HSBC: Stuart Gulliver not off on his travels. too many ties at home?

So, petulant HSBC picked up their ball and set their sights on Hong Kong. Again. And then to no one’s surprise, they decided to stay in London. Again.

Maybe being handed the tickets and having the door held open wasn’t expected. Looks like we’re stuck with them. What if they had decided to go?
HSBC threatens to go. Would we get by without them?

What if they had gone. What if all the banks decided to go. What would happen?

Would the economy fall apart, or would we actually be better off?

Exploring the brave new world of banking

Slowly, the world of finance has new players. its been evolving all around us. While The City held themselves in suspended animation, things were changing. And the Credit Crunch was just a wake-up call.

The Credit Crunch showed the banks weren’t that hot. Maybe we could do better. And there was no shortage of options to look at…

So what exactly do we need conventional banks for, what is their role?

Smoke, mirrors and big bonuses

Banks provided finance, a place to invest money and a method to move money. So which of those would we lose if the banks weren’t there?

Guess what – we would lose none of these. In fact, we’d probably do a lot better. Let’s look at each one in turn.

Investing in business

Today’s new businesses will rarely turn to the banks for their start-up financing. Banks have lost the ability to assess new market players – that role goes to angel investors and investment funds.

No emerging business gets a deal from banks any more. Small business is far too risky an investment strategy for the old school banks.

Strike that off the bank’s score card.

Investing your money

Banks always had a gaping disparity between their investment rates and returns. Their self-induced Credit Crunch took away any residue of any return anyway.

The gap was filled with new boutique investment boutique players like Zopa. They let you invest in a range of risks at a great level of return and you get to chose when, where and how much. Looking for some money to borrow?

Come right in. Zopa will offer you a loan at a great rate, too.

Ouch. Scratch item number two. Not looking good for the banks, is it?

Moving money around

Banks of course provide BACS, paper money transactions and plastic cards. Forgive me on this one, because I’m bound to only be able to list a few of the great new options available.

PayPal, we all know, but Google, even mobile phone companies are positioning themselves in this arena. The banks admit they can’t compete in this market. RBS, one of the biggest players recently sold its WorldPay arm.

And mobile payments and NFC are opening up new opportunities every day.

Strike three. That’s it banks. Your bolt is shot.

The new financial paradigm. No place for dinosaurs

What the Credit Crunch did above all was to disrupt the financial landscape. None of the old rules applied. The ground had shifted. Had the banks been as smart as they told us they were, they would have been able to deal with that.

But they couldn’t. Nothing changed. The banks couldn’t offer us anything new. There was no innovation. Customers were left to cope alone. And cope they did.

The new world of business has learned to live without banks. We even had a taster when the bank’s went on strike in Ireland in the 1970’s.

They got by then – that was long before the Internet, long before we knew better.

We know better now – and we know we’re better off without the banks.

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