Via Lex, an interesting post about financial disintermediation:
In a post on the state of consumer fintech, I took a look at how retail banks are beginning to “unbundle” as tech tries to reinvent finance. I now look at how the same is beginning to happen for commercial banks.
Like it did for retail banking, I think technology is impacting commercial banking in three main ways:
1. Increasing access to information thereby allowing businesses (businesses here refers broadly to small, medium and large businesses which would be the clients of commercial banks) to make better decisions
2. Reducing the friction/offering better experiences for businesses in conducting common activities
3. Lowering the fees on transactions for businesses by serving as a cheaper middle man
None of this is a surprise. Banks tend to be inefficient and generally mediocre. The incentive structure for bank employees encourages the most productive people to look elsewhere (for example, the best traders and programmers tend not to work for banks). Incessant Obama-era financial regulation makes the situation worse by killing off smaller banks that would have increased competition. There is thus a lot of low-hanging fruit for creative non-bank providers of services that banks have typically provided.