Brett King has a three part series of blog posts on Finextra that provide a good backdrop to state of startups in financial services. I commented today with this, and wanted to expand on it after about the notion of disrupting banks. I would take issue though that we are perhaps not yet seeing the ‘disruption of banking’.  As both a long time observer and market participant (disclosure – I am involved with CommunityLend in Canada) I see these startups carving a useful niche, sometimes profitable, sometimes not.  These niches are small and particular.  I believe Giles (quoted – from … Continue reading What will it take to disrupt banks?

The General Accounting Office (GAO) in the US as requested by the The Dodd-Frank Wall Street Reform and Consumer Protection Act directed GAO to conduct a study of person-to person lending. Their report is now released at http://www.gao.gov/products/GAO-11-613 It provides a comprehensive look at how Lending Club and Prosper work, the challenges P2P Lending presents to the regulators who are based on pre-internet business models. This report addresses (1) how the major person-to-person lending platforms operate and how lenders and borrowers use them; (2) the key benefits and risks to borrowers and lenders and the current system for overseeing these … Continue reading US GAO report – “Person-to-Person Lending – New Regulatory Challenges Could Emerge as the Industry Grows”

A headline that is eerily reminiscent of September 2008 when markets dried up overnight following the bankruptcy of Lehman Brothers. Collateral demand rises for interbank lending By contrast, lending between banks without the backing of collateral has ground to a near standstill for any loans of more than a week’s duration, as fears of bank insolvency rise due to continuing uncertainty over Greece and its emergency loan payments. The background here is that small euro banks are implicated in this for now.  The question will be what happens next and what other banks will be involved.  The changes since September … Continue reading Worlds banks are on edge as a result of Greek situation

We know the US financial markets are skewed because of QE2 providing financing for government borrowing from themselves, but this analysis shows just how deep the government support of capital purchases has become in US. State is now dominant force in US capital markets But the dirty secret behind this rhetoric was that government-backed institutions such as Fannie and Freddie were playing an important role in the modern financial system, even before the credit crisis erupted. And what is remarkable now, given that the role of Fannie and Freddie has swelled, is just how little debate this patter continues to … Continue reading More dire analysis on US government finances

The ICB report recommended a system to permit account number portability between banks to make it easier to switch banks.  Such a system would also switch automatic direct debits. Lloyds Bank (60% government owned) have prepared a report to support such a move. UK banks float £2 billion account switching plan Finextra According to the Telegraph, the database plan would cost between £1.5 billion and £2 billion and take around two years to build, while a full account portability scheme would be £5 billion and take up to 10 years to roll out. Continue reading Account number portability report in UK

Having just watched the Munk Debates on growth in China, my mind is on global economics.  This article in the WSJ yesterday by Jim Baker was about the debt ceiling fiasco in America.  Then this little gem of a paragraph at the end of the article. How to Deal With the Debt Limit With the Federal Reserve ending its purchase of bonds later this month, the Treasury must rely even more on China, Saudi Arabia, Japan and other countries to invest in our securities. The cost of these borrowings will ultimately increase if the U.S. is not seen to be … Continue reading End of QE2 in July will have significant implications for worlds interest rates

http://www.munkdebates.com/debates/China Here is the link to the video.  http://livestre.am/PhFU Well worth the almost 2 hours. Continue reading Munk debates – “21st Century will belong to China” – Kissinger, Zakaria, Ferguson, Li

Jim at Netbanker has a positive take on the acquisition of ING Direct (USA) by Capital One.  He sees them as complimentary and expects powerful and sound online marketing from the combined unit. Is ING Direct to Capital One what PayPal was to eBay? Will ING Direct’s online chops boost growth at Capital One like PayPal did for eBay when it introduced epayments into the online marketplace? Wall Street gave it a modest thumbs up, sending Capital One shares up more than 2% on a day when financials were flat. That’s a $0.5 billion positive swing in market cap. Not … Continue reading Capital One and ING Direct seen as a good match

There is much talk about the cloud and it has now hit mainstream media.  So now we get pieces such as this from Ruchard Waters and Chris Nuttal in the FT suggesting the end of the PC.   The end of something means it disappears.  This is ludicrous.  In fact from the same article Jobs is quoted, and his quote is far more accurate than the premise of the article. Cloud threatens to end PC’s reign Introducing Apple’s iCloud, Mr Jobs delivered what appeared to be a carefully scripted line designed to nudge the venerable personal computer – in all its … Continue reading The Cloud – a most misunderstood concept