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Fintech disruption: how startups are exploiting banks’ bureaucracy

Peter Stojanovic

In most markets, technology has facilitated innovation, but fintech startups are instead bypassing the entrenched bureaucracy of large banks and lenders to lead the sector. 

“Bureaucracy is just another word for saying things are slow.”

Paul Aitken, CEO and Founder of Borro, is replying to a question about his thoughts on fintech bureaucracy, or lack thereof in this case, which has enabled startups to scale quickly and threaten corporates.

Large, established banks benefit from an economy of scale both in the US and in Europe but the daily support of their operations requires huge and an often inefficient ICT infrastructure.

This vast network can be updated of course, but usually only in patches, falling short of the innovative acceleration that nimble fintech startups can offer clients and customers.

On such startup is Aitken’s Borro, an online platform for luxury asset-backed lending, delivering liquidity to clients quickly and easily.

“One of the reasons why the broader fintech landscape has real acceleration is because traditional methods of, say, lending access is too slow and then may lead to a ‘no’ anyway.”

Fintech bureaucracy, at it’s reduced rate, means an improved, more efficient service which can make all the difference to new customers.

This is no accident, of course.

“The speed of the service in the alternative lending and fintech landscape is far more efficient; they have been architected, in the last 5-6 years, to be more efficient…than the the big banks.”

Established banks are the competitors which fintech companies are disrupting; however an interesting situation arose when Metro Bank was founded in 2010 – the first to be created in the UK banking scene in 150 years.

Metro Bank was conceived in 2010 by a US financier, Vernon Hill, as a result of the financial crises in 2008.

It provided new, modern branches, seven day opening times, and could open a customer account within 15 minutes – Metro Bank even provided doggy water bowls – all in order to distance itself from traditional banks and use that leverage to gain more traction.

Essentially, the common denominator of acceleration and disruption in this sector is a reduced level of fintech bureaucracy.

“…they’ve thought about the problems that exist in the archaic traditional banking organizations and the fintech startups are exploiting it to provide a faster and more efficient access to liquidity.”