4 ms·

The tech companies aren't even underwriting the accounts. They are just resellers of accounts from actual banks, throwing on a fancy web interface and then data

The tech companies aren't even underwriting the accounts. They are just resellers of accounts from actual banks, throwing on a fancy web interface and then data mining your transactions.

Apocryphon 7y ago
I'm not exactly claiming that Robinhood checking accounts or the Apple Card will blow up Goldman Sachs and kick off the next recession, but it does feel like that if we're at the point where companies unrelated to finance are jumping into it just because it's easy to, we're in a time of irrational exuberance. Extravagantly so.
- rootsudo 7y ago
  The barrier to entry has been reduced and now we're seeing a buffet .
- derp_dee_derp 7y ago
  Can you explain why you think Robinhood is unrelated to finance and is jumping into it just because it's easy to?
  - Apocryphon 7y ago
    Not the best example, perhaps, but a stock brokerage app getting into banking (especially with shady marketing [0]) feels like feature creep. [0] https://news.ycombinator.com/item?id=18699995 https://news.ycombinator.com/item?id=18699995
    - jonas21 7y ago
      Really? I'm struggling to think of any major stock brokerage that doesn't offer banking services.
      - Apocryphon 7y ago
        One wouldn’t normally consider an app-based brokerage, six years old and less than 500 employees, to be considered a major brokerage. Is it common for boutique brokerages to offer banking?
        jonas21 7y ago
        I'm not sure why you consider Robinhood to be a boutique brokerage or what having an app (as opposed to... physical locations?) has to do with anything. They have over 6 million accounts, which is more than E*TRADE and within a factor of 2 of Charles Schwab or TD Ameritrade. And these brokerages apparently felt enough of a competitive threat that they all adopted Robinhood's commission-free model. Regardless, even if you don't consider Robinhood to be a major brokerage, they clearly aspire to be one, so offering banking services makes perfect sense.
        Apocryphon 7y ago
        Guess I underestimated them based on their youth and company size. Didn’t know they had disrupted the market so quickly. If jumping into banking services is an industry convention, I suppose that goes to show that even a brokerage of Robinhood’s age and size must have the stability and temperament to provide reliable banking services that customers can trust despite their breakneck Silicon Valley startup ethos and lack of prior experience in checking.
Scoundreller 7y ago
And skimming off some of the float. What's a company worth with a $1b in it that doesn't have to payout any interest on it and people are in no rush to get back (on average) ?
hcarvalhoalves 7y ago
Not all fintechs though. I currently work at one that has an actual banking license, does its own risk models, customer support, and so on - it's essentially a bank, just invests a lot on technology. "Fintech" is a big umbrella term, I believe it won't last much longer - the same way everybody used "DotCom" in the past.

The tech companies aren't even underwriting the accounts. They are just resellers of accounts from actual banks, throwing on a fancy web interface and then data mining your transactions.

Apocryphon 7y ago

I'm not exactly claiming that Robinhood checking accounts or the Apple Card will blow up Goldman Sachs and kick off the next recession, but it does feel like that if we're at the point where companies unrelated to finance are jumping into it just because it's easy to, we're in a time of irrational exuberance. Extravagantly so.

rootsudo 7y ago
The barrier to entry has been reduced and now we're seeing a buffet .
derp_dee_derp 7y ago
Can you explain why you think Robinhood is unrelated to finance and is jumping into it just because it's easy to?
- Apocryphon 7y ago
  Not the best example, perhaps, but a stock brokerage app getting into banking (especially with shady marketing [0]) feels like feature creep. [0] https://news.ycombinator.com/item?id=18699995 https://news.ycombinator.com/item?id=18699995
  - jonas21 7y ago
    Really? I'm struggling to think of any major stock brokerage that doesn't offer banking services.
    - Apocryphon 7y ago
      One wouldn’t normally consider an app-based brokerage, six years old and less than 500 employees, to be considered a major brokerage. Is it common for boutique brokerages to offer banking?
      - jonas21 7y ago
        I'm not sure why you consider Robinhood to be a boutique brokerage or what having an app (as opposed to... physical locations?) has to do with anything. They have over 6 million accounts, which is more than E*TRADE and within a factor of 2 of Charles Schwab or TD Ameritrade. And these brokerages apparently felt enough of a competitive threat that they all adopted Robinhood's commission-free model. Regardless, even if you don't consider Robinhood to be a major brokerage, they clearly aspire to be one, so offering banking services makes perfect sense.
        Apocryphon 7y ago
        Guess I underestimated them based on their youth and company size. Didn’t know they had disrupted the market so quickly. If jumping into banking services is an industry convention, I suppose that goes to show that even a brokerage of Robinhood’s age and size must have the stability and temperament to provide reliable banking services that customers can trust despite their breakneck Silicon Valley startup ethos and lack of prior experience in checking.

Scoundreller 7y ago

And skimming off some of the float. What's a company worth with a $1b in it that doesn't have to payout any interest on it and people are in no rush to get back (on average) ?

hcarvalhoalves 7y ago

Not all fintechs though. I currently work at one that has an actual banking license, does its own risk models, customer support, and so on - it's essentially a bank, just invests a lot on technology. "Fintech" is a big umbrella term, I believe it won't last much longer - the same way everybody used "DotCom" in the past.