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Brex wants to replace startup bank accounts with Brex Cash
- pedrofranceschi 7y ago[Brex co-founder] We’re incredibly excited to announce Brex Cash! Since we started Brex, my co-founder Henrique and I had much bigger plans than only corporate credit cards. Business bank accounts are a pain for virtually every company for a long time, and for the last 18 months we embarked on a journey to build a banking experience that, coupled with the Brex credit card, is 10x better than anything out there. Alan Kay used to say that if you’re serious about software, you should make your own hardware. In fintech, I believe the equivalent analogy is: if you’re serious about financial services, you should build your own infrastructure. At Brex, we have a strong belief that great financial products innovate at the core, and not only at the UI layer. So instead of relying on existing banking systems to build Brex Cash, we took the approach of building our core systems from scratch, building directly on top of the payment rails (NACHA and FedWire). This level of autonomy with the technology stack enables us to do amazing things like instant onboarding, making funds available instantly, charging no fees on wires/ACH (given our more efficient cost structure), and deeply integrating with the Brex card. And at the UI layer, we packed all of this into a user experience that is minimal, polished and designed to save companies time and get them back to running their business. We also wanted to make business banking better in all aspects - not only on software. We noticed our customers raised millions of dollars and kept the money parked in their checking accounts, earning no interest. A 10x better experience meant offering the highest yield on their money and, to achieve that, Brex Cash became not only a complex technical challenge, but also a financial/regulatory one. The way most fintechs offer banking services without having to be regulated as banks is by “reselling” another bank’s products and bolting a UI on top of the bank’s checking/savings account. But because traditional banks separate checking and savings accounts, customers earn a lower yield on their money as a whole. Instead, we chose a different structure: customers put their cash into Brex Treasury LLC, a registered broker-dealer affiliate of Brex Inc., that invests the cash in low-risk securities, such as U.S. Treasuries. The reactions of our early Brex Cash customers have been overwhelmingly positive, and we believe we’re on the path to build the best bank account replacement, not only for startups but for any business in America. Personally, I’ve been dreaming about this product since I was 16 years old building my first company in Brazil, and I’m incredibly proud of the Brex team for their hard work to make this dream a reality :) We’d love to hear your feedback!
- fillskills 7y agoCan we use Brex bank as a bank for Stripe?
- ritikm 7y ago[PM on Brex Cash] Yes, you get an account and routing number with your Brex Cash account, which you can enter into on Stripe (like you would your bank account's account/routing number) to receive your Stripe payouts.
- fillskills 7y agoGood. Time to get rid of the rude expensive bank i got by default
- toomuchtodo 7y agoMaybe Stripe will start their own Cash account product?
- fillskills 7y agoJust signed up. Can I request to get bumped up in the chain?
- all_blue_chucks 7y agoOther than using Money Market accounts instead of FDIC-insured accounts, what specifically is better about banking with Brex? And for those factors that are quantitative, how MUCH better are they?
- ritikm 7y ago[PM on Brex Cash] Top five things: 1) 1.6% or more yield on your cash balance. (Savings accounts in the US offer 0.06-0.16% interest on average.) 2) Zero fees on ACH and wire transfers. (Average wire fee is $23.) 3) Get Brex reward points every time you do a transaction. (Haven't seen an account give reward points for each transaction but I could be wrong.) 4) One account for all your deposits. (Typically have two accounts -- checking and savings -- with checking typically earning less yield and savings accounts having a transfer limit of 6 transactions/month). 5) Easy-to-use online interface designed to give you back time to run your business. (Of course, very easy for me to say this so I'll let the customer feedback do the talking as we roll Brex Cash out). You can visit https://brex.com/cash https://brex.com/cash for more information.
- DVassallo 7y agoFYI, for Brex, the definition of "a startup" is a company with $500K cash in its checking account: https://twitter.com/dvassallo/status/1179520756905955328 https://twitter.com/dvassallo/status/1179520756905955328
- PopeDotNinja 7y agoBasically it means you have runway, whether you're funded or bootstrapping w/ lots o' savings.
