BANKS weren’t much loved before 2007, and the bailing-out of a bunch of them in the financial crisis hardly helped endear them to the public. A slew of startups in the “fintech” space—short for “financial technology”—now reckon they can do better. Bright young things based in San Francisco, New York, London and Stockholm are raising billions of dollars in venture capital to “disrupt” financial services. With much brashness, these t-shirt-wearing whizz-kids are confident they will do to banks what digital photography did to Kodak and transistors to vacuum-tube makers. Will fintech succeed in killing off today’s financial services giants?Fintech is certainly upending many different niches in finance. Punters wanting to borrow money can now eschew their bank (or credit card) and instead tap “peer-to-peer” lending platforms that match borrowers and savers, such as Lending Club or RateSetter. It is now much cheaper for a person or business to transfer money internationally through TransferWise than through a bank branch. Square, Apple Pay or Braintree process payments, for example debiting your bank account automatically when you finish an Uber journey. A slew of “robo-advisors” such as Betterment or Nutmeg even help you invest your savings. And so on. At least 4,000 fintech startups are active; over a dozen of them are valued at over $1 billion.
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