Why do we even need retail banks? The question applies in both the short and long term.

On Tuesday, JPMorgan reported strong overall earnings that produced a juicy 18 per cent return on equity. Profits were largely driven by surging investment banking revenues, along with releases of loan loss reserves. The bulk of these accrued during the depths of the pandemic last year.

Now Americans are getting out to spend higher wages and stimulus cheques. But so far they are making surprisingly little use of their plastic. JPMorgan’s credit card lending dropped 3 per cent even as the use of plastic for interest-free payments soared.

Boss Jamie Dimon was asked by an analyst if the early 2020s would be like the early 2010s, when economic growth remained sluggish in the wake of a large dislocation. Dimon pointed out an important difference. Households and corporations have hugely reduced net debt on their respective balance sheets.

As for broader trends, he then “got existential”, reiterating his paranoia about threats from Big Tech and fintechs obsessed with upending traditional banking.

Lending will rebound, as it always does. The venue where this will happen is the more interesting question.

Revenue from deals and IPOs has remained strong for several quarters. Turnover from sales and trading has finally abated, though, in line with falling volatility across financial markets. At JPMorgan, fixed income trading dropped by roughly a third, quarter over quarter. At Goldman the fall was 45 per cent.

Goldman, similarly, reported a continued boom at its top-ranked investment banking practice. After achieving a 31 per cent ROE in the first quarter, its profitability remained healthy at 24 per cent.

Expect the other large banks’ results to reflect America’s reticence to borrow. The quarterly tally of household debt from the Federal Reserve Bank of New York recently revealed that aggregate credit card debt in the first quarter dropped by the second-largest amount in recorded history. At $770bn, it is a fifth lower than at the end of 2019.

Household credit growth will eventually return. In the meantime, financial prudence is the order of the day for Americans.

Goldman talked up its “Apple Card” on Tuesday. Yet start-ups continually try to build cheaper financial services for individuals. Consumer, not institutional, products appear to be where big banks are most vulnerable.

The Lex team is interested in hearing more from readers. Please tell us what you think the outlook is for US retail banking in the comments section below