>The end result will be the loss of trust in new banks. The people that would benefit from this effect are established banks

Distrusting new banks in favor of old banks is generally a good idea.

But this is why we don't get new banks, and generally speaking, new things are needed to challenge old things to improve the overall sector. Without challengers, entrenched interests get to engage in monopolistic/money cow behaviors that treat customers as the captives that they are.

But yes, given the current state of things I agree that your take is pragmatic. I'm just saying, that's a big problem in the medium/long term.