Fintech Firms Are Taking On the Big Banks, but Can They Win?

By April 6, 2016Bitcoin Business

Photo Doug Chayka Banking has long been viewed as one of the last traditional, old-school, stuck-in-the-past industries. When you think of banking, you might still think of wood-paneled walls and pinstripe suits.

That impression may increasingly be misguided.

If you spend more than 15 minutes with any senior executive of a large bank these days, it is almost impossible not to hear the phrase “fintech” uttered. It is usually spoken with a sense of optimism, but sometimes with a sense of dread.

“Fintech,” of course, is short for financial technology, a catchall for a near-revolution of new technologies aimed at upending parts of the financial world, including payments, wealth management, lending, insurance and currency.

The fintech phrase itself is actually not new — it dates to the late 1980s and early 1990s — though it has taken on a heightened sense of importance and urgency now that it has been embraced by Silicon Valley as the new new thing. An estimated $19 billion of investment poured into the fintech bucket last year, according to Citigroup, up from just $1.8 billion five years earlier.

“The real threat to banks is not from Washington or Brussels but from start-ups all over the country creating interesting fintech start-ups that are chipping away at key parts of their franchise,” said Steve Case, a founder of AOL and an entrepreneur with investments in several fintech businesses, who just wrote a book about the future, “The Third Wave.”

The promise of all these new technologies is to fundamentally disrupt the biggest players in finance. Companies like Stripe, a payments company, hope to become replacements for PayPal and others. Lending Club wants to make getting a loan cheaper and easier. Wealthfront wants to advise you and manage your money from your phone. And, of course, Bitcoin and its many derivatives wants to […]

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