It is said to be the oldest profession in the history of mankind. No, not that one. Besides survival skills such as hunting, the oldest profession in the history of mankind is lending. It started with lending food to the ones who were not able to pick up enough fruits or kill enough animals. Then later, it evolved to lending resources to farmers, and lending money to adventurers or traders. Even the crusades required lending from banks.

Banks are like refrigerators: we only notice they exist when something is wrong. For people with money, it may be the petty fees. For people in need, it’s the dismal (albeit justifiable) refusal to help. The mandatory bailout of big banks to save them from their hubristic gambles only adds insult to injury. But banking is necessary in any economy, and, in theory, beneficial to all its participants.

Banking is, fundamentally, acting as an intermediary to provide liquidity between someone with too much money vis à vis immediate needs, and someone in the exact opposite situation.

In exchange for letting someone borrow money, a lender receives interest: she will be paid back more than what she lent. In the process, the bank takes a share as facilitator. Interest also compensates for the risk of the borrower to never pay back his debt. A “bad loan” is, until it defaults, simply a loan for which the interest rate isn’t high enough to compensate for the risk. As Tony Soprano could testify, a good recovery process is necessary to keep the lending business profitable. Paying back debt is, unfortunately, not as easy as contracting one, which can make lending morally questionable. The dirty word for charging interest is *usury*, and such practice has been forbidden in many major religions, including Islam, Christianity, Judaism or Hinduism. But since it is a “necessary evil” [Islam and the Theory of Interest, Qureshi 1946], each religion found a way to circumnavigate its own precepts. In the 13th century, the Catholic church listed convenient exceptions. For Judaism, it is the right to charge interest to non-Jews. In Islamic banking, the lender may buy the goods directly and resell them with a margin to the borrower, or simply share profits. And so, starting in the Middle Ages, banking was able to flourish.

The finance world could observe with detachment the transition from agriculture to industry, and then from industry to services. Each time, banks were sheltered from the necessity of the workforce to migrate from one place to the next. Banks remained unthreatened by unemployment or pauperization. Lending money was needed then, is needed now, and will be needed tomorrow. In the 19th century, a big bank looked like a neoclassical temple, complete with marble columns and Latin words engraved in its pediment. Two hundred years later, it looks exactly the same. Of course, banks embraced new technologies along the way. As a matter of fact, the finance industry has always been very quick to put new inventions to good use. For instance, shortly after the appearance of telegraphy, banks began using it to transfer funds. But under the surface, little has changed. The lending activity of the oldest bank still in existence, the Banca Monte dei Paschi di Siena is essentially the same as it was more than 500 years ago. Yet the money business becomes continuously more important. In the last 70 years, the finance industry in the U.S. grew from 2.2 percent of the GDP to 8.4 percent [Source: Commerce Department]. One reason for this may be that scale-free businesses, such as technology companies, have become a massive part of the economy, and they evolve in a winner-takes-all environment that commands massive resource hoarding. The process of continuously brainwashing individuals so they become obsessed with instant gratification—in other words, advertising—was successful enough so that the outstanding U.S. consumer credit was multiplied by 6 between 1993 and 2013 [Source: Federal Reserve Bank of Philadelphia]. This is great news for banks that charge hefty fees in the lending process. Saving accounts return 1.05 percent per year, but consumer credit rates average 13.5 percent [Sources: Bank of America, Bankrate, Lending Club]. Even taking insurance, processing and defaults into account, that’s still more than 7 percent swallowed by banking institutions.

Banks would have a bright future, save for a little detail called the Internet. As many travel agents, record labels and bookshops have painfully experienced, the Internet is extremely good at squeezing intermediaries out of business. The market craves efficiency, and in a capitalist economy, middlemen can only exist as long as they’re inescapable. Internet-based marketplaces are now beginning to make banks obsolete for lending. That phenomenon is new: the first peer-to-peer lending marketplace, Zopa, only appeared in the UK less than 10 years ago. But the market is growing fast. The two U.S. leaders, Lending Club and Prosper, have already issued more than $6B, the worldwide market is doubling every 9 months, and LendingClub’s impending IPO will significantly boost public awareness. The borrowing side is a no-brainer: people with decent credit scores can access consumer loans with rates more than 2 percent cheaper, and the process to get a loan is often less tedious. Things are a little more complicated on the investors’ side. Keeping a portfolio diversified and fully invested is a time-consuming process. Choosing which loans to fund and which one to stay away from is complex, and needs to be done quite fast because of fierce competition on the lender side. Hopefully machine-based investing such as LendingRobot can alleviate those issues. Even with manual investing, peer lending is worth the effort, as it returns 7 percent per year on average with surprisingly low variability. Annual returns can even exceed 10 percent with the help of machine learning. While rising inflation could make those numbers less attractive in the future, peer lending will remain fundamentally more efficient than traditional banking, and is here to stay. Even a catastrophic (and highly unlikely) event happening to a major marketplace would not call the future of Internet-based lending into question, the same way the failure of Webvan hasn’t portended the fall of e-commerce.

The dis-intermediation of banking will soon extend to small-business loans, education, or real estate. Those who think it can only work for consumer credit (for instance, because there is no collateral or because the loans amounts are small) shall remember that 16 years ago, Amazon only sold books. As a bitcoin marketplace says ,”Banking is necessary, banks are not.” Of course, banks provide many other services. Too bad each of them is also facing the unfair competition of Internet and technology-based companies, from Simple for credit cards to TransferWise for money wiring or currency conversion. And that’s not even considering the long-term effect of crypto-currencies.

In 19th-century England, banks helped factories to buy power looms and replace textile artisans, creating the Luddite movement. How fitting that modern machinery may soon replace the bankers themselves.