NEW YORK (TheStreet) -- As purchases with dollar bills give way more and more to digital transactions, are the country's banks at risk of experiencing the same fate as the vinyl-record stores of the 1970s and video-rental chains of the 1990s?
That was the question U.S. Comptroller of the Currency Thomas Curry posed Wednesday -- and answered firmly in the negative. The head of an office that oversees more than 1,600 banks with $10.9 trillion in assets, Currry argued that established U.S. banks will keep their competitive edge against online platforms such as PayPal and digital currencies like Bitcoin. Brick-and-mortar shops like Bank of America (BAC), JP Morgan Chase (JPM) and Wells Fargo (WFC) can rest easy, he said.
"There is no question that depository institutions occupy a very important place in today's larger payments universe," he said. "But that begs the question of how important will banks be in tomorrow's payment systems. We hear it all the time that banks are unable to compete with aggressive newcomers for market share. But we've heard that before."
Although traditional banking may seem outmoded, people forget how agile the seemingly entrenched giants have been in adapting to technological breakthroughs, Curry said.
"The tendency to underestimate the dynamism of the banking system should be resisted, because banks have been the source of so many of the innovative products and technologies of recent years," he said. "Consider, for example, the way banks embraced, and in some cases developed, automated teller machines, Internet banking, mobile applications and more."
In fact, JPMorgan Chase and its peers are seeing mobile banking boom across platforms. More than 20 million active users are tapping into its services on devices, up 22% year-over-year, while the numbers of device users at Wells Fargo and Bank of America have popped 19% to 15 million and 13% to 17 million, respectively.
The adaptability of large banks is also evidenced in the financing of organizations like the Bank Innovators Council, which hosts workshops and lab days worldwide, connecting executives with leaders in emerging technology. The next event will be New York's "Next Bank USA" conference, sponsored by IBM (IBM) and centering on the "startup challenge."
"Banks of all sizes are playing important roles as pioneers and partners in the development and adaptation of emerging payments technologies," Curry said. "Their partners are some of the biggest names in technology -- Apple (AAPL), Google (GOOG), and Microsoft (MSFT) come to mind -- but also some of the smallest, as banks seek out promising start-ups."
In fact, the big U.S. banks have outperformed the rest of the market in the past year. JPMorgan Chase jumped 20.5%, while the broader S&P 500 Index gained just 9.8%. Bank of America and Wells Fargo both rose 11.4%, and Citigroup (C) climbed 15.8%.
Customers still turn in droves to mainstream banks to handle their deposits because of name recognition and trust, Curry said, especially as hacking and fraud cases increase. The steady drumbeat of reports about massive thefts of personal data from organizations as varied as Target and the IRS heighten those concerns.
"I believe banks have an advantage over many of their non-bank competitors in the cybersecurity and anti-money laundering arenas, in part because of the regulatory regime that they operate in and the industry's collective interest in protecting the security of the payments system," he said.