The end of the zero-interest-rate period compressed lending margins, but it had a silver lining. It forced fintech companies to become 'full-stack' by acquiring bank charters and building significant revenue streams from customer deposits, ultimately making their business models more durable.

The current banking crisis isn't a sudden panic run. Instead, it's a 'bank walk,' where deposits consistently move out of regional banks into higher-yield money market funds. This slower, sustained outflow creates a protracted crisis that unfolds between quarterly reports, masking its severity.

Banks oppose stablecoins because they disrupt a core profit center: the spread between low interest paid on deposits and high yields earned from investing those deposits in treasuries. Stablecoins can pass these yields directly to consumers, creating a competitive market.

Despite the digital banking trend, achieving a 7% share of physical branches in a specific market allows a bank to disproportionately capture deposits and economic activity. This highlights the enduring power of a physical presence for customer acquisition and trust.

The BOJ's reluctance to raise short-term rates isn't just about inflation psychology. A key technical concern is that hiking rates would immediately increase funding costs for Japanese banks on deposits, while their balance sheets are filled with long-term, low-yielding assets, creating a painful margin squeeze.

Despite managing a financials fund, Derek Pilecki is bearish on the average bank. He argues that intensifying competition from online banks and giants like JP Morgan will continuously compress margins and lower returns over the long run, making passive bank investing a poor strategy.

To effectively compete for deposits in a market, opening a few scattered branches is not enough. Data shows large banks need at least a mid-single-digit share of local branches. Achieving 10% or more branch share leads to deposit share growth that outpaces the physical footprint.

Major U.S. banks are not expanding their branch networks randomly. Instead, they are strategically targeting a concentrated set of high-growth markets, with a primary focus on the Southeast and Texas. These markets are chosen for their strong projected population and deposit growth, signaling a targeted land grab.

Banks don't pass Fed rate increases on to depositors because of low "deposit beta"—a measure of rate sensitivity. Most consumers prioritize convenience over yield, allowing banks to capture the spread. This differs from institutional clients like deposit brokers, who are highly rate-sensitive.