- DVassallo 7y agoI have more than that as runway. I just don't want it to be in my LLC's checking account. Which is fine. Brex has no obligation to underwrite me. But I got an Amex and Chase business credit card in 15 minutes with cash back bonuses that match Brex's. Yes, I'm personally liable to the balance, but I'm not accumulating any anyway. I auto-pay the balance every month.
- maximente 7y agois that right? because FTA: > Now, any startup, regardless of funding, can create a Brex account to store cash, explains Dubugras, and all companies using Brex Cash will be immediately issued a Brex corporate credit card so is the article correct, or is the email correct? because to me "regardless of funding" reads "we don't care how much you have on hand" but that does not seem consistent with the gmail exchange.
- DVassallo 7y agoInteresting. My email was from 2.5 months ago, so maybe this changed recently.
- brtknr 7y agoPoor choice of name because Brexit
- imhoguy 7y agoMy first thought when seeing this was "they have a way to shield UK startup financials from Brexit".
- bryanrasmussen 7y agoI was thinking it means their company will never have a "just google it" slogan attributed to them "Hey, how should we setup our startup bank accounts?" "Just Brex-it!"
- slavik81 7y agoI would have said because of Bre-X, one of the largest frauds in Canadian history. In 1995, they reported finding gold in one of their mines. That turned them into a $5B company. In 1997, Bre-X collapsed when it was revealed that they had salted their geological samples with gold. https://en.wikipedia.org/wiki/Bre-X https://en.wikipedia.org/wiki/Bre-X That said, I remember the name, and they're obviously unrelated. Maybe that's mission accomplished.
- emptysongglass 7y agoI also don't understand why they picked a name like this when anyone who is anyone first thinks of Brexit. Not a good look.
- Angostura 7y agoI wouldn't want to work in the IT department
- captainbland 7y agoI've read it twice now as "brexit crash".
- sgt 7y agoIt's one of those cases when you can't succeed due to a poor name.
- ctdean 7y agoGood job Brex and Radius Bank! This is a great product and a great user experience.
- giacaglia 7y agoCongrats!! This looks great!
- dang 7y agoWe detached this comment from https://news.ycombinator.com/item?id=21141438 https://news.ycombinator.com/item?id=21141438 and marked it off-topic.
- JaimeThompson 7y agoWhat protections are in place to protect customers financial transaction information and will that information be sold, lent, or shared with any outside parties?
- cosn 7y ago> What protections are in place to protect customers financial transaction information and will that information be sold, lent, or shared with any outside parties? [I work at Brex] Data privacy is something we’re really passionate about. We’ve had strong stance internally since we launched the Brex card, and a few weeks ago we made that publicly available, in a very transparent way (https://brex.com/privacy https://brex.com/privacy). Tl;dr: we do not and will not sell any personal information. You can read more about it here: https://brex.com/blog/privacy-policy-update/ https://brex.com/blog/privacy-policy-update/
- otterley 7y ago> Tl;dr: we do not and will not sell any personal information. Ok, you won't sell it; but will you give it to third parties (even without payment) without the consent of the subject beyond the extent required by law? (BTW, this was the weasel-language used by Facebook. They didn't sell information to Cambridge Analytica, but they conveyed it to them anyway, where it was misused.)
- cosn 7y ago> Ok, you won't sell it; but will you give it to third parties (even without payment) without the consent of the subject beyond the extent required by law? [I work at Brex, and I’m not a lawyer :)] Yes, you’re right in that we work with a small number of 3rd party systems which go through a rigorous screening, much of it focused on how they store and secure data. These systems are either for internal monitoring (e.g., system logging), or for running the business (e.g., KYC).
