How the internet will kill banking

"Neither a borrower nor a lender be; For loan oft loses both itself and friend,

And borrowing dulls the edge of husbandry."

That's Polonius in Hamlet, Act I, Scene 3, nagging his son Laertes one last time before the youngster sets off on a trip. I know this because of Google, not because of any instant-recall facility I have for Shakespeare.

But the internet has removed the obligation for me, or anybody else, to remember anything - it has usurped memory. The web is also overturning conventional 'business models' by the nano-second and creating infinite options for online entrepreneurs.

Just this week, for example, a Sydney Morning Herald story - cadged from somewhere else - reported on a maths prodigy applying his genius to lowering the odds even further for the gambling-addicted losers drawn in ever-increasing numbers to the world of online poker.

"That's the beauty of playing online," [poker software creator Victor Wong] says. "You've got so many tables starting every minute you don't have to play with good people."

Great business plan. To Victor, goes the spoils.

Another piece re-published in the New Zealand Herald this week revealed just how quickly the internet can undermine established businesses with Microsoft winding down its online encyclopaedia Encarta.

"People today seek and consume information in considerably different ways than in years past," Microsoft was reported as saying in Encarta's epitaph.

"Translation: Wikipedia ate our lunch," the article says.

There are other online pioneers, too, trying to grab a slice of the biggest meal in business, the banking system.

As reported  in The Guardian, the internet lending firm Zopa has had a bumper year while the rest of the UK banking system has tightened lending and screwed savers.

Zopa promises to perform many of banking's traditional tasks - risk management, for example - without the messy, expensive layer of bankers insinuating themselves between borrowers and lenders.

"It's a smarter, fairer and altogether more human way of managing your money, where both borrowers and lenders get better rates," the Zopa site says. "... Lending and borrowing is pretty simple."

Banking: it's not rocket science. It's not Shakespeare either.

 

David Chaplin

 

 

Photo: Sandra Mu / Getty Images