Our global financial system is in the grips of a full blown crash – clearly now the worst since the Great Depression. Just when we think things are stabilizing, a new shock dwarfs all that came before. It’s safe now to say that the old normal will likely never return. This wasn’t caused by just greed; this was a fundamentally flawed system that turned out to be incredibly fragile.

Where will it end and what will emerge when the crisis finally lifts? I believe we will have a much simpler system that will necessarily be a much smaller part of what society thinks about. Banking will take back its role from Wall Street allowing it to focus on its core mission once again. Borrowers and lenders will become much closer. Lending will be thought of as lending not investing. And the middlemen who made credit decisions but took no credit risk will be gone. Without competition from Wall Street, banks will get much stronger.

So what role will Prosper and P2P lending play? Plenty. With Wall Street’s moral hazard lending out of the equation, both banks and ordinary people will reap more rewarding opportunities to lend.

Banks will become much more cautious – as the lessons of the 2008 crash will cause them and their regulators to put a premium on classic conservative underwriting. There will be more pressure on banks to do well, less on “doing good”. Bank lending will be restrictive and uninteresting. Deposit rates will also drop as banks find less competition from aggressive newcomers.

People will use P2P lending to bridge many of the gaps in the new lending and deposit landscape and to provide competitive pressure to newly powerful banks. People’s sense of “doing well by doing good” will become more important than ever to ensure that tomorrow’s entrepreneurs, students, and homeowners aren’t paying the price for today’s market calamity.