Impact of the Zero-Rate Era on Traditional Banking

The transition away from the zero-interest rate policy (ZURP) has led banks to reassess their deposit strategies significantly. Previously, banks had little concern regarding their deposit levels due to ample liquidity; however, with increased interest rates, the emphasis on acquiring deposits has surged. This shift has prompted financial institutions to explore partnerships with fintechs to enhance their offerings and competitive edge while simultaneously raising concerns about the stability of these startups. Consequently, banks are cautious in their collaborations, striving to find reliable partners who can contribute to long-term growth rather than temporary gains.