The invitation for Friday’s “Break the Banks Hackathon” in New York City reads like a gathering of activist hackers.
“Inspired by the Occupy Wall Street movement, we want to address the real issues and help create game changing solutions to some of the industry’s biggest problems,” it states.
“How can we utilise modern technology to disrupt the current banking systems to benefit the customer?”
But the event organisers, which runs from Friday to Sunday, aren’t stragglers from the 2012 Occupy Wall Street movement.
It’s one of UK’s hottest unicorns: TransferWise, a fintech startup which helps customers transfer money abroad through low cost transfers.
Revolution, not evolution
“We want this to be a revolution in finance and not evolution,” Michael Goodbody, a spokesman for TransferWise, told Business Insider.
“This is the start of something very fundamental. It’s very inflammatory language to get people to think about it in a revolutionary way of improvement in an industry that is being disrupted and will continue being disrupted.”
At the hackathon, a healthy mixture of investment bankers, coders, entrepreneurs, and some Columbia University students are expected to pitch solutions to what they consider problems with the existing financial system. The event, which originally capped off at 100 attendees, now has 165 RSVPs.
Some of those problems could be ATM fees or the continued use of checkbooks — which are both “archaic” parts of the US banking system, according Joe Cross, the US general manager of TransferWise.
“We want to show that all these things they can do can be done correctly in a weekend. And show that fintech has solutions to some of New York’s biggest problems,” Anthony Catt, the managing director at Oxygen Startups, told Business Insider.
For TransferWise, valued at $1 billion, the event is not only a way to get ideas flowing, but also for the company, which has done well in the UK, to make its presence felt in the US.
It will help the company tap into US early adopters, mix with US clients and set up a base, said Cross.
“The hackathon is a great way for your customers to bond with the brand — people really love the idea of being a part of something that is changing banking,” he added.
Strange Bedfellows: David and Goliath
Fintech funding has been on a tear. Investments in the fintech space have tripled from $4.05 billion in 2013 to $12.21 billion in 2014. Online lending startup Sofi raised $1 billion in September, the biggest financing round by any company in fintech.
Many of these companies have positioned themselves as the antithesis of the big banks.
“It’s like a David and Goliath set up, and the big banks are Goliath — they been there for centuries, and then there’s the David, smarter, nimbler with better tech,” Cross said.
Still, most fintech companies still have a relationship with the big banks, according to Cross. JPMorgan recently announced a relationship with OnDeck Capital, for example.
“Most fintech companies still have relationships with traditional banks to hold their funds and transmit money …. The one thing banks do quite well is hold money,” He said.
Goldman Sachs recently set up a hackathon in conjunction with Kensho in June, the New York Times reported. Barclays is also running a fintech lab known as the Barclays Fintech Accelerator, a three month program focused on developing disruptive financial technology.
“Break the Banks,” TransferWise’s event, is also sponsored by Yodlee Interactive, Digital Ocean, and IEX Group. It is in part, organised by Oxygen Startups, a startup accelerator.
A cash prize along with dinner with the founders of TransferWise, Kristo Käärmann and Taavet Hinrikus, as well as a board member from IA Ventures, will be awarded to the winning team, in the hopes of making their startup into a business.
“We’ll see what comes out of it,” TransferWise’s Goodbody said when asked if the company would be interested in commercialising any of the ideas from the hackathon. “If something interesting comes out, we’d be interested in going from there.”
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