A Future without Banks

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It’s not uncommon for people of this generation to hear about the concept of a “bank-less” future. It’s something that is seen as the future of finance by many advocates of the idea.

The recent action plan embraced by the European Commission to establish a Capital Markets Union could well be the precursor for this concept. The idea behind the plan is to enhance the scope of financial markets and thereby, perhaps, bring down the power of banks in general. Over the years, banks across the globe have been facing mounting pressure due to the digital phenomena that has hit the economy. The discussion has now started and is catapulting into newer levels. But, is such a future possible? And if yes, how would it be?

A snapshot of what could be and what is

If you thought you’ll have a bank around when you are ready to purchase a house or car, think again; this may not be the case in some time. The paper-based currencies of today may not be at our disposal to buy whatever we want. The beloved ATMs may not be at our service to churn out money as we need it.

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Remember we used to barter things before currencies were invented? Maybe this upcoming plan could take us back to this previous century. And, bartering could mean that we would not even get precise change for what we are “paying.” This complication in transactions is what banks had eased out when they started issuing currencies, checks, and now debit and credit cards that rendered the entire purchase-and-selling process so much easier. It is worth contemplating that the pioneers of single-click e-purchasing, such as the Snapdeals and Flipkarts of today, may soon establish their own type of “banks” that will slowly oust the kind of banks we are familiar with currently.

Banks and the banking sector have conventionally been run by private bankers and stock brokers. Currently, however, the situation is witnessing a slight change. A doubly strong force is hitting this monopoly of bank ownership as we know it.  First, a new wave of automation is being readied to replace human bankers with software that can perform detailed customer profiling and market analysis to, ultimately, help in making investment decisions. Second, the biggest wave in the investment world of today – aka crowd-sourced investing – is making a dent in the banking landscape.

Non-Banks: A game of unpredictability or safety?

Over the years, banks have been our go-to place for borrowing money – or taking “loans.” Prior to banks, people relied on their kin and kith to borrow money from. As we all know, this usually ends up in fights, arguments, and relationships going haywire never to be mended again. Banks made everyone’s lives easier by bringing loan officers into the picture. They acted as intermediaries who were detached from the personal lives of the borrowers and the lenders. Fair play, don’t you think?

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It’s only after hundreds of years of experimentation that nations around the world settled for currencies that they were comfortable dealing in. In the present day, central banks dominate national currencies and control supply majorly via commercial banks. Central banks, therefore, seem to hold this holy power to increase or cut short supply by adding to and implementing reserve criteria on commercial banks.

So yes, intriguing changes are about to hit the banking sector. But, the question pertinent to the situation is: can the upcoming non-banks replicate the security and simplicity that banks provide us? Further, if the crucial banking areas are acquired by non-banks, will governments still be able to drive the finances of countries? It’s a wait until we get the answers to these questions, but it sure won’t be a long wait, nevertheless.


The investment scene is going to be even more relentless in 2016



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My team did some detailed analysis on the potential investment scene one can expect to see as the rest of 2016 slowly unfolds. And it’s not going to be anything like the economy expected!

Startups were drenched in investors’ money all of last year. The inconsistently playful stock market, however, is now making the investors work more carefully toward the startups they want to invest in. The total amount that investors would be investing is estimated to drop by a quarter of what it was last year.

So, what are some of the investment trends we foresee? Let’s explore!

Education: Does it matter?

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Will educational qualifications be that important when you evaluate startup founders? That’s a big NO.

Take any successful new venture and it’s probably the baby of a high school dropout. Ultimately, all that matters is the idea behind the company. Is the concept fresh and promising? Then, you’ve just struck gold! The universities or schools the founders attended will not be used as a criterion for judging the potential of the startup either as, in reality, startup ideas are being conceived equally well by the minds of many innovators, be that of an ex-MITian or an ex-IITian.

The fate of the investees

Indeed, many of the startups get acquired within a couple of years. And really, isn’t that the ultimate dream of the founders?

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Some of the startups do stumble and crash. Things to watch out for are overexpansion and blind competition.

Then, there will be those who go public. How do they perform right after that? We’ve seen some pretty dismal performance for most IPO-based companies. So, is it really a good route to take? That’s quite a gamble in itself!