The title shouldn't seem like a pun, given that this classification is increasingly used to interpret the changes taking place in the credit and financial industry, in relation to which a more complex articulation of its components is foreseen.
The general theme is that of disintermediation which, especially in systems such as the English one, wants large commercial banks already subject to the challenges of financial innovation and new competitors. But the question is destined to concern all systems, given that the competition gauntlet is thrown down to everyone as a result of technological-financial innovation, the entry into the banking services market of social networks and e-commerce platforms, commercial strategies based on the centrality of the customer, as well as the regulation committed to framing the evolution in progress, also through the legitimacy of new operators.
Here, disintermediation must also deal with the reduced trust of savers in banks which has recently manifested itself with:
a) the transfer of deposits from local banks, affected by the crisis, to larger and more solid ones and to Bancoposta,
b) the preference for liquidity held in current accounts, even if unprofitable, which increases the risk of funding volatility,
c) the holding of cash in safety deposit boxes, sheltered not only from taxation and its traceable use, but also from the risks of bail-in.
With the hope that a phase of improved perception of the stability of the system will open after the conspicuous public intervention in support of the most critical banking situations and the success of the important capital increase of the second largest bank in the country, it is necessary to understand whether there is the possibility to create a less bank-centric system, favoring a more marked differentiation in the offer of financial services, also through the development of the activities of specialized non-banking intermediaries.
These are the operators that are referred to by expressions such as not banks, almost banks or shadow banks, who do not have the possibility to operate in the round in credit, financial and connected services intermediation, since they are prevented from collecting savings from the public, but who can legitimately contribute to satisfying specific needs of businesses and households, in a innovations and adequate transparency. Asset management companies, SIMs and, in relation to financial activities, insurance companies must also be included among non-banks.
In respect of a large part of this segment it has been accomplished recently a major regulatory overhaul, through the establishment of a new register of operators listed in article 106 of the Consolidated Banking Act and the introduction of stricter supervisory methods. The interested operators belong to the categories of guarantee trusts, credit financial intermediaries (consumer loans, salary-backed loans, issue of guarantees, leasing and factoring) and trust companies (heading of assets).
The picture of the most recent regulatory innovations is completed by the establishment at the Ministry of the Economy of the register of credit brokers and agents in financial activities and for payment services (OAM Register), the provisions concerning payment institutions and money and those on microcredit, while the methods of access to and exit from the SIM and SGR market are to be considered mature by law. Starting from next year, new operators may be authorised, pursuant to the Second European Directive on payment services, who will profoundly change the relationship between banks and their customers.
Once the entire sector has been made more reliable, through risk-based regulation and the principle of regulatory equivalence, we need to ask ourselves what are the conditions for these intermediaries to play a more important role than at present.
Indeed, as emerges from a recent work by some scholars of the Bank of Italy dedicated to shadow banks (Shadow banking out of the shadows: non bank intermediation and the Italian regulatory framework, C. Gola et al., February 2017), if on the one hand the objective of monitoring individual subjects, based on the criterion "same risks, same rules as the banks" leads to "strong" supervision, on the other The almost total membership of these specialized operators in banking groups subordinates their development to the strategies of the respective parent companies. The fact is that the weight of these activities on overall intermediation is quite limited and that of independent financial intermediaries is all the more reduced.
The total assets of non-banks are in fact equal to about 60% of GDP (with absolute predominance of those of asset management), while those of the banks exceed by twice the GDP itself.
We therefore need to understand whether the segment as a whole has actual growth opportunities, for example by investigating the relationships that could be established between specialized intermediaries, not belonging to banking groups.
The missing requirement a consortiums, credit institutions, leasing and factoring companies, SIMs and minor insurance companies essentially pertains to services of a monetary nature, to disburse loans, collect installments or premiums, pay claims, carry out monetary transactions ancillary to the main activities. Payment services appear to be the real enabling factor for any innovation in the financial and trade fields, through which these needs can be satisfied with products from institutions that are also specialized, as an alternative to the bank current account. The example is the payment account, a European instrument that can be placed by payment and electronic money institutions.
In the most advanced versions, it allows all types of collections and payments to be made, in full compliance with SEPA standards, being able to be mobilized using debit and credit cards from private and international circuits, internet banking platforms and mobile telephony. In addition, lower and more transparent prices than the current account are applied to the payment account (there are no currency effects and commissions not strictly connected with the services offered). Added to this is the possibility of associating incentives based on use and the fact that it is practically exempt from stamp duty.
The methods for managing partnership relations between non-banking intermediaries can be of a contractual nature, including multilateral ones, using the so-called network contract, which, introduced into the Italian legal system in 2009, aims to encourage both innovative capacity and efficiency of the participating companies.
Il Network contract in fact, it lends itself to developing forms of horizontal collaboration, in compliance with the entrepreneurial autonomy and specializations of each participating intermediary, to manage non-competitive services, to be offered to customers jointly, for example by coupling the disbursement of a loan or the recurring payment of insurance policy premiums to a payment account.
Thanks to this contract, operational efficiency objectives can also be pursued, through common choices for the purchase of IT and professional services, for the selection and training of personnel, the management of distribution networks and the possibility of extending activities to the nascent platforms direct lending, crowdfunding and electronic commerce.
Ultimately, the value of a network contract is of a strategic nature, as it presupposes a common project aimed at managing something new for non-banks and for the market, to the point of representing an effective alternative to the more traditional business models. In our opinion, it would be particularly suitable for this sector to generate a minimum of production scale and create economies of scope, redesigning a less dispersed offer. The prospect of growing the so-called Smart communities should also be considered, in which the offer to the citizen of a plurality of digital services starts precisely from innovation in financial and payment services.
Reciprocally, it would also benefit the payments industry which, despite having an open field given the backwardness of the country, is struggling, with the commercial methods followed up to now, to show signs of recovery of the gap that separates it from our competitors: while the Italian GDP weighs on the European total by 12%, in payments other than cash, our share does not exceed 4%. The advantage for payment institutions and Imel could be given by the possibility of making use of the sales networks already active in the area belonging to consumer credit, salary-backed loans, confidi and SIM companies for a more effective placement of their products.
Five years after the birth of the first specialized operators, the context would also seem favorable to mergers among those of smaller size and the entry on the market of national subjects of greater weight operating in the GDO, in telephony, in motorway services and so on. A more robust structure of these non-banks could counter, at least in part, the large international platforms which move rapidly away from electronic commerce towards more typically banking activities.
The conclusion is that there are spaces for a financial activity promoted by entities other than banks which could also take the paths opened up by fintech, leveraging on the exploitation of competitive advantages deriving from more flexible organizational structures than banking ones.
The greater attention to reputational risks should also lead these intermediaries to amarket information higher quality and full adherence to the regulatory compliance environment.
As for the overall risks, they are undoubtedly of lesser systemic value than banks, given that, as mentioned, these operators do not collect savings from the public, which is why a careful fine-tuning of the regulation in the name of the principle of proportionality represents a factor not to be little for their effective take-off, on a par with a practicable and low-cost innovation such as that of the proposals illustrated below.
