Readers of my posts know that I am not the biggest fan of investing in the banking industry. My number one reason for this is that the advances in information technology are making most banking organizations "legacy" institutions. I am not convinced that traditional banking models are as economically viable now as they once were and for ordinary deposit and clearing business, non-profit credit unions will do just fine.
Myself, I don't use a commercial bank for most of what I do. And, among my friends, they don't use commercial banks either. We can get all the "financial services" we need to live a good life without working within the confines of a traditional commercial bank.
The other thing leading to the demise of the traditional banking industry is regulation. The cost of regulation, especially to the small- to medium-sized banks is enormous. The cost of regulation to the largest banks is an irritation, at best, and a cause of distraction that keeps executives from focusing on their real business, at its worst.
Furthermore, regulation in this modern world is always fighting the last war while the institutions the regulators regulate are always moving to the new way to do business…especially if the business is out there in the new world of finance that has just been allowed by the information technology available to those that find it profitable to use.
But, this takes the banks further and further away from traditional banking practices.
If you are interested in finance and financial institutions these days, my suggestion is to look into the "shadows". More and more information is coming to light about what is going on in terms of alternative financial operations.
I recently wrote about what is happening in the derivatives market, "More Derivatives Trading Now in the
