Date: March 19th, 2018 2:37 PM
Author: Territorial exhilarant idea he suggested
Just tossing this out since once in a while smart people come here.
why hasn’t technology totally upended modern financial intermediation (banking, insurance, investment management, capital markets - these are all various kinds of maturity transformation)? The financial sector enjoys gigantic economic rents based on a few advantages: access to information (to make better informed decisions about risk and capital allocation), distribution (bank branches everywhere), scale (cross sell different financial services) and, maybe most importantly, legal barriers to entry. Save for the last factor though, this market is MADE to be annihilated by stuff like machine learning, big data, cloud, ect. Banks have prehistoric back office functions and inefficient processes - I’m confident new players could provide better services at lower cost. Easy to imagine new tech making better credit decisions, better insurance decisions and better liability management decisions at waaaay lower fixed costs than modern banks and insurance companies
So why hasn’t his happened yet? Is it more likely incumbents just buy up threatening new startups or that the entire industry/regulatory structure collapses under the weight of new competition? Banks are politically unpopular but are super important to the modern system of money creation - they’re still the plumbing for the global economy. Killing their profitability could arguably hirt their resiliency and shift risks onto society writ large. Is there a point where politicians step in to protect modern incumbents then?
I have a couple VC/Corp dev interviews this week and this is relevant thanks
(http://www.autoadmit.com/thread.php?thread_id=3922927&forum_id=2#35638438)