[chmod775]

Those gouging banks could immediately use their scale to undercut that competitor, killing it, then return to whatever they were doing.

Considering how much of an upfront investment (not just in pure cash, but also in agreements, infrastructure and operations) becoming anything more than a basic savings bank is, the risk is very great.

Likely existing players can go pretty far before before the risk/reward of creating a new bank checks out.

The real question is why those existing banks aren't trying to undercut each other. Maybe there's some pressure and risks that make them behave this way in the current economy, or maybe it's good old price fixing.

[memefrog]

They do undercut each other. Interest rates respond directly to interest rate changes from central banks and commercial savings banks operate on thin margins. It is not price fixing for people to make large profits.