A few weeks ago, 60 minutes discussed how one sector of our economy after another is being disrupted by new apps and technology. We have seen the change in how we do almost everything, like booking travel, purchasing books, and using taxi’s. Is the Banking Industry the next change?
Thousands of startups are challenging the many aspects of banking. Now this is being referred to as Financial Technology or The Fintech revolution. However, many say that banks are too set in their ways.
Stripe, which has investment money from Paypal, is founded by two brothers age 25 and 27. Stripe is one of the many startups that allow companies to instantly accept payments online - a process that only takes five minute to set up and allows you to accept payments for goods and services for your business. Stripe charges the seller a small fee and the buyer pays nothing. Their idea is that the buyer doesn’t have to write a check, mail the check, and then have the seller take it to the bank to deposit the check. Even recent technology allows the seller to scan and or take a picture of the check to deposit the check, but Stripe wants the process to be even quicker.
Stripe has developed software for the “buy” button which is integrated into the seller’s website. This allows buyers to buy quickly online with their debit card, credit card, or electronic check. They are working on the technology that will allow a buyer to purchase without a bank account.
The goal is for consumers to be able to send money as easy as sending an e-mail from any device. Twenty-five percent of Americans have used Stripe already on Facebook, Twitter, large department stores, and Apple pay.
Stripe is just one of the many startups that are challenging the way we bank. Paypal, Fundbox, Personal Capital, Active Hours, Simple, Ripple, Square, and Venmo are just a few of the thousands of startups that are helping to make banking faster, cheaper, and mobile.
Some of these technologies allow a customer that is looking for a loan to make a loan request similar to the way we request a car on Uber.
So what is next for banking? Do the Banks fear these startups of Fintech? Will banks eventually just hold our money for us and will all these startups determine a way to unbundle the banking system as we know it today?
Millennials are now in their mid 30’s and are the creators of many of the startups. Will they force banks to change the way they do business? Many millennials prefer to go to the dentist vs going to a teller at a bank; millennials don’t trust banks. The financial crisis is fresh on their minds. They have seen their parents lose their home and how student loans can crush their earnings.
$20 billion has been dumped into over 12,000 Fintech company startups in the last year and a half. How does this technology effect the hundreds of thousands of jobs in the banking field?
Do consumers trust the startups enough with their money? Some feel that these startups are not regulated enough to handle large amounts of money being transferred. They also don’t trust the online security of these startups.
How are these startups going to change the commercial real estate environment? We have already started to see online payments for rent, but when will this become the only way rent can be paid? When will we use an app to find a loan for a property or to hold deposits?