Banks in crisis: loans to businesses are down, bad loans remain enormous, the disaffection of customers increases. An opportunity for shadow banking
The alternative forms of loan, including the marketplace lending, have the possibility to fit into an ever-increasing supply gap. Bank.it explains why
Bank loans to businesses collapse; budgetary bad debts continue to be monotonous – despite a slight improvement; they are closing more and more branches and therefore the physical dimension of the banks is disappearing, while the need for capital increases to comply with increasingly stringent requirements and above all for the lack of “pandemic” profitability that involves the operators in all the globe.
We are still, without any doubt, in loan crunch . And alternative forms of financing companies have the great opportunity to fill an increasingly deep void . Especially for those targets, such as micro and very small businesses, to which lend is particularly burdensome, as well as absorbing capital, for traditional banks that tighten the loan lines. There is no QE that takes: liquidity is not transferred to the real economy – those of the companies with whom we relate to it every day – and stops at the financial system.
A wonderful opportunity for the lending marketplace that Bank.it is trying to grasp: the growing numbers of our disbursed (at the end of the year exceeding 7 million euro, up by one million month on month) show an increasing interest from part of the companies . The potential for growth is enormous.
But let’s try to frame the context with a greater level of detail.
Let’s start with a disruptive data: according to the latest monthly report prepared by the Unimpresa Study Center , which is based on data from the Bank of Italy, loans from banks to companies in the last 12 months have fallen by over € 18 billion (-2%) , albeit in a context in which consumer loan increased (+5 billion) and private loans (+5 billion).
The same report indicates that the unpaid installments (non-performing loans) decreased slightly by 1.9 billion from 201 billion to 199 billion with the “backwardness” of companies dropped by 1.2 billion from 143 billion to 142 billion. A slight improvement that we also find by analyzing other sources. Like the PwC’s The Italian Npl Market report, according to which, in 2016, for the first time since 2008, bad loans have been reduced to the Italian system level: in particular the NPL (a macro-category in which everything is included, bad loans) , substandard loans, doubtful loans, total exposure to what is non-performing) stood at 331 billion in June 2016 (-3% compared to the end of 2015); while bad loans (non-performing loans) amounted to 197 billion euro, down by about 3 billion from the levels at the end of 2015.
But there is no need to shoot fireworks, indeed, considering that 2016 should have been the year of acceleration on the divestiture of the NPL, which in reality was not as strong as expected.
The perennial crisis of banks is not just a matter of budgets : the banking world is changing its skin and it is not even too quietly. The interaction models necessarily change. Just think about the number of branches that will close in the next few years : the 800 of Uniloan will be the ones that will be canceled from the new business plan in the next four years. But, “i n the basis of projects submitted by the 10 largest banking groups (including Bank), the network of bank branches will see almost 3,300 closures, more than one tenth of the national branch network, while thousands more will be involved in the process of rationalization. “Which means that it will have to change the model of customer interaction with the bank . Traditional institutions are becoming more and more virtual, losing that dell’ut of physical access that has always been the true added value of traditional banking, especially for the segment of the population with little or no computer literacy.
In short, everything converges because the Internet and alternative forms of banking take the upper hand , or at least find their right position alongside traditional banking services. Will the banks disappear? Of course not. But for some categories of services, and loans to micro and small businesses are among them, they will be replaced more and more pervasively by Fintech.