- all_blue_chucks 7y ago
- nlh 7y agoSo this is cool, and I hate my current business bank (Bank of America). I've been waiting for someone to tackle the "banks suck" problem. But FTA: -- "It’s not a bank, but in practice, it can replace a bank"...Brex now has many similarities to a bank...Brex Cash is backed by the Securities Investor Protection Corporation (SIPC), a nonprofit agency overseen by the U.S. Securities and Exchange Commission that insures up to $500,000 and specializes in protecting customers of brokerage firms from the loss of cash and securities. -- Can you guys elaborate on this in non-marketing/PR speak? If it looks like a duck and walks like a duck... Yes - I understand that legally a "bank" is a very specific and highly-regulated thing, so what this sounds like to me is that it's hard to expensive to launch a bank, but if you launch something that's basically a bank without calling it a bank (but in partnership with a bank) you can get around the regulations. Do we want you to be getting around the regulations? Are those regulations in place to hurt or help us (the business owners)? I'm genuinely curious here -- I am seriously excited about a real, digital-first, intelligent, non-physical business bank. But I'm immediately concerned that you're trying to "move fast and break things" and frankly I don't really want that when it comes to my business checking account. Thoughts? EDIT: I'd missed Pedro's post when I wrote this. To quote: ...because traditional banks separate checking and savings accounts, customers earn a lower yield on their money as a whole. Instead, we chose a different structure: customers put their cash into Brex Treasury LLC, a registered broker-dealer affiliate of Brex Inc., that invests the cash in low-risk securities, such as U.S. Treasuries. This sounds..."clever". Do I want my corporate card to be clever? Totally! Be clever. Do your thing and put Amex into the ground. Do I want my bank to be clever? I'm not so sure...
- ritikm 7y ago[PM on Brex Cash here] Thanks for the response, all great questions. Answers below: > Can you guys elaborate on this in non-marketing/PR speak? If it looks like a duck and walks like a duck… Brex Cash functions like a checking account, but the structure behind it is different. Traditional banks separate checking and savings accounts, which means customers earn a lower yield on their money as a whole. To be able to offer yield in all of the funds, we use a different structure: customers put their cash into Brex Treasury LLC, a registered broker-dealer affiliate of Brex Inc., that invests the cash in U.S. Treasuries through a money market fund. This means that while we don’t offer FDIC insurance, funds are held in low-risk securities backed by the U.S. government. > Do we want you to be getting around the regulations? Are those regulations in place to hurt or help us (the business owners)? Brex Cash is regulated as a broker-dealer, by FINRA. This is a well known structure used by Fidelity and other large financial institutions to offer similar products offering higher yield cash accounts. > I’m genuinely curious here — I am seriously excited about a real, digital-first, intelligent, non-physical business bank. But I’m immediately concerned that you’re trying to “move fast and break things” and frankly I don’t really want that when it comes to my business checking account. Totally understand the concern, and this is top of mind for us as well. We’ve spent over a year building the right technical, regulatory, and financial foundation to make sure we can scale this product. This is a product that we have built to be resilient and not to move fast and break things -- when it comes to customer’s money, we simply don’t do that. We’ve been working with customers for months to make sure the product functions well. Lastly, we’re rolling it out slowly, starting with an early access program for existing customers. Our motto internally is: “The Brex Cash rollout should be boring” :).
- rahimnathwani 7y agoOn a related note, I just moved to the USA yesterday and am not sure where to open a bank account. I don't need anything fancy, but looking at Nerdwallet it seems the traditional banks each have different drawbacks (one or more of: monthly fees, high fees for ACH transfers to other people, fees for incoming wires, poor customer service etc.). I see that N26 now offers a US bank account, but it's via a partner bank I've never heard of. Where would you open your first US bank account in 2019?
- pkaye 7y agoAre a business or as an individual? As an individual, I always prefer a credit union which is like a not-for-profit bank. With a sufficient amount in your account, you shouldn't have to pay monthly fees. Credit unions tend to have lower fees than the big banks in general.
