Customers Bancorp, Inc. (CUBI): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Customers Bancorp, Inc. right now, trying to figure out if their impressive late-2025 numbers-like a 3.46% NIM and a 73 NPS-translate into a durable competitive advantage. It's a classic financial puzzle: they've built real stickiness with clients via platforms like cubiX and are actively controlling supplier costs, but the regional banking space is brutally competitive, and new digital threats are always lurking. The moat isn't obvious; it's engineered. We need to map out the five forces to see precisely where Customers Bancorp, Inc. is winning and where you should expect friction ahead.

Customers Bancorp, Inc. (CUBI) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Customers Bancorp, Inc. (CUBI) is primarily centered on funding sources, with deposits being the most critical component. The cost of these deposits represents the price CUBI pays to its primary supplier base. You're looking at a dynamic where CUBI is actively working to reduce this cost, which directly impacts net interest margin.

Cost of deposits is a key supplier price, but CUBI is actively lowering it. For instance, the Q1 2025 average cost of deposits was reported at 2.82%. This was an improvement from the Q4 2024 average cost of 3.07%, showing a 25 basis point reduction in that quarter alone. By the second quarter of 2025, the average cost had ticked up slightly to 2.85%. This focus on cost management is central to supplier negotiation.

Deposit transformation efforts are reducing reliance on the more volatile and often costlier brokered funding, which improves funding stability and control. This strategic shift involves remixing the deposit base away from higher-cost sources. For example, by Q3 2025, higher-cost wholesale Certificates of Deposit (CDs) had decreased to just 9% of the total deposit base, down from 22% in Q4 2022. Furthermore, in Q2 2025, CUBI simultaneously reduced brokered deposits by an estimated $350 million quarter-over-quarter.

The success of the deposit-gathering strategy is evident in the growth of relationship-based funding. New banking teams brought in $2.4 billion in high-quality, relationship-based deposits since March 2023, as reported in the Q2 2025 results, representing 13% of total deposits at that time. By Q3 2025, the total managed by these new teams had grown further to $2.8 billion. This influx of granular funding helps offset the power of more transactional suppliers.

Wholesale funding markets, like the Federal Home Loan Bank (FHLB) and interbank sources, offer alternative capital, but these are inherently rate-sensitive, meaning their power increases when market rates rise or CUBI's internal liquidity tightens. As of June 30, 2025, CUBI's total immediately available borrowing capacity with the FRB and FHLB was approximately $8.0 billion, with $1.2 billion utilized in borrowings.

Labor is another critical supplier category. Specialized talent acquisition for new verticals like title and sports/entertainment increases labor cost pressure, as the bank competes for specific, in-demand skills in a tight labor market. To counter general industry trends where turnover exceeds 20% annually, Customers Bancorp has maintained its turnover rate between 2% and 7% annually. This suggests that while competition for specialized talent is high, CUBI's retention strategy is effective, somewhat mitigating the supplier power of labor in terms of attrition costs.

Here's a quick look at the key supplier metrics as of mid-to-late 2025:

The success in shifting the deposit mix is a direct action to lower the bargaining power of the most significant funding suppliers. You can see the impact in the improved Net Interest Margin (NIM), which expanded to 3.46% in Q3 2025.

• Deposit-focused teams have increased commercial deposit accounts by approximately 60% since year-end 2022.
• In Q3 2024, deposit inflows from commercial customers of $1.1 billion funded the paydown of $0.7 billion of higher-cost deposits.
• The bank's employee turnover rate is significantly lower than the industry average of over 20%.
• The bank is actively recruiting to expand into new verticals, which requires competitive compensation to attract necessary expertise.

Finance: draft 13-week cash view by Friday.

