Why Silicon Valley Will Eat Wall Street’s Lunch

Category / Venture Capital Published on

Wall Street, the world’s financial capital, steeped in decades of history, has long been the draw of top graduates from America’s finest universities. The allure of steely buildings, sharp suits, and neatly folded copies of the New York Times has inspired the cream of the crop to enter the corporate fray and work towards that house in the Hamptons.

 

 

That was so 2005.

 

Today’s brightest financial minds are increasingly heading west to compete for jobs at companies like Google, Stripe, Lending Club, and a whole host of Bitcoin, blockchain, and other fintech (financial technology) companies that many say are directly competing with Wall Street. The uniform has changed from pinstripes to hoodies, and the offices are open work spaces, not cold offices in high rises.

 

But behind the facade is an even more substantial shift, one from bureaucracy to independence; from stodgy habits to crazed innovation. Today’s millenials see more than a hip work environment in Silicon Valley, they see the opportunity to change the world. And many of them think Wall Street is the first thing that needs to be changed.

 

The financial technology coming out of Silicon Valley empowers users to totally control their own finances, expedite the transfer of funds, and invest in a range of endeavors that are too disruptive for Wall Street’s pallet. In short, the world’s financial rulebook is being rewritten, and consumers are buying.

 

This has not gone unnoticed in New York. In a letter to shareholders, JPMorgan Chase CEO Jamie Dimon profoundly stated that, “Silicon Valley is coming.” This statement explains moves made in the last year by dozens of the world’s leading banks to try to catch up to many of the groundbreaking initiatives that have been pioneered by tech companies.

 

Just last month a startup called R3 announced that 13 new banks had joined its partnership to explore how blockchain technology can be utilized by traditional banks. Among the list of new members were names like HSBC, Bank of America, Citi, and Morgan Stanley. These join other financial heavyweights that were already members, including JPMorgan Chase, Barclays, and Goldman Sachs.

 

The question that will be answered in the coming years is: which center of power will emerge as the leader? Wall Street has the war chest; Silicon Valley has the ideas.

 

There are a lot of compelling reasons to believe that Silicon Valley may emerge as the capital of fintech, and ultimately preside over a sizable share of the world’s financial power. It is not enough to have the ideas; it takes a commitment to risk-taking, innovation, and disruption to grow these new technologies to their potential. To date, Wall Street has shown little genuine interest in forging those paths.

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