Big Banks' Greatest Threat - Non-Banks

Christopher Joye

Coolabah Capital

In The AFR I evaluate one of the greatest long-term threats to conventional banks: the post-GFC revival of "non-banks" and "marketplace" funding, where the latter is also known as "peer-to-peer" (P2P) lending. Ironically, the 1997 Wallis Inquiry into Australia's financial system forecast that banks and their balance-sheets would be largely superseded by more efficient, technology-enabled "markets" (eg, securitisation). After explaining that "disintermediation refers to the process of borrowers bypassing [bank] balance-sheet intermediaries and obtaining finance directly from the capital markets", the report predicted that although banks might "still perform valuable functions in a disintermediated lending environment … loans would increasingly be secured directly from the markets rather than from an intermediary's balance sheet". While this vision was temporarily junked by the GFC, non-banks and their Internet-era incarnation, P2P lenders, are clearly on the rebound as evidenced by the surge in securitisation volumes, the ASX IPO of Pepper, and the local launch of well-capitalised P2P participants like RateSetter and SocietyOne. Click here twice to read the full column for free (VIEW LINK)


Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.