Fintech: Shaking up the financial industry

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CBS News 60 Minutes  | Lesley Stahl | May 1, 2016

CBS News Fintech feature 60 minutesThe following is a script from "Fintech" which aired on May 1, 2016. Lesley Stahl is the correspondent. Shachar Bar-On, producer.

It's being called the financial technology, or fintech, revolution. Lesley Stahl meets some of the fintechies challenging the establishment, seeking to reinvent nearly every aspect of modern banking

One sector of our economy after the next is being disrupted by new apps and websites, like bookstores, travel agents, taxis, hotels. Tonight, we're going to explore whether the banking industry is next on the list. Thousands of startups are challenging many aspects of banking, the newcomers argue that this important sector is too set in its ways. It's being called the financial technology -- or fintech -- revolution. We looked at the birth of one fintech company founded by two young fintechies who started not unlike the founders of Facebook and Microsoft.

Lesley Stahl: Which one of you dropped out of Harvard?

John Collison: That was me.

Lesley Stahl: And which one of you dropped out of MIT?

John Collison: By elimination--

Patrick Collison: Right, I was the other one.

Brothers Patrick and John Collison quit college because they had an idea for modernizing the financial industry they thought needed a shaking up.

Patrick Collison: In a world where people can send a Facebook message or sort of upload an Instagram photo and have it available to anyone anywhere in the world [snaps] like that, I think the fact that that doesn't work for money is something that seems kind of increasingly, honestly, unacceptable to people. And so, I think the question for banks is just-- can they get there first in providing these services? Or will it be somebody new?

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They want to be the somebody new. John, 25, and Patrick, 27, first noticed the problem when they were in high school in Dromineer, a dot of a town in Ireland.

Lesley Stahl: And you were coders?

John Collison: Yeah, we had both learned to program growing up, and, we had been building iPhone apps, we had been building web services.

But when they wanted to charge people to buy the apps they hit an unexpected snag: they had to go to the bank and file paperwork just to be able to collect the money.

Patrick Collison: Like really sort of kind of like getting a mortgage. You'd have to, like, convince them that you were worth supporting--

John Collison: And like a mortgage, it would have to be approved.

Patrick Collison: Right, exactly. And it would take sort of weeks for this approval process to happen. And it just seemed sort of like this crazy mismatch.

So they decided to do something about it. They created software that allows businesses to cut through all that bureaucracy and instantly accept payments online from countries across the globe. We visited their startup, Stripe, in the Mission District, the heart of San Francisco's tech scene, where Patrick showed me how fast a business could set up a money-collection system using Stripe.

Pretend I left 60 Minutes to create an online business.

Patrick Collison: What do you want to sell?

Lesley Stahl: I think I'm gonna sell... dogfood. Homemade dogfood.

In five minutes, after a few clicks and a cut and paste of their code, he said my company would be ready to receive payment for homemade dog food online, right then and there.

"Many of the innovative services in financial technology that have come along in the past 10 years are not coming from banks."

Patrick Collison: It doesn't need to take any longer. This is how it should work.

Lesley Stahl: And this is what would take weeks and weeks and weeks and forms and forms and verification and--

Patrick Collison: And going to the bank branch and waiting for paperwork to be mailed back to you and all this stuff.

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They developed software for "buy" buttons, letting companies accept payments online fast and in new ways. Stripe charges sellers a small percentage for every transaction.

Lesley Stahl: Does the buyer pay anything?

Patrick Collison: The buyer pays nothing.

Lesley Stahl: Nothing?

Patrick Collison: Correct.

Their goal is to make money as easy to send as email - for everyone, anywhere, on any device.

Patrick Collison: We want to free businesses from just selling via credit cards, you know, to people who hold bank accounts, and instead, enable people to purchase online no matter what it is that they use, bank account or no.

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