I think the biggest mistake everybody in the traditional world makes is, "Here's a new technology. Oh, well I can use this - in the case of mobile banking - I can close some branches. I can reduce my overhead. I can increase my margin. What a great thing this mobile banking is!" But often what new technology does is it changes business plans, it changes business models, it changes behavior. It does more than just allow you to skimp a couple of margin points off of your costs. And so they didn't realize that they were opening up a whole new business model by going to mobile banking. They didn't see it because we were stuck with zero interest rates for many years, but as soon as rates started rising and the public started realizing, "For five minutes of my time on my phone, I can make thousands of dollars by moving to a money market fund or buying a Treasury bill." And they started doing this.
And now these bankers are going to have to grapple with what you think you understand about your deposit base no longer applies. They are not more likely to get divorced than switch the bank. That has really changed. And it really changed in the last 90 days... I don't think we're going to see the outflows stop from the banks. People are going to continue to say, "I don't want 2 basis points from Chase. I would rather move to a money market fund and get 4 1/2%. And we're going to continue to see that until those rates converge on each other.
~ Jim Bianco,
interview with Bankless, 25:40 mark, March 28, 2023
No comments:
Post a Comment