In his recent annual letter to shareholders, Jamie Dimon, Chairman and CEO of JPMorgan, bemoaned the extraordinary level of competition in his industry. In particular, he highlighted the rising influence of non-banking players in markets traditionally dominated by banks. “The growing competition to banks from each other, shadow banks, fintechs and large technology companies is intensifying and clearly contributing to the diminishing role of banks…in the United States and the global financial system.”
He’s not wrong. Data compiled by the Financial Stability Board reveals that banks around the world account for only 38% of global financial assets, down from 47% in 2008. The shift is particularly marked in the United States, where banks now account for just 23% of domestic financial assets. Picking up the slack are the “shadow banks” Dimon highlights: a catch-all category that includes investment funds, finance companies, structured finance vehicles, insurance companies – basically any fi…