#SIBOS insights: digitization of wholesale banking

Lots of SIBOS attendees are from wholesale banking (clients are corporates or other FIs). So a session on disruption in wholesale banking was a must attend session.

Deloitte broke the market into 3 segments. My takeaway was how profitable this is for the top 7 banks (they could not find the data for the smaller banks) measured by ROE:

  1. FX: 34%
  2. Securities Lending. 8%
  3. Trade Finance: 25%

As Bezos says “your fat mergin is my opportunity”.

The session was good on the theory of disruption with Jon Hagel presenting the patterns of disruption that go across all industries not just banking, but there was too little on the practice of disruption. I know plenty of examples in FX and Trade Finance, but none in Securities Lending which seems ripe for disruption (opaque and fragmented). The low ROE for top 7 Banks is an advantage for startups (no massive moat to attack).

Anybody know of any startups going after Securities Lending?