Dinosaurs and Banks


[Editor’s note: This is a guest post from Caribou Honig. Caribou is one of the founding partners of QED Investors, a FinTech focused Venture Capital firm, that has made several investments in the marketplace lending space.]

American Banker recently published an article on the prospects of Banks vs. FinTech arguing the scale and long history of Banks would lead them to prevail. As a former bank executive and now partner at a FinTech venture capital firm, I see the battle fought every day and read the article with keen interest. I believe it overstates the importance of scale and experience, and it reminds me of a similar argument for your consideration:

Dinosaurs vs. Mammals?  No contest, Dinosaurs Win.

The post-meteor rise of mammals in recent years is nothing short of remarkable.  The media headlines charting mammalian progress in just the past year might even have you think that the end of the age of dinosaurs is here.  But that assessment is dead wrong.

What is often overlooked is how much mammal’s advancement relies on the established dinosaur ecosystem.  Yes, innovations such as fur and live-bearing of young are driving much of vertebrate evolution.  But dinosaurs are — and will remain — squarely at the apex of the animal kingdom for some time.

Here are four reasons why mammals still face big challenges in competing with dinosaurs.

Dinosaurs have been around (and so have the flora they eat)

Dinosaurs have been the dominant family (among those with backbones) for 200 million years and will continue to be so well into the future.  They are far too ingrained within the ecosystem to be removed within any foreseeable time frame.  There’s a history of symbiosis between dinosaurs and plants that mammals are still eons away from rivaling.

Dinosaurs have more biomass.

Weasels, one of the leading mammal success stories, only weigh three pounds.  That’s not bad, but compare it with the thirty ton Alamosaurus, the largest North American sauropod.  Dinosaurs are massive.  And being so large makes them resilient in a changing climate.  On the other hand, smaller vertebrates are more susceptible to being blown about in rainstorms and volatile weather.

Dinosaurs internal organs are huge.

Dinosaurs not only have enormous size, they maintain massive internal organs to support this mass.  Yes, mammals have made strides in improving efficiency with the four-chamber heart, but more traditional vertebrates have hearts larger than a weasel’s entire body!

Dinosaurs have big brains – really big brains.

Although several mammal species are evolving a sophisticated cerebral cortex, dinosaurs still have the upper hand in the brain department.   After years of evolution, dinosaurs have larger “lizard brains” than mammals.  In fact, some of the largest dinosaurs possess a secondary brain near their pelvis, and pachycephalosaur has evolved a 10 cm thick skull.  Dinosaur brains are a key advantage in survival of the fittest.

Unlike dinosaurs, Banks aren’t doomed to extinction. Many banks in the U.S. and worldwide are adapting, engaging, and competing head-on with FinTech innovators. But just as it’s a mistake to assume speed and leading-edge technology alone will assure success of FinTech start-ups, incumbent banks shouldn’t rely on size and scale to retain their place on top of the food chain.