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The NY Fed looked at lending specialization actually improved Bank lending performance https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr96

The NY Fed looked at lending specialization actually improved Bank lending performance https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr967.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... This has to do with deposit specialization which I don’t know if it’s been studied, but you could see the same arguments applying to.

majormajor 4y ago
If you're an individual startup, you don't care about the overall system, just maximizing your own. So that efficiency seems great. But if you're a VC with a broad portfolio, you're much more exposed to the single-point-of-failure risks that come with increased efficiency. "Give up some efficiency for system robustness and long-term-health" is a no-brainer for mature engineering orgs, but in this financialized world nobody can see the longer term big picture