
Thoughts on hacking finance - AaronChua
http://ac-idealog.blogspot.com/2009/03/thoughts-on-hacking-finance.html
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HSO
I too thought there must be opportunities in "disrupting" finance. Then I
realized people "want" to be taken advantage of. Of course, not literally. But
in a weird sense, people do not want to take responsibility for their
finances. Instead they prefer to have someone to blame whom they can replace
when things go bad. It seems easier on their ego to say "I trusted the wrong
guy" than to say "I was wrong". Of course, that gets exploited by the snakes.
This basic mechanism (abrogate intellectual responsibility and substitute
(blind?) trust for -- questionable and contradictory -- domain knowledge(s))
is very robust over cycles and will make it very, very hard if not impossible
to disrupt the financial industry. Another factor is that for most people, at
least in Europe and Asia, money is not a polite subject to obsess about.
Instead, it would be easier for people to, again, just have a person who makes
them feel good and trust things are in "good hands". Again, in a weird sense,
they don't actually want to know all that much detail about what's happening
with their money. Easier to say, I gave it to this guy at such-and-such
brandname institution and how can that be wrong. Maybe I'm just too stupid to
see a way around this. The fact is, though, that all these attempts to give
investors/customers more power seem to go nowhere or remain insignificant.
There is a reason for that and I think it's not an issue of making it easier.
It's a question of do they really want what they say they want?

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olefoo
Yes, you've totally got it nailed.

The best solutions that I can come up with off the top of my head are better
tools for watching out for ones financial health.

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antonber
I like the ideas, but terribly written.

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blurry
Come on, the ideas are as lazy as the writing.

Consider this gem:

 _We need better ways to provide financing to those who need it: students, low
income groups, creatives, people with poor credits. There are lots of
opportunities to provide low cost alternatives to what traditional banks are
failing to offer._

So the idea is to charge high-risk borrowers low-risk fees? Didn't we all
_just_ go through this?

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AaronChua
I mean low cost in terms of operation costs, not in terms of cheap loans.

Current bank structures are too cost heavy to provide light weight services to
these under served markets.

Some of the embedded links show more concrete examples of such models.

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syntactic
One of the sites he mentioned in there, covestor, seems pretty interesting in
how it links to an investor's actual trading account to track his record. To
me, that makes a lot more sense than following a financial adviser's advice to
buy something they don't even own.

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AaronChua
Thanks for reading!

Here is the post from the perspective of the VC that invested in Covestor. It
highlights the opportunities in disrupting the asset management industry.

<http://www.unionsquareventures.com/2008/04/covestor.html>

