European Bank Nightmare Far From Over as Fines and Fintech Loom - Bloomberg Business

European Bank Nightmare Far From Over as Fines and Fintech Loom - Bloomberg Business



If you had to pick the moment when European banking reached the point of no return, which would you choose? ... Sept. 12, 2010, when Basel III’s raft of costly capital requirements started upending the economics of global finance?...



...Now they have to find a way to prosper in a marketplace that’s being reshaped simultaneously by strict new capital regulations and myriad financial technology startups that don’t have to abide by them...



...European banks aren’t going through a stormy phase that will eventually clear and permit them to claim a new golden age.The industry is undergoing a metamorphosis that will demand a thorough and radical alteration of its core operating model...



... More than 100 startups are now attacking the core services of retail banking in the U.S. and U.K...Venture capitalists, angel investors, and bankers themselves have plowed more than $24 billion into fintech startups worldwide in the last two years...



...UBS has been running experiments on issuing “smartbonds” in its blockchain lab here. Dopay, a startup based here that enables companies to pay their employees via an app, has joined forces with Barclays. ... “What no one expected was fintech.”...



...With most of their legal bills paid and Dodd-Frank’s rules written and implemented, U.S. lenders are getting back to business...



...Steve Schwarzman, the chairman and CEO of private equity giant Blackstone, suggested in the same discussion that regulators were stifling economic recovery in Europe by leaning too hard on banks. “Regulation has made the world more dangerous,” Schwarzman said. “Please don’t say that we have overregulated the banks,” said Dijsselbloem, who also serves as the president of the Eurogroup, which is made up of the euro area’s finance ministers ... Rather than saying regulatory regimes put in place are smothering economic activity, I think it’s actually the opposite. ...”



...London-based Funding Circle has arranged more than $1.5 billion in loans to small businesses in Germany, the Netherlands, Spain, the U.S., and the U.K. since 2010, delivering an average annual return of 7 percent to lenders. The startup is still tiny compared even with midsize banks. By matching borrowers and lenders on its website, it doesn’t have to use its own balance sheet to make loans...



...banks could just acquire fintech companies and try to fold them into their operations... JPMorgan Chase’s recent decision to distribute small-business loans through On Deck Capital, a New York-based online lender, groundbreaking. The bank is essentially telling the marketplace that it trusts On Deck’s methodology for managing risk. That’s huge for the burgeoning peer-to-peer industry...