transparency, and interest rates over branch proximity when choosing where to bank. For regional banks, this means that the relationship advantage must be extended into digital channels — not just preserved in branches.
The Regulatory Dimension
One area where regional banks have a structural advantage is regulatory familiarity. Banks are already subject to comprehensive federal and state regulation, including capital requirements, consumer protection rules, and regular examination by bank supervisors. Big tech companies entering financial services face a more uncertain regulatory environment, with growing calls from lawmakers and regulators for greater oversight of tech-company-provided financial products.
The potential for new regulation targeting big tech's financial services activities could level the playing field to some degree. If Apple, Google, or Amazon are eventually required to meet the same compliance standards as traditional banks, the cost and complexity advantages they currently enjoy could diminish. However, the pace and scope of any such regulation remains uncertain.
Looking Forward
The competition between regional banks and big tech is not a winner-take-all contest. The financial services market is large enough to support multiple models, and the most likely outcome is a landscape where traditional banks, big tech companies, and fintechs coexist — each serving different segments of the market and different aspects of consumers' financial lives.
For regional banks, the imperative is clear: invest in digital capabilities, embrace interoperability, and find ways to extend their relationship strengths into digital channels. The banks that do this effectively will remain relevant and competitive. Those that cling to branch-only strategies or treat digital investment as a cost center rather than a strategic priority risk losing ground to competitors — both traditional and otherwise — that are moving faster.
