As if further evidence was in fact needed the major high street banks are reducing their attachment to real estate. Since 2015 over 400 branches have been closed. This is attracting the attention of the powers that be as there is no substitute for those who are not IT literate. Traditional banks are between a rock and a hard place. Real estate is expensive. Digital newcomers would seem to have a clear advantage, certainly on the liability side of the balance sheet. Anyone can take deposits! Investing the money profitably is the difficult part. The clearers are their own worst enemies though. They have productised all of their activities and are losing their relevance. Local businesses have nowhere to go and nobody at the clearers worth talking to. When they need some help being offered a product that doesn’t suit them doesn’t work. Cash is another issue as well as age discrimination. I don’t see a good way out of this neither here or in Europe.
Tom Stevenson of Fidelity International writing in a personal capacity has picked up on an issue that overshadows all asset classes and all risk activities including lending. All of a sudden a world that is buying into green technology is beginning to understand that mining and administering digital coinage is highly energy intensive and not at all green. So paradoxically we have green car maker Elon Musk supporting a very ungreen technological instrument. When he backs off, some people lose their shirt. However the subject is not the flakiness of the business case for Crypto currencies although that is a subject all on its own; but something more insidious. Tom has been around the block a few times and can draw on historical perspective. The conclusion is that we are back in the 1990’s and that too much easy money is chasing too many flaky investment ideas. Bankers take note.
Apologies for coming back to Greensill, but it keeps on giving. In this column on 23rd. April I pointed out that not understanding the risks involved in banking transactions was a complete no no. Ex Prime minister Cameron was being paid by a bank and that makes him a banker as far as I am concerned although there are question marks about Mr. Greensill himself. Cameron made it quite clear that he didn’t really have a clue about the credit processes or structure of the business that Greensill was writing but there and again nor did Credit Suisse. Cameron at least did ask a vague question about portfolio risk concentration but was fobbed off by being told there was a plan to address this. I don’t buy any of this nonsense. If you are going to lobby to get HM government to disburse money of any kind then you should know your subject. When I worked on arranging syndicated deals I was expected to understand the risk. Needless to say I was not as well remunerated as Cameron.
Howard Tolman is a well-known banker, technologist and entrepreneur in London,
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.
Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.