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December 9, 2016
/   Insights

Twitter recently turned ten, but more important for the world of payments, it’s been a decade since the UK moved to EMV. The arrival of chip and PIN cards was one of the biggest changes...

Are central banks getting on board with blockchain?

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/   Insights

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What will the future of digital banking look like?

December 1, 2016
/   Voices

Today there are tens of millions of under-banked and unbanked Americans.  At first glance, this statistic may be surprising, but when you dig into the underlying reasons, it’s not hard to understand why. For...

What opportunities will PSD2 present to FIs?

November 30, 2016
/   Insights

Time is running out for every financial institution (FI) operating in the EU to be compliant with the latest directive governing payments from the body. The Payment Services Directive 2 (PSD2) builds on regulations...

UK pumps cash into fintechs – a sign of the times?

November 24, 2016
/   Insights

Yesterday (November 23rd), all eyes were in UK were on chancellor of the exchequer Philip Hammond as he delivered his first Autumn Statement, setting up the country’s financial priorities for the months ahead. The...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the Banking.com team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

This article originally appeared on the Retail Banking Academy Blog – By 

It is well-known that Basel III categorizes retail deposits as a relatively stable source of funding for banks. The two key liquidity standards (Leverage Coverage Ratio and Net Stable Funding Ratio) reward banks that are mostly retail-funded. A recent study by the Bank of International Settlements (BIS) has placed retail-funded banks in a new and even more positive light.

The study consisted of 222 lenders for the period 2005-2013 which found that commercial banks that are funded mainly by retail deposits have the highest average return on equity (ROE) of 12.5% compared to investment (i.e., trading) banks which achieved an average ROE of 8.1%. Wholesale funded banks earned an average ROE of 5.8%.  The report also shows a spectacular average risk-adjusted ROE for retail-funded banks (8.76%), 2.5% for wholesale-funded banks and a conspicuously negative 9.55% for trading banks.

The report concludes, “regardless of the profitability metric, the retail-funded model is the top performer.” This conclusion is consistent with the findings in a paper by Altunbas et al (2011) who document that banks with a greater share of deposits in their funding mix fared significantly better in the recent financial crisis than those dependent on market funding.

Conclusion:There is evidence that commercial banks funded primarily by retail deposits are more profitable and more resilient in periods of economic shocks.



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Compelling voices and contributed content from around the web

Andy Brown

Andy is marketing director for payments at NCR. He has nearly 30 years' experience in e-payment systems from the delivery and support of systems in the Far East and Europe, from both the product management and marketing perspectives. Based in the UK, Andy is responsible for marketing NCR payment solutions.

Dena Hamilton

Dena is NCR's Director of Enterprise Fraud & Security Software Solutions. She specializes in fraud, risk, compliance and security, with over 35 years of experience in the financial services space. Her focus is the development and deployment of enterprise financial crime solutions optimized in prevention, detection and back office efficiency.

Jan Rees

Jan Rees is a Solution Sales Specialist for NCR's Fractals and Authentic solutions. Jan has 27 years of diverse experience within the cards and payments industry, including technical systems implementation and project management, and managed services operations.

Colin Gordon

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Andrew Short

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