Banks’ business models have been wrecked twice in the last twenty years. Now they’re not sure what to do with themselves. Their original business model broke down in the mid 1980s. That’s according to Do Banks Have an Edge?, a 2018 paper by Juliane Begenau of Stanford and Erik Stafford of Harvard. Historically, banks had an edge on every other type of company: access to cheap funding via bank deposits. Pay 1 per cent on deposits, charge 5 per cent on loans, keep the difference. According to the 2018 paper, that edge disappeared in the mid 1980s, when the cost…

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