Customers Bancorp, Inc. (CUBI) - Porter's Five Forces: Bargaining power of customers

You're looking at Customers Bancorp, Inc. (CUBI) and trying to gauge how much sway its clients have. Honestly, the bargaining power here lands in the moderate zone. This is largely because Customers Bancorp, Inc. has deliberately focused its efforts on commercial and specialized lending clients, which often means deeper, stickier relationships rather than purely transactional retail banking. That focus changes the dynamic significantly.

The loyalty you're seeing from their client base is quite strong, which naturally lowers the desire for customers to switch banks. We see this reflected in their latest customer feedback. Customers Bancorp, Inc. reported a Net Promoter Score (NPS) of 73 in Q2 2025. To put that in perspective, the industry average NPS was only 41. That's a substantial gap, suggesting promoters significantly outnumber detractors.

For commercial clients, while they definitely have many choices for banking services, Customers Bancorp, Inc.'s commitment to a Single Point of Contact (SPOC) model creates real stickiness. This high-touch service model means a dedicated relationship manager helps streamline their experience, making the administrative hassle of switching providers a real deterrent. Also, for institutional clients, the cubiX payments platform is a key operational component. If this platform is mission-critical for their daily treasury or payment flows, the switching costs-the time, integration, and risk involved-rise significantly, effectively locking them in.

Still, you can't ignore the power of the largest borrowers. These big clients have the volume and the leverage to negotiate more favorable loan terms, which directly pressures the Net Interest Margin (NIM) that is the lifeblood of any bank. We saw the NIM for Customers Bancorp, Inc. settle at 3.46% in the third quarter of 2025. That number is the result of a balancing act between the yields they can command on new loans and the funding costs they manage.

Here's a quick look at some of the key customer-facing and financial metrics that frame this power dynamic:

The ability of large borrowers to push on pricing is a constant headwind you need to watch. When a major commercial client demands a basis point or two off a large loan, it directly erodes that 3.46% NIM. What this estimate hides, though, is the counter-leverage gained from the granular, low-cost deposits that the SPOC and cubiX efforts are bringing in; those deposits lower the overall cost of funds, which helps offset some of the pressure from large loan negotiations.

You should definitely track the success of their deposit-gathering teams. They added 7 new teams in 2025, and their pipeline for recruiting more remains strong. This focus on relationship-based, granular funding is their primary defense against customer power, as it keeps their funding costs low, even when loan pricing is under pressure. Finance: draft a sensitivity analysis on NIM change for a 50-basis-point shift in large commercial loan pricing by next Wednesday.

Customers Bancorp, Inc. (CUBI) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the fight for every dollar of funding is fierce. The US regional banking market is fragmented, and honestly, the competition for deposits is intense right now. Still, Customers Bancorp, Inc. is making noise, which naturally draws the eye of rivals.

Customers Bancorp, Inc.'s performance itself is a magnet for competitive attention. For instance, its reported Q3 2025 core Return on Common Equity (ROCE) hit 15.52%. That kind of profitability doesn't go unnoticed when peers are struggling to keep pace in the current rate environment.

The bank is clearly trying to stand out through technology. Differentiation comes from the cubiX platform, which processed about $1.5 trillion in payments volume in 2024. That scale in payments processing is a genuine advantage, especially as it helps source sticky, low-cost deposits.

To put Customers Bancorp, Inc.'s size in context relative to the competitive landscape, as of Q3 2025, the company had total assets of over $24 billion. While American Banker's 2025 lists cover other tiers-like the one for banks with $2 billion to $10 billion in assets or the top performers over $50 billion-Customers Bancorp, Inc.'s size places it squarely in that middle-tier segment where competition is sharpest.

This drive for growth is fueling direct rivalry in the talent market, too. Aggressive hiring of new banking teams increases the pressure for both talent acquisition and market share capture. You see this in the results: teams recruited since March 2023 accounted for 13% of total deposits by Q2 2025, and management noted onboarding three new deposit-focused teams year-to-date in 2025, with more in negotiation.

