The
banking system is a lot less risky compared previously
·
Higher
capital level compared previously for most of the banks.
·
Highly
liquid assets held by the banks
·
Not
many complex and exotic products around
·
Higher
underwriting standards
·
Many
standardized derivatives are moving to the clearing houses.
Future
threats to the banking industry will include
·
Ambitious
large Chinese banks which has the scale and the strategic reason to compete and
yet do not need to live by the same US rules that apply to the large US banks.
·
Silicon
Valley companies such as lending club who is able to connect lenders and
borrowers quickly.
·
Competitors
in the payments industry such as Paypal and Bitcoin.
·
Cyber
Security Threat.
Key
changes to the banking industry
Non-bank
competitors have become bigger lenders in the marketplace.
There is
far less liquidity in the marketplace because of regulatory requirement
resulting in low inventories of securities.
In the event
of a crisis, banks are reluctant to extend credit because it utilize precious capital
and in addition to the low liquidity in the market, hence the market in general
could lead to increase volatility.
