To compete with the oligopolies, identify the products or customer groups for which their services are too high priced. Find the customer needs that they can't serve or choose not to serve, such as credit cards for people with less-than-excellent credit—a majority of Americans—and individualized, proximity-based asset services for the affluent. Not to mention transaction accounts for the many who don't need branches or who can be satisfied with less expensive, increasingly capable and flexible mobile and other non-branch access. Acquire more attractive products faster from outside sources.
The dinosaurs were also big. They're extinct because they couldn't adapt, not because of government regulation. Megastores better managed than Sears and Circuit City aren't extinct, but neither have they beaten out smaller retailers who are astute in their management of locations, product lines, service and prices. Smaller banks and nonbanks will likewise continue to adapt and add value.