Silicon Valley Takes On Wall Street

Kevin Roose reports that “financial start-ups—known collectively as ‘fintech’—are spreading like kudzu, each with a different idea about how to usurp the giants of Wall Street by offering better services, lower fees, or both”:

Part of the reason the tech world is interested in finance is the sheer amount of money involved—financial services is a $1.2 trillion industry, and U.S.-based fintech start-ups raised an estimated $1.3 billion last quarter alone. But banking is also a prime candidate for disruption because, like much of the old-line corporate world, it tends to run on bloated, creaky technology. Even something as simple as applying for a loan can take weeks or months, thanks to the sheer number of human hands such transactions pass through. And, since each intermediary wants a cut, fees are everywhere. Undercutting big banks and speeding up processes might not be as sexy as, say, creating the next Snapchat, but it’s low-hanging fruit for techies who want a way in to a lucrative market. After all, today’s megabanks are really just bundles of particular, loosely related services cobbled together by years of acquisitions and market ­consolidation. If those bundles can be broken apart, the start-up world’s revolution looks a lot more plausible.