Larry Scheinfeld: Why Fintech Matters to Millennials

image of fintech and millenials

Large scale Wall Street incumbents are suffering losses at the hands of younger, faster and more efficient startups who have done away with sluggish, unwieldy, anachronistic methods. Sleek systems like NetSuite (a cloud-based CRM, ERP, accounting and ecommerce software), Symmetric (a hedge fund tracker) and Robinhood (a brokerage app) are improving strategic, financial and operational decision-making efficiency by using cloud-based real-time data, analytics, spreadsheets and/or plug and play components.

The rise of fintech in global finance is a coup worth billions. Since 2008, investments in these burgeoning startups have increased to $3 billion. The aforementioned Robinhood App, for one, raised $16 million. Much of the move from traditional, institutional finance may be millennials’ love of autonomy – and their inherent misgivings about current systems. 27-year old Stanford grad Vlad Tenev, co-creator of Robinhood, says traditional finance is for “old people”.  Unfortunately for big banks, Tenev may have a point: early-stage companies are ruling in VC deals. According to a recent Accenture report, two-fifths of all fintech venture capital deals done in 2014 were first round investments in startups. The Executive Summary of the report also shakes a finger at traditional banking institutions:

“Digital disruption has the potential to shrink the role and relevance of today’s banks […] To make the impact positive, banks are acknowledging that they need to shake themselves out of institutional complacency and recognize that merely navigating waves of regulation and waiting for interest rates to rise won’t protect them from obsolescence.”

Luckily (or unluckily for startups), progressive C-level senior management in the industry have taken notice and are leaving behind corporate complacency. By collaborating with a large pool of new, hungry talent; they are creating internal “fintech” shops to win over the new wave of savvy young millennials. It is very possible startups will ultimately be devoured by big finance entities – when Wall Street charges less or no commission, simplifies outdated systems and gets on the neo-fintech wave – but until then, the word on the (Wall) street is that fintech isn’t in the process of disrupting; it has already disrupted financial tradition.