Finance’s frustrating sclerosis

Wired.com

Wall Street isn’t ready for the future, said Zachary Karabell. There are “looming challenges” on the horizon that will upend the financial industry, and Wall Street luminaries have mostly responded with shrugs and dismissals. Take the digital currency bitcoin, the price of which has increased more than 750 percent in the past year. That surge has led JP Morgan Chase CEO Jamie Dimon to label the currency a “fraud”; global investment bank UBS recently dismissed the bitcoin “bubble” as a passing fad, adding that fans were deluded because “the world never changes that much.” “Excuse me? The world changes all the time, dramatically.” Hardly anyone had smartphones a decade ago. Just because bitcoin

might be in the midst of a bubble doesn’t mean it is a mirage. It still has the potential to “augment and replace traditional currencies” in unexpected ways in the very near future. Then there is China, where technology firms, not banks, are “creating a sui generis financial system.” Alibaba’s Ant Financial “dwarfs the capabilities of PayPal,” offering instant mobile payments, loans, credit checks, and peer-to-peer payments, and it has dozens of established competitors. Wall Street titans simply don’t seem prepared for this technology-driven shift. They would like to pretend that change always happens slowly, instead of “unexpectedly, dramatically, sweeping away what seemed to be stable and certain with breathtaking speed.”