Sarang Ahuja’s latest post:
Recently, Kevin Roose, writer for NY Mag, talked about his bank and how he was charged an overdraft fee. He wanted to find a disruptive bank and thought that Silicon Valley might be the right place to look. Why? Firstly, the tech world is interested in the finance sector because of the sheer amount of money that is involved within. Financial services account for $1.2 trillion and financial tech companies in the U.S. known as fintech actually raised $1.3 billion in the last quarter for start-ups.
There is another reason as well. Banks still operate a high amount on the old-line corporate structure that Roose mentions is bloated and creaky. Something as simple as applying for a loan takes an inordinate amount of time to get through the system simply to the process of passing through many different departments and many different hands. Also, intermediaries are requiring cuts everywhere, which means the customer is paying fees left and right to be a member of the bank and conduct everyday transactions.
The lucrative market is going to be too good to pass up for a lot of techies however because even though undercutting big banks will speed up the process it isn’t as sexy as some may say, according to Roose.
Roose also mentions that banks of the past are really just conglomerated and bundled together groups that provide a variety of services based on need and years of acquisitions with other market players and consolidations. Breaking up the bundles will actually help the fintech start-ups looking to get in on the market and it makes the idea of getting in on the action a lot more feasible for these groups.
The new wave of finance is taking place all over. From companies starting an app to check balances on gift cards to other start-ups attacking core functions of the bank, it appears that Silicon Valley will have influence somewhere in the financial sector, just how exactly will it look?
from Sarang Ahuja http://ift.tt/TgI9Ww