Fintech’s Race To Low-Cost Offerings

The financial technology and financial services sectors are incredibly interesting.

My personal fascination with both kicked off in third grade when I took part in a stock market club at my elementary school. I torched my Monopoly money starting capital but was instantly hooked on using computers to tinker with money.

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I don’t remember if I was at TechCrunch 40 when Mint launched, but I was at TechCrunch 50 when it announced its $140 million exit to Intuit. I loved Mint from the first moment I saw it. There was something brilliant about taking something my parents handled in analog fashion and building a responsive, online tool that was leaps and bounds better.

(Money and tech have always made sense as a pair. That we’d eventually see an even purer union of the two in the crypto-boom is therefore unsurprising.)

Regardless, a couple of recent developments in the fintech sector are worth our attention:

• “JP Morgan to unveil new investing app with an eye-catching, disruptive price: Free.” The mega-bank will give out free trades and tools to retail investors. In the wake of Robinhood’s free trading service and quick growth, the world of retail stock and ETF trades is getting rocked. Who knows if Robinhood will survive. Either way, consumers are certainly doing well from the company going after fees that felt more like relics of the paper-and-pen era than properly priced digital transactions.
• “Titan launches its mobile ‘not a hedge fund.’” Titan accepts investments of as little as $1,000 and takes fees of just 1 percent with no carry. Per TechCrunch, the startup “picks the top 20 stocks based on data mined from the most prestigious hedge funds,” taking the cost of making choices right out. This sort of investment-drafting isn’t new (check out the Buffett acolytes for more, etc.), but Titan’s model is neat. Hedge funds may be trash, but if you want to be trash, too, now you can without having your parents’ money to get you started.

In both cases: lower fees, smaller margins. Here is technology eating inefficiency. That’s pretty nice.

Startups can impact big markets by changing consumer expectations. And the more hidebound the industry being changed, the harder it is to imagine it changing until it’s too late.