Daily Deposit 2.14.2023

GM. This is the Daily Deposit. The newsletter that helps bankers get better, not worse, everyday

KC Chiefs smashed the PA Eagles in the 2nd half of the Super Bowl last night, but Rihanna’s Halftime performance smashed expectations…

Today in Banking

8 in 10 American consumers used a fintech app to manage their money in 2022. Why are consumers choosing new tech over old tech? It helps them save time and money, make better financial decisions, and reduce financial stress.

*Newsflash: this is no bueno for big banks.

Fintech has the potential to disrupt traditional banking in several ways.

1. Competition: Fintechs offer a more convenient, user-friendly, and lower-cost alternative to traditional banking. With the adoption of things like BaaS and AI, big banks are losing market share. I love a good underdog story…

2. Disruptive innovation: Fintechs are more agile and quickly adopt new tech. Big banks are slow lumbering beasts when it comes to new technology, and will have a difficult time keeping pace to maintain their competitive advantage.

3. Customer expectations: Costumers have much higher expectations as we move into 2023. 2010s (or earlier) UI is not going to cut it. Point of Sale (PoS) banking product offerings are too convenient not to offer. I don’t know about you, but I prefer you show me what I need when I need it. Ain’t nobody got time to research that on their own!

4. Regulatory challenges: Although Fintechs are subject to a lot of the same regulatory challenges of big banks, but right now some regulations are less restrictive, like capital reserve requirements. Fintechs also typically have lower compliance costs and are able to more quickly comply with regulations because they lack the slow-moving bureaucratic compliance processes of big banks.

This is gravy for Fintechs right now, but it’s worth noting that the regulatory landscape is rapidly evolving and the gap in regulations may narrow in the future.

Banking 101

Today’s lesson in the School of Banks: How Banks provide Economic Stability

If trust in US banking fails, the whole system collapses. We’re talking no access to cash or credit and likely your run-of-mill riots mayhem…

Here’s why that hasn’t happened. Yet…

1. Facilitating payments: Banks are the intermediaries in the payment system, which allows individuals and businesses to make secure electronic transactions. Again, trust that if I swipe this AMEX Platinum 😎funds make it to that business’s account.

2. Managing risk: When it comes to lending, banks help reduce the likelihood of loan defaults. Unlike the poor FTX investors lending to SBF swinger parties… Banks use credit scores, collateral, and loan monitoring to manage the risk associated with lending.

3. Providing credit: According to Rich Dad Poor Dad author, Robert Kiyosaki, “Good debt is a powerful tool, but bad debt can kill you.” Banks are a source of credit that support economic growth through credit. More lending increases money supply, which increases spending, creates jobs, and overall grows the economy.

4. Regulation: The main reason for trust in the system… Banks are heavily regulated with a set of standards to ensure the stability of the financial system.

5. Lender: As a last resort in financial stress, banks can provide emergency funding and hopefully avoid widespread panic. A potential ace in the hole.

LULZ

1% Better

Man’s Search for Meaning, Viktor Frankl

The way to achieve success is to avoid thinking about it and surrender to a vision. Develop a vision that is more significant than yourself. Dedicate yourself to your mission, and let success become a by-product. The success is in the journey, not the outcome. But only if the vision means something to you.

reply with a Cold Stone bowl score… did you:

a) like it

b) love it

c) gotta have it