LE CAPITAL

A series of technological advancement in the financial world recently got me thinking about the future of the banking system as we know it today. The inherent role of banks is centered on taking deposits, making payments and providing or brokering funding. Today, their deposit-taking role competes with money market instruments proving better returns for idle money. As such, the deposit growth of the top 5 American banks is negatively correlated to FED rates and the subsequent attractiveness of money markets investment avenues. Money markets, together with debt capital markets, are also and increasingly duplicating the lending role assumed by the banking system. Lending to large corporates has got increasingly competitive and unprofitable for banks because of the lower interest rates they command. Banks are better off brokering deals for debt markets in return for a fee . Banks’ transactional role is not better off. Last year has seen for the first time, the amount of globa