State Street Bank (NYSE: STT) announced another 360 layoffs today, mostly targeting “executives and senior staff”.  This news comes on top of the 600 staff laid off last fall.

Goldman Sachs, Credit Suisse, Morgan Stanley have all announced massive layoffs in the last few weeks and this trend will not abate.  There are a few reasons that come immediately to mind such as a slowing global economy, and increased regulations.  But I suspect there is another fundamental change; the decentralization that comes with improved technology and infrastructure.

The industry of financial services, with banks and brokers acting as middle men, will look very different in 20 years.  And the large, globally recognized names that have sat atop the world’s financial system for generations will not be needed.

Of course there will be a need for the functions those banks and brokers do.  Lending, executing and tracking trades of all kinds, managing assets, providing M&A advice are necessities for global trade to exist.  But the technologies and companies that are harnessing those technologies do not look anything like traditional banks and brokerage firms.

The role of M&A advisor is the safest of those functions but even that role has been changing.  Pres. Clinton and Congress effectively removed the Glass Steagall Act of 1933 by allowing commercial banks and investment banks (in this case Citibank and Travelers Insurance) to merge in 1999.  And the small boutique M&A advisors were crushed.  Commercial banks who had the ability to do the actual lending could now act as advisors too.  And they could use their balance sheets to set up equity trading operations to help make active markets for companies that went public.  But Dodd-Frank has changed that.  In the last 6 years there have been numerous success stories of M&A bankers starting small boutiques that offer advice only; no lending or market making needed.

The other financial intermediary roles (asset manager, lender, custody banking) are starting to look different than a guy in a suit with well-shined, cap toe shoes and a navy suit.  Those roles are being handled by coders who wear Atari t-shirts and ripped jeans, but who can build programs to better diversify a portfolio, or can match a lender’s profile with a borrower’s request (and run a full credit check) in seconds.  Betterment and Smartleaf for wealth management, Kabbage for peer to peer lending, Kantox for global FX transactions, etc.

In the Margin Trading Products (“MTP”) industry, bank wires were the norm for funding as recently as 2012.  Now most MTP brokers and online gaming companies receive the vast majority of client deposits and withdrawals via payment service providers (“PSP”) like Safecharge, Neteller, YuPaay, etc.  There are a few PSP’s that are large and stable, but that industry seems to birth a new PSP every few weeks.  As a MTP broker or online gaming company, you need to be able to connect and work with those new PSP’s very quickly.

So it is no surprise that the largest financial firms are laying off workers and seeing diminished market capitalization.  The benefits of scale that had been present in financial services for a long time are wearing off and the smaller, nimbler companies are taking advantage of that seismic change.

The future of financial services does not look much at all like the past; no need for a rearview mirror.