Fiinu (LON: BANK) (FRA: LWW) shares are down 66% this morning. BANK shares are down another 66% perhaps we should say. For we seem to have a 90% or so decline in Fiinu over the past 12 months. Just what we look for in the care of our money by a group of bankers. OK, OK, that's being a bit unkind as we're not to view them as bankers taking care of our deposits, this is the equity portion of banking we're talking about. But it is still true that this is not a grand explosion of the bankers' art here.
The specific problem as released: “Given the ongoing expense of maintaining and enhancing the development of the operationally ready banking technology by Group companies, the Company has now determined that the best course of action for its shareholders is for cost reductions to be initiated at its subsidiaries, Fiinu 2 Limited and Fiinu Holdings Limited, by various means including providing notice to reduce staffing levels, the re-negotiation or termination of agreements with suppliers. By reducing costs and satisfying all outstanding debts and liabilities of Fiinu 2 Limited and Fiinu Holdings Limited, the balance of resources available to the Company and across the Group will be optimised as the best way forward for shareholders is determined.” As we've noted before there's an art to reading company statements. And, to translate that one, it's “Well, that hasn't worked, what do we do next?”
Fiinu share price from London Stock Exchange
We have to admit that we're not fans of much of this new banking lark. Because we tend to think there's much too much concentration on the new bit and not enough on the old problem of banking. Yes, online and so on can indeed reduce the costs of lending money to people. Or, as with Wise, international transfers. There are aspects of the financial markets that can indeed be approached in a new way. But banking, banking itself, has had a problem for centuries now. Which is that most of the people it is worth lending money to are already able to borrow money at fine prices. It's the people who are, perhaps, not worthy of borrowing who are willing to offer high prices - and also can't get money from the current system despite being willing to pay those high prices. This is such an old problem that Adam Smith published on it back in 1776.
And thus our hesitancy on much of this new banking story. The problem with banking is not, in fact, how do you do banking. It's where are those people worth lending to who cannot already borrow?
