Note: If you look at the end of this post, you'll find a .pdf crucial for all WSO users to download. It's a document specifying projected progress for the next 20 years of finance. I was going to keep it for myself, pretty much forever, but hey, knowledge is best when shared.
In the United States, our Big Four's, hold around ~60 - 70% of our nations business lending (In the UK, their Big Four hold 85%), and some other decent margins in terms of market share in other financial markets/applications, but we don't see much innovation. Institutional banking has remained the same for quite some time. Let's contrast a bit though.
Day-to-Day banking in relation to the aforementioned, is changing daily, and by the hour. You can see this through the torrent of services popping up in Online Banking (Mint.com, Cardless Transactions, Instant Check Processing), and technically with companies likeowning prominent in-store card systems tendering $3 Billion+ they too having become "banks" (Top 200 at that).
With anyone being able develop networked tech for banking, and be successful at it, it's easy to imagine 'Banking API's being released to the public soon so consumer banks can fetch their cut.
Recently a little series of bills passed under the bundle title called the JOBS Act. You might of heard of it. In short, it allows a company to have more shareholders before they have to go public, and it allows entrepreneurs to crowdfund their business'.
That isn't a hit on institutional banking though, because bigger corporations still need a way to receive $100M high tallys, and that can't exactly be raised with an impromptu "Kickstarter".
Just to wrap this up and round back to Institutional Banking so you all can stop reading this in the bathroom stall and go back to work, corporate consumers don't really care about the channels payments have to go through, or a bells-and-whistles "Mint.com" presentation, they want to request the money and just have it there ASAP. Have a 2005 Yahoo layout for all they care.
What I'm getting at is Day-to-Day Banking mixed with the developments of the JOBS Act can in show us the first real innovation in Institutional Banking. Since Corporations want the money quick, all Institutions need is an intelligent processing system.
Think of a company that raises money through the channels the JOBS Act has granted, but instead of directly vesting it in a startup, it's pooled with a BB's funds for business lending, so when a corporation makes the request for funds, their standing get's evaluated by a simple AI (pre-scripted system looking for optimal data traits), and in a matter of weeks, a yes/no response is granted (in this case a 'Yes' response) sending cash quickly to said Corporation. This allows little guys to all get a bite on big deals, and helps the counterparties.
It's not much of an "innovation" per say, but it would be a leap in terms of progression, somewhat matching D2D Banking.
- Do you think this system will work?
- What inefficiencies do you see in Corporate Lending?
- What do you think of the PDF attached?
- General Thoughts?
- Can someone get this on Business Insider? (lol just kidding)
- How do you propose we do cleaner Corp. Loans?
DONT FORGET TO DOWNLOAD THE PDF
Alternative C+P Link: https://www.box.com/s/5x2vhtfx0b074m7tilan
(It's a fat file, use your zoom button in your PDF Viewer, the native Box viewer sucks)