NEW YORK (TheStreet) -- Peer-to-peer lending is going public. Lending Club, an online-only bank, announced it is planning a stock offering. But, this is just the leading edge of Silicon Valley's move into the banking business.
This effort is typical of how Silicon Valley does business. First, pick out an industry, next, transform the various pieces of the industry through technology and then see the industry respond. While large banks have focused on providing "one stop" banking, the wave of the future appears to be going to different providers that address specific needs.
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Banking is being transformed and something like Lending Club is a great way to get involved and be a part of the new wave. You can be sure this is the first of many more.
Like many of the companies in this crowd funding space, Lending Club uses sophisticated computer algorithms and "big data" to screen borrowers and lend money to those whose loans are too small or whose credit may seem a bit shaky.
This is typical of what is happening today. Not only have a substantial number of other peer-to-peer lenders been started, there are other "new" lender-types that are moving onto the bankers turf.
This is the future. Banking has to change. Take a look at the current lot of teenagers. They never go into banks and wonder what all those "little" bank buildings are for. But, they are very familiar with electronic gadgets. In five to ten years, these individuals will be the foundation of the new wave of "bank" customers. Banking is going to have to change to accommodate them. As a consequence, there are going to be a large number of Internet-based companies coming public over the next few years.
For another example, let's take the payments system, long the bread-and-butter of the commercial banking system. What is the future of the payments system?