- rahimnathwani 7y agoIndividual. Any credit union to recommend for someone living in San Francisco?
- notyourday 7y agoCaution: As a foreigner you may have a problem joining a credit union unless you have a green card. I know a few of credit unions that have these kinds of restrictions. I say go to those that know how to deal with foreigners. (The last thing that you want is to have your account locked out because a small bank/credit union did not know what to do with you, opened an account and it was flagged down the line - maybe 6 months later). Those would be: 1) Big national banks 2) Big international banks such as HSBC 3) If you are by Chinatown, look for banks servicing Asian population After you open one account open a second account in a different bank. You do not want to keep all your eggs in one basket, especially as a non permanent resident. Dealing with an account lock out is especially annoying without a network in a country.
- rahimnathwani 7y ago
- notyourday 7y agoSo you... have invented a ZBA with an automatic sweep to a money market/bond fund? A treasury management of every single regional and above bank can do it on balances above $10k. They can probably do it for less but the transaction costs are a killer (and if you tell me that you don't have those transaction costs I'm going to look at you really funny) I mean the ultimate job of a CFO of a company with a pile of cash is to make sure that the pile of cash at the fed close is nearly the same (preferably exactly the same) at the fed open the next day, which is why treasury management is not popular below companies of a certain size with gigantic finance departments. One can make a respectable amount of money collecting customer's cash investing it for 10-30-90 days before redistributing it to some other customers a-la AirBnB but that requires people that otherwise would be working for Goldman to be on a payroll, and their total compensation makes all non-FAANG engineers cry. So if my startup has $800k split between four banks because I know about coverage limits, what are you doing that's better?
- ritikm 7y ago[PM on Brex Cash] It’s true that banks are able to offer money market fund sweeps, however, they are incentivized to hold funds as deposits (better for their bottom line), which often results in limitations on account activity, and checking account interest rates near 0%. We built Brex Cash to give startups their time back -- so customers can spend time building their businesses, instead of optimizing deposits and spending across multiple bank accounts. Within the Brex Cash account, our goal is to provide startups with a safe and liquid place for their funds, with benefits of yield that larger companies are offered.
- chiph 7y agoHow do you plan on making money?
- cosn 7y ago> How do you plan on making money? [I work at Brex] Brex earns fees, including distribution/referral fees (also known as 12b-1 fees) from money market mutual funds that are included in the Brex Cash sweep program.
- exabrial 7y ago> Brex tells us they’ve built the core banking infrastructure from scratch Unless they're getting a bank charter and issuing cards without visa/mastercard I don't see this as anything but more lipstick on a pig.
- deleted 7y ago[deleted]
- onion2k 7y agoIt sounds like they're an American version of Monzo. Monzo started out by issuing Mastercard credit cards with a cool app but have since been granted a proper banking license and are now a proper bank. Monzo also wrote their own software. In other words, Brex may not be a bank yet but don't wrote them off as smoke and mirrors either.
- exabrial 7y agoOk fair enough. I just want someone to break the stupid deathgrip Visa/Mastercard have. Things I want: * Require a password or OTP to withdrawl money from my bank account, or use my credit card/debit card Things credit card issuers want: * Reduce fraud Things that confuse me: * Why hasn't this option been offered to consumers
- toomuchtodo 7y agoIs offering Brex's financial infrastructure as a service similar to the Bancorp Bank's offering on the roadmap (similar to Stripe considering itself financial infra)? As Pedro mentions in his top comment, "we took the approach of building our core systems from scratch, building directly on top of the payment rails (NACHA and FedWire)"; it would seem to me that this would be a superior foundation than fintech startups could acquire through traditional white label providers (ie Bancorp).
- ritikm 7y ago[PM on Brex Cash] Great question -- not on the roadmap as we're laser focused on building a resilient and delightful Brex Cash product for our customers.
