Concluding remarks

In this chapter, we have looked at several forces of competition in the digital age, most impor­tantly, competitors from unexpected places, winner-takes-all dynamics, plug-and-play busi­ness models, and relentlessly evolving business models.

It would be a pity if a knife fight broke out between banks and FinTech companies. This might severely cannibalize the energy of the financial sector that could serve much better purposes for innovation and co-creation. Marketplace lending has introduced several good ideas that might be worth integrating for banks. Among them are credit scoring with fringe alternative data, lending as a service (LaaS), and real-time credit decision. Finally, the high standards for data quality and storage and transparency that marketplace lending has brought to the fore of credit pave the way for unified analytics, which we will now discuss.

NOTES

1. Hirt, Martin and Willmott, Paul (2014) “Strategic principles for competing in the digital age” (McKinsey & Company).

2. Fudenberg, Drew and Tirole, Jean (1984) “The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look,” The American Economic Review, Vol. 74, No. 2, May 1984.

3. Alloway, Tracy (2015) “Lending Club forms partnership with Alibaba” (Financial Times, 3 February 2015).

4. Kaminska, Izabella (2015) “How to eat a banker's lunch,” (Financial Times, 17 March 2015) http://ftalphaville.ft.com/2015/03/17/2121994/how-to-eat-a-bankers-lunch/, date accessed 18 March 2015.

5. Robinson + Yu (2014) “Knowing the Score: New Data, Underwriting, and Market­ing in the Consumer Credit Marketplace.

6. Ismail, Salim (2015) Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it) (New York: Diversion Books).

7. Robinson and Yu (2014) “Knowing the Score: New Data, Underwriting, and Market­ing in the Consumer Credit Marketplace. A Guide for Financial Inclusion Stakeholders,” http://www.robinsonyu.com/pdfs/Knowing_the_Score_Oct_2014_v1_1.pdf.

8. King, Brett (2013) Bank 3.0 (Hoboken: Wiley).

9. Rotman, Frank (2015) “The Hourglass Effect: A Decade of Displacement,” http://qedinvestors.com/frank-rotman-releases-the-hourglass-effect-a-decade-of-displacement/, date accessed 23 May 2015.

10. Swanson, Jann (2015) “Net Cost to Originate the Average Loan Rises to $5,238,” (Mortgage News Daily, 2 April 2015), http://www.mortgagenewsdaily.com/04022015_mba_mortgage_profits.asp, date accessed 22 May 2015.

11. Ibid.

12. Lending Club (2015a) https://www.lendingclub.com/info/demand-and-credit-profile.action.