Ed Miliband has promised to force the big five banks to give up "significant" numbers of branches to make way for new competitors if Labour wins the next general election.
In a keynote speech on the economy at the University of London, Mr Miliband will say the financial services industry has been "an incredibly poor servant of the real economy".
He will blame a lack of competition in the sector for misselling scandals and a £56bn drop in lending to business since 2010.
The Labour leader is attempting to flesh out his party's economic policy for the next Parliament.
Ed Miliband will set out the Labour Party economic policy But he risks being overshadowed by Chancellor George Osborne's backing of a significant rise in the national minimum wage.
Mr Miliband will promise to introduce a legal maximum threshold for any bank's share of the market in personal accounts and small business lending, with powers to force the sale of branches and block mergers and acquisitions to prevent it being breached.
Under the proposals, the Competition and Markets Authority would report within six months of the May 2015 general election on the level the threshold should be set at and the timetable for the sell-off of branches, which would be completed by 2020.
He will say: "We need a reckoning with our banking system, not for retribution, but for reform.
"If we carry on as we are, we will end up stuck with the same old banks dominating our high street: the old economy.
"In America, by law, they have a test so that no bank can get too big and dominate the market. We will follow the same principle for Britain and establish for the first time a threshold for the market share any one bank can have of personal accounts and small business lending."
Earlier this week, Bank of England governor Mark Carney said a cap on banks' market share "would not result in substantial improvement to competition".
He told the Commons Treasury Committee: "Just breaking up an institution doesn't necessarily create or enable a more intensive competitive structure."
Business Secretary Vince Cable said he agreed with Mr Miliband's desire for increased competition but insisted that "many of the things he is calling for have actually happened".
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