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There is an explosion of entities waiting to become banks. In the last 60 days for example, no less than six bank applications were filed (including the formidable Revolut Bank). Behind that, there are a rash of new competitors coming to include banks by Affirm, PayPal, World Liberty, Mercury, NuBank and UKG. Most will create…

Banking has now arrived at a speed that it cannot handle. While there have always been problems in banks’ asset-liability models (ALM) and liquidity stress test models, the current environment exacerbates this problem. Recent bank failures hurting public perceptions, the current market trends of higher rates, Quantitative Tightening, digital banking, social media, and a flight…

In two recent articles, we reviewed the banking industry’s deposit behavior with regard to cost of funding earning assets (COF) (HERE), and we compared how community banks’ COF behaves relative to national banks in a rising interest rate cycle (HERE).  We demonstrated that the average community bank’s COF is highly correlated to short-term interest rates…