Ever since the tech boom, Silicon Valley has displaced a lot of industries with rapid growth of technology. After the financial crisis of 2008, many looked to Silicon Valley to take over Wall Street with all of the fintech start ups sprouting left and right. Wall Street proved to be a different animal to tackle because of the numerous restriction and lobbying efforts in place to protect the ancient financial service industry. The difficulty of denting the influence and power of the big banks was one of the main issues small fintech start ups have to overcome. There still has not been a single company to even come close to replacing even a small function of the big banks’ functions. Venmo and Bitcoin were seen to be the most promising companies but even they don’t even come close to reducing the influence of major financial institutions. Most new fintech startups aren’t really trying to challenge major financial institutions but instead are “add-ons” that build new services around the existing infrastructure like credit cards.
In my opinion, it will be a long while before fintech startups have the influence to upend Wall Street. There is too much influence and power within Wall Street and too much of our financial infrastructure has been built on services that they created.
Reference: http://www.seattletimes.com/business/silicon-valley-tried-to-upend-wall-street-now-it-works-with-the-financial-industry/