3 Silicon Valley Trends That Will Reshape the Financial Services Industry —Forbes

Increased Transparency, More Automation, and More Access to Capital  

Rod Ebrahimi, a columnist for the Entrepreneurs section of Forbes, writes that “Thousands of miles away from Wall Street, some David-sized companies in Silicon Valley are cultivating new trends that will change people’s relationship with money.”

Many areas of today’s financial services, asserts Ebrahimi, are ripe for significant change: too many financial companies are slow and disconnected from their customers despite (or perhaps because of) the fact that the financial services industry is without question among the most lucrative in the world.  

The emerging trends Mr. Ebrahimi predicts he asserts will have a broad impact on the financial services industry at large. For the moment, these trends represent competitive advantages that allow smaller, entrepreneurial financial technology companies to succeed alongside financial services giants. They are:

1. Increased Transparency
Upstart financial technology companies in Silicon Valley are making a commitment to transparency as they attempt to build long-lasting relationships with customers. Such companies are improving how they communicate with customers and clients across the board; the key is in the way they describe their services and prices. Tricky financial products with confusing pricing options lead to short-term gains for companies, but such gains are not sustainable in a competitive environment where everyone is offering similar products and customer loyalty makes the difference. . . . 

2. More Automation
Financial services companies are finally applying technology in order to automate personal finance. For a majority of people, financial decisions are intimidating and human instinct often works against “doing the right thing.” Our brains are wired to see short-term gains (a nice restaurant meal) more favorably than long-term gains (a robust retirement or investment account). Fortunately, technology can help automate common financial goals like investing or paying off debt to overcome the short-term bias we all face. . . . 

3. Improved Access to Capital
Today, accessing credit is a challenge for both individuals and businesses. Traditional ways of borrowing money are expensive for both lenders and borrowers. For large lenders, regulations are challenging and servicing the unique needs of different types of borrowers is difficult. This is causing interest rates to increase and creating unnecessary hurdles for borrowers. This is particularly true for small businesses that have unique needs that traditional banks don’t understand (like inventory or irregular receivables). . . . 

Read the full piece for lots more information about the origin of these trends, the way they’re currently growing and manifesting, and the likely effects they’ll bring to the broader financial world. 

Silicon Valley Innovation Will Change the Financial World