{"id":29277,"date":"2012-04-24T11:02:26","date_gmt":"2012-04-24T15:02:26","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/04\/dwolla-threat-to-the-financial-services-industry\/"},"modified":"2012-04-24T11:02:26","modified_gmt":"2012-04-24T15:02:26","slug":"dwolla-threat-to-the-financial-services-industry","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/04\/24\/dwolla-threat-to-the-financial-services-industry\/","title":{"rendered":"Dwolla: Threat to the Financial Services Industry?"},"content":{"rendered":"

Article by Investment U<\/a> <\/p>\n

\"Dwolla:<\/p>\n

Dwolla may well be one of the biggest \u201cdisruptors\u201d on the financial services scene today.<\/p>\n<\/div>\n

Here is a bit of financial trivia. In the 116-year history of the Dow Jones Industrial Average, which component stock was the first (and only) to go into corporate liquidation?<\/p>\n

Does the name \u201cU.S. Leather\u201d ring a bell?<\/p>\n

In 1896, when the DJIA was put together, U.S. Leather carried a market cap of $2 billion (in today\u2019s dollars). From boots to bookbindings, belts and buggy whips – leather was as much a key ingredient of the fast-growing national economy as steel or coal. Manufacturers had no other choice if they needed a material that was tough, durable and flexible.<\/p>\n

All that changed in the twentieth century\u2019s first decade. Autos began to displace horses as means of transportation. The first rubber-soled shoes hit the market, and so did the first pneumatic rubber tires. Rayon, the first manmade fiber, went into mass production in 1905.<\/p>\n

U.S. Leather\u2019s monopoly position and profits disappeared. By 1920, the keepers of the DJIA booted the company out of the index.<\/p>\n

So here\u2019s what I\u2019m wondering\u2026 Is the protected, insular world of big banks about to go the same way as U.S. Leather?<\/p>\n

Here\u2019s what got me thinking about the analogy. One word: Dwolla<\/em>.<\/p>\n

Financial \u201cDisruptor\u201d<\/strong><\/h2>\n

Dwolla.com is a new, but fast growing payments processing company based in Des Moines, Iowa.<\/p>\n

If you (and a merchant) have both registered with Dwolla and downloaded the company\u2019s smartphone app, you can buy goods and services, just like any card-based transaction. And like a debit card, Dwolla is tied into your bank account. If you buy a cup of java at a coffeehouse, Dwolla debits your account, and credits the merchant\u2019s (at near instant response times). Simple enough.<\/p>\n

But that doesn\u2019t explain Dwolla\u2019s huge growth since it opened its doors a little over two years ago. Back then, it was processing a tiny $200,000 in transactions a month. A year later, that figure grew to $4 million, and now – $30 to $50 million a month.<\/p>\n

Here is why Dwolla may well be one of the biggest \u201cdisruptors\u201d on the financial scene today. To use Dwolla costs:<\/p>\n