Disruption in the banking industry is driving fees down, and proposed regulatory reforms favor small and medium-sized institutions. Because of this, are the big banks good stocks to invest in anymore?
A full transcript follows the video.
This video was recorded on April 16, 2018.
Michael Douglass: Matt, let's take a step back and look at these stocks from a long-term perspective. We've covered a lot of news and a lot of numbers, and that's all very important, because, of course, when you're thinking about a company, you need to know with some detail what's going on. Do you think any of the big banks is well-equipped to handle the incoming disruption that we've talked about on past episodes? When I look at this group of companies, I'm happy that they're there, because they're excellent barometers for what's going on across financials, but I do question long-term what their road to prosperity looks like.
Matt Frankel: That's true. A few episodes ago, we talked about how the reduced banking regulations over the next coming years that are being proposed wouldn't affect the big banks. So, that actually adds in another dynamic that, it kind of levels the playing field between the big banks and the smaller banks. I mean, big banks have a lot of inherent advantages. Scale is the obvious one. Brand name recognition, you can't ignore that. But, between that and the disruptors we talked about, the lending, especially, is a big thing, with all the peer-to-peer lenders and other ones like Marcus by Goldman Sachs coming onto the market and giving people who need to borrow money a new avenue that they haven't had before.
To be clear, I'm a Bank of America shareholder, I have been for some time. It's one of my biggest stock positions, and I think they're going to be a good investment long-term. But it's getting tougher to make the case that some of the smaller disruptors and smaller banks are not going to be even better.