Online Seminar: Bank Lending in The Age of Digital Disruption
The latest online seminar of the Florence School of Banking and Finance, ‘Bank Lending in The Age of Digital Disruption’, looked at the opportunities, possible evolution and regulatory implications of banking services in the new digital age.
The lead presenter, Jean Dermine, Professor of Banking and Finance at INSEAD’s Singapore campus, discussed the case of peer-to-peer (P2P) lending. Starting from a historical overview of financial technologies and their impacts on the main banking services, Professor Dermine outlined the characteristics of P2P lending and how a combination of fraction loans, with amounts as low as 25 US dollars, can be a way for investors to diversity their portfolios and earn solid returns.
Analyzing how this technology was put in practice by different actors all over the world (especially in China, but also in the US, UK, France and other countries), Professor Dermine discussed the case of Lending Club, a platform created in 2006 which, after its initial successful IPO in 2014, suffered from a decline of its share price and its price-to-book ratio. On the basis of this example, he highlighted how economies of scale of the P2P lending industry have yet to be materialized, despite a large potential for growth. Closing his presentation, Professor Dermine presented the regulatory issues and the risk factors arising.
The presentation was followed by a comment by Giacomo Calzolari, Professor of Economics at the University of Bologna, who highlighted how FinTech falls in the natural competitive pressure that is part of the industry and, consequently, how unbundling and dis-intermediation are to be expected. Professor Calzolari then discussed new technologies’ implications on regulation, starting from two figures, one on the heterogeneity in the approaches of different European regulatory regimes applied to FinTech and one on the correlation between investment in FinTech companies and regulatory stringency. On this basis, Professor Calzolari discussed how a convergence between FinTech and the traditional banking should be expected, and discussed the future implications on the industry of the speedy developments in the fields of artificial intelligence and machine learning.