Several sell-side analysts have issued notes over the past week reminding clients that the current balance sheet strength and funding composition of the Australian banks is much stronger than it was leading up to the financial crisis in 2007.These reminders are in response to the sustained sell-off of bank stocks, which has seen their valuations reach levels that were last seen during the GFC.Macquarie Research issued its Aussie Banking Wrap yesterday, which said banks' funding requirements were more manageable now, with average requirements lower than in 2008/09. Volatile short-term wholesale funding has fallen from 23 per cent in June 2007 to 17 per cent now. Domestic deposits made up 44 per cent of Australian banks' funding in June 2007 but make up 55 per cent now. A Deutsche Bank report noted that the Financial Stability Board's recent review of Australian banks said they had made good progress in reducing the reliance on wholesale funding.Macquarie said the major banks had access to a new source of funding with the opening of the local covered bond market, which is due soon. The banks are also beneficiaries of the strong deposit market.Credit default swap spreads have gone back to pre-financial crisis levels. CDS levels indicate the market's view of bank credit risk and also indicate the trend in wholesale funding costs.Macquarie said: "Higher wholesale funding costs are likely for a period of time. However, we believe they are manageable."If the banks had to roll all 2012 funding at this level (an increase of 40 basis points in wholesale pricing in the past couple of months), it would result in a two to three basis point decline in margins."There was scope to offset some of this increase through asset re-pricing.Goldman Sachs said the latest data from the Australian Prudential Regulation Authority showed that retail and business deposit flows were running in the banks' favour.  Retail deposit balances rose 1.1 per cent in August, consistent with signs of risk aversion from consumers amid elevated volatility and weak market performance. The monthly increase represents an annualised rate of 13.2 per cent - well above the eight per cent growth in the 12 months to the end of August.Business deposits were up 1.5 per cent over the previous month. Household and business lending growth is well below those rates, giving the banks a strong net inflow of deposits to further bolster their balance sheets.