An interesting thing to try to predict is when an industry will flip – i.e. when the digital models will start to make more sense than the traditional ones. We’ve seen it in music with Spotify, Rdio and Pandora. We’re seeing it in film with Netflix and Hulu. We saw it in cameras as the technology met the mass market price point (and when Kodak went bankrupt). There are signs we’re seeing it in education with Khan, MOOCs and the flipping of the classroom.
This FT op-ed claims that banking is now approaching that point. Case in point would be Lending Club or M-Pesa. The fact that Google took a stake in Lending Club, their first financial venture (not counting Google Finance and Google Checkout/Wallet) shows that they might agree. Although I think we’re still far from that point, it is clear that banking is not more immune than any other industry.
A fragmented industry of smaller, mobile and digital players, while still under relevant government consumer protection would be a nice solution to too big to fail.