Here's a quick look at some of the key metrics that define Customers Bancorp, Inc.'s current competitive standing:

The competitive dynamics are shaped by a few core factors that rivals must address:

• The US regional banking sector remains highly fragmented.
• Customers Bancorp, Inc. is actively recruiting specialized teams.
• The cubiX platform generates significant payments volume, around $1.5 trillion in 2024.
• High ROCE of 15.52% in Q3 2025 draws competitive scrutiny.
• Loan growth guidance for 2025 was increased to 13% to 14%.

Finance: draft 13-week cash view by Friday.

Customers Bancorp, Inc. (CUBI) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Customers Bancorp, Inc. (CUBI) and wondering how external alternatives are chipping away at traditional banking revenue streams. The threat of substitutes is real, and it comes from several directions, each targeting a different part of your balance sheet and fee income.

Non-bank Financial Institutions as Loan Substitutes

Private credit funds are definitely stepping up to replace traditional bank financing, especially in areas where banks have pulled back due to regulation or risk appetite. This isn't just a niche anymore; it's a major force. By 2025, the private credit market, which includes corporate and real estate loans from nonbank lenders, was estimated to be worth around $1.7 trillion globally. To put that growth in perspective, in Commercial Real Estate (CRE) lending in Q3 2024, banks only accounted for 18% of new originations, while alternative lenders captured 34%. This shift shows borrowers are actively choosing non-bank sources for speed and flexibility, even if the blended cost of capital might be higher. Customers Bancorp, Inc. has managed its own risk exposure well, noting that its exposure to the higher-risk commercial real estate office sector was only about 1% of the loan portfolio as of Q1 2025.

Here's a snapshot of how capital markets are competing with bank loans for corporate funding:

Payment Systems Competition

For payment services, the threat comes from established, high-volume networks and newer instant rails. Fedwire, which Customers Bancorp, Inc. uses for large-value transfers, saw an average transaction value of $5.4 million in 2024. Meanwhile, the broader ACH Network is seeing massive adoption, with Q1 2025 volume hitting 8.5 billion payments valued at $22.1 trillion. The Same Day ACH component grew even faster, recording 326 million payments valued at $897 billion in that same quarter. Customers Bancorp, Inc.'s own cubiX platform directly competes in this institutional space, offering payment capabilities to commercial clients, including those in the digital assets ecosystem. The bank's Q3 2025 revenue was reported at $231.77 million, showing the scale of its operations being challenged by these substitutes.

The payment ecosystem is evolving rapidly:

• ACH Network payment volume (Q1 2025): 8.5 billion transactions.
• Same Day ACH value (Q1 2025): $897 billion.
• Fedwire average transaction size (2024): $5.4 million.
• Banks connected to RTP or FedNow (as of 2025): 62% of U.S. banks.
• Banks expecting improved customer retention from real-time payments: 93%.

Fintech Lenders as Digital Alternatives

Fintech lenders are a clear substitute, particularly for smaller commercial and consumer loans, because they offer speed and often lower friction. The global fintech lending market size was valued at $589.64 billion in 2025. Honestly, the preference shift is significant: approximately 60% of borrowers now prefer digital lending platforms over traditional bank loans due to faster approvals. For small and medium enterprises (SMEs) in developed markets, more than half of the loans in 2025 are now sourced via these fintech platforms. This pressure forces Customers Bancorp, Inc. to innovate its own digital processes to remain competitive for these smaller credit segments.

Stablecoin Legislation and Digital Assets

The regulatory environment around digital assets presents a unique dynamic. While digital asset-focused payment systems could be a substitute, Customers Bancorp, Inc. is strategically positioned to benefit from evolving stablecoin legislation. If clear regulatory frameworks solidify, it could legitimize and integrate these digital assets into the traditional banking infrastructure, potentially reducing the 'shadow' threat from unregulated digital substitutes by bringing them under the purview of regulated entities like Customers Bancorp, Inc. The bank's CET1 ratio was 11.7% at March 31, 2025, giving it a strong capital base to navigate such regulatory shifts.

