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A Bank Behind the Fintech Boom
- ncmncm 7y agoThere is no bank "behind the fintech boom". Clickbait, thy name is Forbes.
- maneesh 7y agoDid you read the article? It's very clearly about one specific bank (Cross River). You might be trying to say that the forbes article is exaggerating with the headline, but your comment is implying that there is literally no specific subject of this story.
- thwd 7y ago"The Bank Behind High-Interest Loan Apps"
- deleted 7y ago[deleted]
- 55555 7y agoWhy is Forbes.com prompting me to "Install Crypto Wallets" when I visit the submission link?
- wyxuan 7y agoThe CAGR of 45% is nuts, but I think it's concerning when Banks start using the same lingo and mindset that startups use.
- abcpassword 7y agoThe amount invested in startup type projects is nothing compared to normal business costs. Without adopting a startup like mentality when appropriate, a bank will spend 100M to put a webpage on the internet.
- CryptoBanker 7y agoCAGR is a widely used finance term applicable to literally any company. Doesn't mean anything here
- wyxuan 7y agoyeah but i was referring to the growth or bust mindset that allows for CAGRs like 45%
- trimmedarticle 7y agoNo JavaScript - reduces page load by 77% from original size of 3.75 MB to 866 kB: https://beta.trimread.com/articles/1169 https://beta.trimread.com/articles/1169
- tempsy 7y agoSometimes I wonder if the current state of fintech is nothing but lipstick on a pig. Maybe I'm being too cynical, but as someone who follows this industry fairly closely I haven't seen many companies do something actually that innovative or new. Most of it just seems to be a difference in distribution channel e.g. a website.
- giancarlostoro 7y agoAt least in my few months in fintech I would say yeah thats what it felt like. Some of it was overkill and there were vendors with awful APIs so of course we were the make up for their pig APIs as well.
- hogFeast 7y agoI am not sure what the current state of fintech is but it is fairly obvious to observe that there is a ton of cost in the industry that probably doesn't need to exist anymore (and btw, we aren't even in the first innings of this). This has happened before: for example, insurance used to be sold in-person, then over the phone, now online. And that is innovation. Selling it in-person was very expensive. But it is also true that none of the companies mentioned in the OP have really innovated anything. The innovation was finding a new way to justify massive volume growth that would later turn out to be unprofitable. This happens every cycle. The distribution method wasn't really novel either afaik. Maybe having an app makes your product a bit cheaper but it isn't really going to be a massive difference to selling over the phone. In particular, with high-interest loans analysing credit quality is probably going to be more important. But idk (I have looked at these businesses and it isn't something I would ever get involved with: high-interest, P2P, all scams).
- tempsy 7y agoI can call Chase/Amex/Etc and have someone pick up in seconds or minutes. I have signed up for some neobank accounts out of curiosity and there’s no phone number just email and chat, and when I’ve asked a question it’s taken at least 2-3 days to get a reply on average. Reducing cost might be good for the business but as a customer I get no additional benefit (my Chase account is free) and reduced quality of service. Why would I want that?
- freedomben 7y agoI wonder how much of this is a direct result of the massive regulation around the banking industry. I'm not saying regulation is necessarily bad, but the law of unintended consequences can be a beast. The large amounts of regulations make the barriers of entry very high, and make it impractical without preexisting economies of scale. Perhaps we need to reexamine regulations and their potential hampering of creative destruction. Source: worked at a fintech startup and had to review and implement a lot of this regulation. Some is really important for protecting consumers, but some is hellishly onerous and makes automation difficult to impossible.
- watertom 7y agoDepends on your goals. If your only concern is investor return then banking regs are pointless, it’s no different than the privacy laws impeding Facebook and Google. Fuck over the consumer, fuck over the public. I’ve worked at a very large financial institution, I helped to start their credit card division, I helped to start their banking division, and I’ve been recruited to a number of “innovative” fintech startups. The only “innovation” I ever saw was how they interpreted regulations so they could exploit their customers and transfer the firm’s financial risk in the short term so that the principles could make as much money as possible in the shortest amount of time.
- freedomben 7y agoThis is kind of what I'm talking about. Only the established players are able to do this sort of thing, because of high barriers to entry. If you and I wanted to start a bank that didn't do slimy things, we'd have a really hard time. That's not to say it's impossible, but I wouldn't try it again unless there was a team of people willing to work for equity that were already experts at compliance.
- boomboomsubban 7y ago> I wonder how much of this is a direct result of the massive regulation around the banking industry. How much of what? Regulations aren't forcing pseudobanks to repackage shitty loans, nor are they causing massive overvaluation.
- rahimnathwani 7y agoThe article is light (and confusing) on details, so it's hard to take it seriously or draw conclusions from it. For example: "State-chartered banks like his have the regulatory and compliance framework in place and the lending licenses necessary to originate loans. Most fintechs do not and thus rely on banks for funding." If the fintechs have a lack of cash money then they might need to rely on banks for funding. But there's no reason a lack of licences or processes would require them to rely on banks for funding. Also, I'm not sure why the need to mention 'FDIC-insured' a couple of times. FDIC insurance has nothing to do with consumer lending (the subject of this article). FDIC insurance protects retail deposits, but these fintechs aren't generally offering current/savings accounts. I wish the article would explain why it's difficult to become a lender in the US. It mentions LendingClub many times, but a quick online search showed me that LC has dozens of state consumer credit licences: https://www.lendingclub.com/legal/licenses https://www.lendingclub.com/legal/licenses So why don't the other fintechs apply for these licences? Is it hard to be approved? Are the regulations very difficult to implement?
- rolltiide 7y agoThe FDIC is a confidence game. Mentioning it just gives a reminder of its existence and confidence in the system. I just like to imagine the enterprisers in 1930 that convinced Congress to insure their private company deposits with public money in order to more easily convince people to make deposits. Worried about the viability of a new market because there is no recourse if you lose your money? Make enough money to lobby Congress to insure it with non-participant's money! Now there is more confidence in your market
- rahimnathwani 7y agoFDIC insurance, and similar deposit guarantee schemes in other countries, aren't primarily a way to socialise private risks. A bank run is caused by the perception that a bank may have insufficient liquidity. But once a bank run starts, this is a self-fulfilling prophecy. The bank may have held enough of its assets as cash/near-cash for normal times, but of course many of its assets are illiquid things like mortgage loans. The main purpose of deposit guarantee/insurance schemes is to prevent this vicious cycle from starting in the first place. If the scheme succeeds in instilling confidence, then there will never be a run, and the scheme will never result in a costly bail-out.
- the_mitsuhiko 7y agoI was expecting this to be about Wirecard.