Wednesday, June 1, 2016

Related imageIt is an era of the app revolution that we live in now. All sectors of our economy is being assaulted by apps. Hotels, bookstores, taxi’s almost anything you want or need there is an app for that. Why isn’t the banking industry on apps more these days too? Thousands of young people with their engineering degrees are challenging many aspects of the banking industry. They even have a name for it. FINTECH the Financial Technology Revolution. One new company is founded by two young brothers who started like the founder of Facebook and Microsoft. One is a Harvard dropout and the other is a MIT dropout. Patrick and John Collison quit college because they had an idea of how to modernize the banking industry. 
We live in an instant gratification world where we are used to even on our tiny phones being able to order up photos and documents instantly and also to be able to send this stuff instantly wherever we want to across the globe. We are spoiled and we also want to vote and bank instantly too. These two brothers age 25 and 27 want to be pioneers in the New banking industry that is devoid of marble buildings, long waiting periods and lengthy applications to get loans, make investments or deposit and withdraw funds. The boys noticed the problem while they were in high school.
FINTECH sites are already changing the way we bank. Their apps are hooking up borrowers with lenders directly. The process is called Unbundling  the Banks. Algorisms are replacing human advisors for financial planning. Apps like Venmo  let people click money to each other similar to texting. If you want to wire money across borders. A company called Transferwize is an app that can transfer money abroad and convert currencies without bank tellers or high exchange rates. Users just swap with each other. Do the big banks even realize this banking revolution that is going on? Why aren’t they at least competitive?
The computer has put travel agents out of business with apps like Air B & B. Taxi services are in an uproar over Uber. Will your bank be the next economic fossil? All these new companies are no problem with the newest generation of clickers on their mobile phones. This new generation has 70% of them who would rather get their teeth pulled at a dentist than go to a bank. They would rather put their social security number on the web than fil out forms at a bank. We have learned from the financial crisis that banks are more concerned with their welfare than the needs of their clients. In the last year and a half investors have poured 20 billion dollars into the brother’s app called Stripe.
The apps offer services to lower income families that banks would never approve loans for. 10 million American households don’t even have a bank account. Bank fees, exchange rates and commissions all add up at traditional banks that people just can’t afford to contribute to a loan any more. If an internet company charges you fees it will be much lower than a traditional bank’s fee. Why aren’t we all caressing our phones and clicking away then? An app eliminates jobs and rental fees on bank properties because they are gone. We just don’t need Betty at the Bank to click away at the computer for us when we can just do what we need ourselves. The shame is that she used to be a travel agent too.

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