EMV is Here: Tips & Tricks You Need to Know

October 7, 2015
/   Insights

The EMV (Europay, MasterCard, Visa) shift went into effect on October 1, 2015 and a majority of large retailers and merchants have upgraded POS terminals to accept EMV chip cards. Despite this new mandate,...

FI Highlight: BankMobile

October 2, 2015
/   Spotlight

Financial institutions that aren’t developing and catering to the wants and needs of younger demographics are missing out on huge opportunities for growth. Luvleen Sidhu, Chief Strategy and Marketing Officer at BankMobile, spoke with...

EMV Liability Shift: Are You Ready?

September 28, 2015

The talking is nearly over for the US payments industry as October 1st sees the all-important EMV liability shift. Chip cards are being issued to consumers and merchants are upgrading their point of sale...

The 5 Most Dangerous Mobile Banking Habits

September 14, 2015
/   Voices

Mobile banking grows more ubiquitous every year. 52 percent of smartphone owners with a bank account use mobile banking, according to the Federal Reserve, and more than half of users log in at least...

The Case for CSR

September 7, 2015

The demise of a New York City law shouldn’t stop good works

FI Highlight: Nusenda Credit Union

September 1, 2015
/   Spotlight

While it is important for banks and credit unions to consider the needs of consumers, it’s also important for FIs to take employee needs into consideration as well. Michelle Dearholt, SVP of Human Resources at Nusenda...

Is a .bank Domain Right for Your Bank?

August 28, 2015
/   Voices

With the general availability of the .bank registry under way, more than 5,500 applications from over 2,200 banks have already taken place, according to fTLD Registry Services.

Can Smartphones Solve ATM Skimming

/   Insights

ATM skimming remains a big business for organized crime rings. According to a recent article in ATMMarketplace.com, card skimming accounted for more than $2 billion in losses. One new approach that banks are exploring...

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...

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...

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...

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...

It was always known that from the moment she was awarded a spot on the Senate Banking Committee, freshman Sen. Elizabeth Warren would be making waves. In the few months since her swearing-in, she’s certainly lived up to her billing: She’s hammered bankers, lobbyists and regulators alike on issues such as home foreclosures, announced an active review of the settlement the government reached with big banks, and called for major changes to gender equity laws. And that’s all in just the past few weeks.

Another recent query, however, may have even greater consequences for the banking industry. During a hearing with the Senate Committee on Banking, Housing and Urban Affairs, she asked a direct question that has perhaps been on many others’ minds: “Are we reaching a point where we should have a two-tiered regulatory system?”

By any definition, this is at least a valid question. Specific subtleties aside, the entire industry is essentially subject to the same set of regulations. However, as the Federal Deposit Insurance Corp. has reported, community banks represented a staggering 95% of all banking organizations in 2011, yet retained only 14% of all banking assets. Incidentally, that figure represents a steep drop—in 1984, the same industry segment held 38% of all U.S. banking assets.

There are other serious discrepancies, too. Despite the dominance of larger banks in this domain, the FDIC revealed that community banks hold the majority of banking deposits in U.S. rural and ‘micropolitan’ counties. In fact, almost 20% of all counties in the United States have no physical banking offices other than community banks. This represents a sharp urban-rural divide, ensuring that any change to the system could have major ramifications.

There’s another variable here that may be even more significant: These community banks, which technically have such a small footprint in the industry overall, currently hold 46% of all small loans to businesses.

If this is seen as a problem, is a two-tiered banking system the solution? It’s an interesting question that deserves extended discussion.

First, as the FDIC makes clear, community banks often succeed or fail for the same reasons as their larger industry counterparts (or even other businesses). The three main factors are distressingly familiar: too-rapid growth, an unjustified focus on commercial real estate lending and volatile funding practices. In effect, some banks made bad decisions and paid the price.

However, it should also be noted that the banking environment in 1984 (the ominous date cited in the FDIC report) was entirely different, one without online banking or mobile apps. As discussed in this blog frequently, many consumers no longer feel the need to go the neighborhood bank, since a basic smartphone can take them anywhere. Does this hurt community banks, or does it give them the ability to take on larger competitors more aggressively?

Moreover, does a two-tiered regulatory system imply that community banks will face fewer regulatory restrictions? Sen. Warren makes the case that small banks are subject to too many mandates that were written for their larger brethren, creating a fundamental unfairness that hurts some competitors.

Larger institutions could argue, however, that more regulations in effect penalize larger corporations for their success. After all, short of monopolistic concerns, shouldn’t everyone have to play by the same rules?

There are perhaps no easy answers here. But in the weeks and months ahead, as the economy continues to heal, the housing crisis works itself out and new technologies continue to emerge and stoke competition, it will be interesting to see how this debate plays out.



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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp


Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.