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Finance goes online and mobile

Five top VC’s in California were asked to pick the ten biggest tech trends over the next five years (Forbes article). #2 on their list was digital disintermediation of banks and #10 was that credit cards are the new app platform. I wrote in my Vision 2014 that finance services are finally going mobile. We see more evidence all the time that the internet and mobile are finally going to disrupt finance structures.

It is expensive to set up a bank, have enough money in the balance sheet and fulfill all regulatory requirements. Entry barriers to the banking business have been high. It has been the same for many other finance services like investment banking, broker dealer business, payment and international money transfer services. Nowadays it would be easy to offer many of these services over the internet. But regulation, capital requirements and conservative attitudes have retarded this development.

Now people have really started to ask, why does it take two days to transfer money from a bank account to another? Why do you have to pay $50 for international money transfer? Why do you need several middlemen in your investments who charge high commissions even if they often do quite routine work?

At the same time we have seen services like M-Pesa, that enables people to transfer money from one mobile to another one. PayPal (although it is not officially a bank) is a more important payment account to young people than any bank account. People have started to invest their money through crowdfunding and p2p lending services. Some companies already plan, how an automated platform can replace a fund and its expensive managers. Starbucks handles millions of mobile payments in their stores. And we have a lot of other innovate companies in the industry, like Fidor Bank in Germany offers a pure web bank, Bancbox combines net payments and banking, GBGroup offers identity intelligence to internet finance services and Crowd Valley offers the full platform and back office for crowdfunding or p2p finance services.

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