From the way Silicon Valley talks about banking, you might well conclude that the industry was ripe for oblivion. The T-shirt-wearing whizz-kids and their backers reckon that newcomers will do to JPMorgan Chase, hsbc and the rest what e-mail has done to post offices and Amazon to bookshops. So far bankers have simply failed to notice that their sprawling firms will become tomorrow's low-margin utilities. Finance, all bits and bytes, is at heart a tech problem, the Valley believes, and will be solved by tech companies, not the lumbering banking gerontocrats. This is not just intemperate youth speaking. Strikingly, many more entrepreneurs and investors now believe that it is possible to take on the banks. In San Francisco, London, New York and elsewhere, venture capital is pouring into financial technology, or "fintech", making it arguably the hottest spot in a bubbly funding environment for startups. Last year firms in this sector attracted $12 billion of investment, up from $4 billion the year before, according to cb Insights, a research firm. A handful of fintech insurgents have already graduated from startups to listed companies, achieving billion-dollar valuations. Plenty of others seem to be heading the same way.
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