The credit crisis is fueled by lack of trust. Which bank can you trust with your billions nowadays, is the question.
So the race to increase the ratio’s is on, governments step in to increase the solvency of large banks. But even if the tier-one ratio is increased from 8 to 12 %, it is not enough when trust is lost and the public runs to the bank to withdraw its money.
Maybe the bottom line is that nobody really trusts the banking system any more.
Plenty of room for disruptive moves from unexpected entrants in the market who rewrite the rules. Anybody who has a lower risc profile/higher trust ratio than a standard bank and is able to manage the ordinary “dull” banking functions at low costs is a contender. After all, if you have a couple of billions to invest this party would be preferable.
So what about large supermarket chains? Marketing, logistics, IT, card handling, credit assesment and consumer relations hold no secrets for them. They know how important trust is: you cannot make mistakes with food quality without paying a high price. Or other large retailers?
Big telecom companies? Nice cashflow, their basic business is also a need-to-have purchase item for consumers, nice and stable. Consumer billing at low costs is a well known operational skill. Credit management? Look how mobile operators have learned to manage their riscs. Marketing? Certainly not worse than most banks.
I wonder how long it takes before somebody suddenly wakes up and sees the opportunity to redefine banking. It will be easy to pick up experienced people to build the business……..
