Receiving Wide Coverage ...

Banking's Identity Crisis: Banks are in the midst of a period of upheaval, as the industry seeks to reinvent itself amid huge changes in consumer preferences, banking technology and the regulatory landscape. Fintech disruptors will probably be subsumed into the larger banking universe, although their ideas will live in. Ultimately, the old ways of banking will die only when those banks that lived through the financial crisis move on.

That's the point of a Wall Street Journal series that looks at the "existential crisis" facing the banking industry. The WSJ series will continue later this week.

The series kicks off with a look at how banks are living with the variety of new regulatory requirements they face, from Dodd-Frank to the TILA-Respa Integrated Disclosure mortgage rule. These rules, as American Banker readers know and live with every day, have required the industry to hire thousands of new compliance employees. Meanwhile, state and federal regulators have also ramped up their own job-creation programs; many of these examiners have near-permanent desks inside banks' offices.

The rules on how bank-paid employees can interact with government-paid examiners who work on the same floor can be tricky. One bank employee said her company's informal rule is that you are only allowed to wave at the examiners, but not much else.

The new regulatory regime has probably made the banking system safer. But it's had unintended consequences like restricting lending for student loans and mortgages.

The series includes an examination of whether the global bank model, ushered in by Sandy Weill in the late 1990s, still works (if it ever worked). It's clear that for many of the global banks that were created post-Citi, it has not worked — Credit Suisse, HSBC, et al.

Many investors and analysts think the other remaining global banks don't really work either, from those that have struggled, like Citi and Barclays, to those that have remained mostly profitable, like JPMorgan Chase.

A highly detailed chart attempts to show how a global bank, in this case Citigroup, has transformed its revenue streams over time.

If it's still an open question whether the global bank model should continue to exist, then what is a bank?

Another article ponders whether a company that lends money but doesn't face much in the way of regulation (see online marketplace lenders) should be considered a bank. What about purveyors of the blockchain technology? Payments go-betweens, like PayPal? None of these questions has a straightforward answer.

Wall Street Journal

A Bangladeshi official indicated there may have been some involvement by insiders at the Bangladesh central bank, in the theft of $81 million from its account at the Federal Reserve Bank of New York. The member of the Bangladesh government-appointed committee that's investigating the breach also reiterated that global bank messaging service Swift holds blame for the theft.

Financial Times

The FT observes Wells Fargo appears to be getting interested in mortgages again. The paper quotes the head of its home mortgage division, Franklin Codel, as saying on the bank's recent investor day that Wells Fargo is especially interested in making mortgages to millennials. Not exactly shocking news, but the FT deemed it noteworthy all the same. Wells Fargo recently introduced a low downpayment mortgage product designed to appeal to low- and moderate-income borrowers and first-time homebuyers. The mortgage is supposed to be an alternative to Federal Housing Administration loans.

The FT's Lex column attempts to insult Wells Fargo's business model by calling it "boring," "yawn-inducing" and "dull." But the column later says it would be "peculiar" if Wells Fargo were to branch out into riskier business ventures, as it would jeopardize its sterling returns.

Elsewhere ...

Lancaster Online: The eastern Pennsylvania city of Lancaster provides a dramatic example of how a local banking market can be affected by mergers and acquisitions. In less than two years, four locally headquartered banks have been acquired by out-of-town banks. BB&T bought both Susquehanna Bancshares and National Penn; F.N.B. acquired Metro Bancorp; and S&T Bank bought Integrity Bank. Those deals represented about a third of all the bank deposits in the Lancaster market. Some of the remaining local banks, like Univest Bank & Trust, are licking their chops at the potential to steal customers who are discomforted by the market disruption.

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