- toomuchtodo 7y agoThanks for taking the time to reply. I'd just like to note my interest in building a narrow bank type credit union for individuals on top of Brex if enough core functionality is exposed programatically. Might end up at Bancorp in the interim though.
- ritikm 7y agoGot it, good to know and will keep in mind for future planning. Thanks for the feedback here!
- deleted 7y ago[deleted]
- Osiris30 7y agoCBW Bank - founded by an-Ex google engineer and an ex-Wall Streeter has been doing this (created a bank from bottom Up - including purchasing an actual bank and creating the software) geared towards startups) since 2014. Don’t know how well they are doing now. But they wouldn’t have had the in-built In go-to-market strategy, or the prestige/visibility in the funding community, of a YC Alum. 1. 2016 - Why Fintech Startups Are Flocking to a 124-Year-Old Bank in Kansas https://fortune.com/2016/08/24/fintech-bank/ https://fortune.com/2016/08/24/fintech-bank/ 2. 2014 - Small Bank in Kansas Is a Financial Testing Ground https://dealbook.nytimes.com/2014/12/13/small-bank-in-kansas-is-a-financial-testing-ground/ https://dealbook.nytimes.com/2014/12/13/small-bank-in-kansas...
- smnrchrds 7y agoI wish this were available in Canada! I know it's never gonna happen, but one can wish.
- ganitarashid 7y agoBrex is starting to sound like WeWork
- styren 7y agoPlease elaborate
- thoughtstheseus 7y agoSeems like this is just a money market fund, any decent CFO can have this set up in less than a day.
- ganitarashid 7y agoAn old business model that is not a tech company, propped up by hype.
- privateSFacct 7y agoSome questions: - checks are still a thing in business, what is remote deposit story? - ACH fraud a big thing - do you have ACH positive pay? Ie originator ID and limit?
- ritikm 7y ago[PM on Brex Cash] > - checks are still a thing in business, what is remote deposit story? You’re absolutely right - which is why are in the process of adding the capacity to send and receive checks. Remote deposit capture is what we're looking into for the "receive checks" piece. > - ACH fraud a big thing - do you have ACH positive pay? Ie originator ID and limit? Yes, we are able to offer ACH positive pay. Generally, per the payment network (NACHA) guidelines, if a fraudulent transaction is identified by Brex or by a customer, we are able to return it to the originating bank. This helps to prevent customers from ACH debit fraud, and allows us to keep track of potentially malicious activity for future transactions.
- nathan_f77 7y agoI just received my Mercury.co debit card in the mail, and now I'm planning to move all my money from SVB into Mercury and close my SVB account. I already use Brex for corporate credit cards, and they've been awesome. It looks like I will need to "request early access" for Brex Cash (and I probably don't meet their requirements since I'm not VC funded), so I'm not going to wait around for that. However, Stripe is the very core of my business. They already offers corporate credit cards, but I've never thought about switching or adding new cards, because I'm very happy with Brex. I use Brex virtual cards for everything now, and I recently received a physical card that I can use for flights and hotels. However, if Stripe ever offers a bank account in the future, then I'll immediately close my Brex and Mercury accounts and just migrate everything into Stripe. Nothing would beat a single login where I have my bank account, debit cards, credit cards, and all of my customer payments. Also Stripe is much bigger and I have much more trust in their security and engineering teams.
- ritikm 7y ago[PM on Brex Cash] Glad to hear that you’re having a good experience with the Brex card! We would love to hear your feedback on the card, and what you would like to see in Brex Cash. We are doing a limited roll-out for Brex Cash, however, as YC alumni ourselves, we are prioritizing this community and would like the opportunity to show you the product and let you see for yourself if it’s a strong fit for your business. Shoot me an email: ritik [at] brex.com
- deleted 7y ago[deleted]
- krallja 7y agoHow is this different from the “it’s not a checking account” Robinhood offered outside of regulatory compliance?