Jeremy Zawodny has an amusing post about the hassles of doing an electronic wire transfer at his bank. Not only was he unable to schedule the transfer on a delay (so it would go out a week later), but when he tried to send it immediately, they told him there would be a 48-hour delay, for the paperwork to clear. The conclusion, he notes, is that it would be more efficient to stuff an envelope with $100 bills, and send it via FedEx to the recipient. The anecdote exposes how out of date, technologically, the financial system is. Sure, you can trade stocks, set up automatic bill pay, and check your balance online, but there hasn't been much change on the back end, just the user interface is different. Some of it may have to do with regulatory compliance, but finance as a whole isn't known for regular upheaval. The same banks, payment processors, and brokerages have been in power for nearly a century. Remember the hostility when Google tried to use an alternative IPO method? More recently, wire transfer giant Western Union shocked the world when they announced an end to the telegram -- the shock of course being that they hadn't ended this years earlier. The financial industry should take a warning from the entertainment industry about what happens when you fail to appreciate technological changes. Barriers to entry, which seem so high, have a way of disappearing quite rapidly.
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