The venture capitalists who have invested billions of dollars in this wave of new financial technology — think Venmo and Bitcoin — have been left waiting for a breakout star
that actually looks like a threat to even a part of the big banks’ business.
Start-ups focused on improving payments have had more success — the most valuable recent American
technology start-up is Stripe, which helps new companies accept online payments.
Some start-ups looked at becoming banks, so they could offer deposit insurance — among other things — but they generally found
that getting a bank charter required more time and money than is available to even the most successful start-ups.
Much of this change, however, is now expected to come from the banks themselves as they absorb new ideas from the technology world
and shrink their own operations, without necessarily losing significant numbers of customers to start-ups.
But Stripe and other payment start-ups like Square are all built on top of the existing credit card
and banking infrastructure and have not posed any type of fundamental threat or challenge to the existing giants.
Lending Club, which makes personal loans, and OnDeck, which focuses on small business loans, initially grew swiftly and went public,
but both companies have run up against the limits of how fast a lending business can grow without being a bank.
China has four of the five most valuable financial technology start-ups in the world,
according to CB Insights, with Ant Financial leading the way at $60 billion.