Rethinking Banking: Navigating Digital Fragility and Systemic Risk

In this episode of Capital Horizons, Francesco Filia, Founder and CEO of Fasanara Capital, discusses the rapidly changing dynamics of the banking and financial sectors. Francesco shares his insights on the following important topics:

• Digital fragility in banking: Discussion on how technology has increased the speed of depositor mobility making traditional banks more vulnerable to sudden outflows

• Risk of flash bank runs and systemic risk: Examination of the potential for flash bank runs typical of digital economies and the underestimated fragility of current funding structures

• Narrow banking: Advocacy for a banking model with reduced leverage to create a more resilient financial system

• Regulatory evolution: Analysis of the need for supervisors to better adapt to the digital economy and address vulnerabilities in banking

• Fintech platforms: Exploration of how fintech is improving user experience decentralising lending and competing with traditional banks

• Alternative lending models: Discussion on shadow banking and the role of funds in providing sustainable long-term capital to the real economy

• Innovation in finance: Observation that innovation has shifted away from traditional banks to fintech blockchain and AI-driven platforms

• Procyclicality in banking: Critique of how leverage in banks exacerbates credit cycles compared to the potential steadiness of alternative lenders

• Future trends in banking: Prediction that traditional banks will play a smaller role as shadow banking and fintech platforms expand

• Systemic stability and adaptation: Call for a diversified financial ecosystem to mitigate systemic risks and prevent crises like those seen during the global financial crisis

Please see here the link to the full episode: Capital Horizons - 20 November 2024

About Fasanara

Founded in 2011, Fasanara is a global asset manager and technology platform. We manage c. USD 4 billion AUM (as of December 31, 2023) in Fintech strategies on behalf of pension funds and insurance companies in Europe and North America, in addition to a mandate from the European Investment Fund (EIF). We are a pioneer investor in Fintech Lending, enabling Real Economy Impact. For more information, please visit https://www.fasanara.com/