Customers Bancorp, Inc. (CUBI) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Customers Bancorp, Inc. (CUBI) is generally considered moderate to low, primarily due to significant structural barriers, though technology is creating new, targeted avenues for disruption.

High regulatory barriers to entry for new banks, including capital requirements

Starting a traditional bank is an undertaking with massive upfront capital demands and intense regulatory scrutiny. The current capital environment, as evidenced by Customers Bancorp, Inc. (CUBI)'s own standing, suggests a high bar. Customers Bancorp, Inc. (CUBI) reported a Common Equity Tier 1 (CET 1) ratio of 13.0% at Q3 2025, an improvement from 12.1% the prior quarter, bolstered by a successful equity raise of $163 million. This level of capital strength reflects the regulatory expectation for stability. To put the initial hurdle in perspective, estimates for starting a 'baby bank' suggest a requirement of at least $100 million in regulatory capital, in addition to roughly $100 million for basic infrastructure and initial running expenses. These figures create a substantial moat against casual entrants.

The high cost of entry is best summarized by the required initial investment:

New entrants must clear these high capital hurdles, which is a defintely significant deterrent.

Digital-only banks (neobanks) can enter with lower cost structures, targeting CUBI's consumer/small business segments

Digital-only banks, or neobanks, bypass the massive overhead of physical branches, allowing them to operate with a leaner cost structure. This enables them to compete aggressively on price, particularly for the consumer and small business segments that Customers Bancorp, Inc. (CUBI) serves. While they may not immediately replicate the full suite of commercial lending services, they can chip away at the deposit base, which is foundational to a bank's funding. The global digital banking market is projected to reach a net interest income of $1.61 trillion by 2025, showing the sector's growing financial viability and attractiveness to new players.

• Lower physical footprint overhead.
• Focus on seamless digital onboarding.
• Potential for lower fee structures.
• Rapid user acquisition via mobile-first design.

The cubiX platform's specialized niche in digital asset payments could attract new, niche fintech competitors

Customers Bancorp, Inc. (CUBI)'s investment in the cubiX platform, which facilitates digital asset payments, creates a specific, high-tech niche. While this is a strategic advantage for Customers Bancorp, Inc. (CUBI), it also signals a market segment ripe for specialized fintech disruption. In Q3 2025, cubiX clients were noted as contributing to a $1.4 billion increase in total deposits for Customers Bancorp, Inc. (CUBI). A new, highly focused competitor could emerge solely to serve the digital asset payment ecosystem, potentially offering superior integration or lower transaction costs within that specific vertical, bypassing the broader regulatory burden of a full-service bank initially.

New entrants must overcome the high initial cost of building a deposit franchise, a key CUBI focus

Securing low-cost, stable deposits is the lifeblood of any bank, and it is notoriously difficult and expensive to build from scratch. Customers Bancorp, Inc. (CUBI) has made this a strategic priority, growing non-interest bearing deposits by $900 million in Q3 2025 to reach $6.4 billion, representing 31% of total deposits. This success shows the value of an established commercial banking presence. A new entrant must spend heavily on marketing, relationship managers, and technology to attract and retain these sticky balances, often having to pay higher rates initially to lure customers away from established players like Customers Bancorp, Inc. (CUBI).

Established tech firms could enter the lending or payments space, leveraging massive existing customer bases

The largest threat often comes not from new banks, but from established technology giants. These firms already possess massive, engaged customer bases and deep pockets, allowing them to enter lending or payments with minimal customer acquisition cost. For instance, a major tech firm could integrate a lending product directly into its existing ecosystem, instantly accessing millions of users who already trust their platform. They can afford to operate in a loss-leading manner for years to gain market share in the payments space, a luxury traditional banks cannot easily match. This indirect entry bypasses the initial chartering process but directly attacks the revenue streams.

Finance: draft 13-week cash view by Friday.