Fintech: Silicon Valley Takes on Wall Street

The April 21, 2015 Vlab meeting held at the Stanford Graduate School of Business was on Fintech: Silicon Valley Takes on Wall Street. #vlabFintech
  • Financial institutions are becoming more efficient. Since 2010, there have been a large number of financial technology startups. There are two driving forces. First, 65% of millenniums are not happy with current financial products—they dislike the fees and credit evaluations. Second, there is a move towards using mobile devices.
  • Nick Shalek, Partner at Ribbit Capital. Ribbit is a venture capital firm whose mission is to change the world of finance. People only buy seven cars in their lifetime. When you go shopping for financial products, it is like everyone has a remedy for hair loss and is saying the same things; making it difficult to make an informed decision.
  • Baiju Prafulkumar Bhatt, co-founder of Robinhood. We were started in 2012 and currently have 30 people in our firm. Robinhood provides free stock trading and has no minimum account size. Stock trading products from other firms are very complex and intimidating. We are a mobile first company. We have 1 million people on our waiting list. Less than 10% of our customers are over 40 years old. We make our money from interest on margin accounts and uninvested customer cash balances. We believe in allowing people to learn by doing.
  • It was observed by Jillian Manus that financial products are like fire, they can either help cook your food or burn it. For a novice investor, the key question is how do you make sure the rocket is pointed in the right direction? It is easy to lose your shirt on margin investing.
  • Libor Michalek, CTO of Affirm. They let consumers make a purchase, then pay for it in easy, fixed monthly payments; enabling customers to gain financial literacy. They make credit decisions based on a combination of FICA and social signals using algorithmic learning within two minutes.
  • Jake Fuentes, CEO of Level Money (acquired by Capital One in January 2015). Level Money automatically updates spendable cash as you make purchases each day, providing a simple, real-time picture of how you’re doing in order to stay in the black. There are 85 million millenniums, it is a big demographic. There has been mass adoption of mobile devices that are always accessible. Yet it is difficult for these individuals to know how much money they have at a given instance. They launched their product 18 months ago in November 2013.
  • Jillian Manus, General Partner of Structure Capital. Jillian observed that she was the oldest person on stage, having a couple of grown children, her youngest son being in high school. She was the first investor in Uber. She observes that millenniums have an incredible mistrust of existing financial institutions. In many ways, the phone has become their magic wand.