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Not quite. BaaS just provides the banking rails. The ability the send, receive and store money. But it’s up to their customers to build actual products on top

Not quite. BaaS just provides the banking rails. The ability the send, receive and store money. But it’s up to their customers to build actual products on top of it. Such as bank accounts, loans etc. Otherwise all you really have is a REST API that happens to be able to move money. But good luck getting your average consumer to pay for that.

hef19898 5y ago
And who's owning the banking license in that case? Because to me that sounds a lot like, well, banking. And wasn't aware that the ability to move money from one account to another is actually a big issue. And if it's just the software banks use, well, they already use it, don't they?
- avianlyric 5y ago
  Banking licence is owned by the BaaS company, and they allow others to borrow it when using their platform. The companies building on top of a BaaS are not banks. They’re fintechs building products like privacy.com, or something else. Moving money between accounts at the same bank is obviously trivial. I’m talking about the ability to move money to other financial institutions via card payments, wire transfers or whatever.
- hn_throwaway_99 5y ago
  The diagram on Column's homepage (scroll down a bit to "our advantage") explains it quite well. There are a bunch of banking-as-a-service middleware providers like Galileo, Treasury Prime, Unit, Synapse etc. who provide nice, easy-to-use APIs for things like opening a bank account, sending an ACH, provisioning a debit card, etc. Doing these things "on your own" can be incredibly difficult, e.g. the NACHA rules around sending and receiving ACH files are incredibly complex. These companies do NOT own a bank charter. Instead, these companies partner with lots of different banks that DO have a bank charter and integrate with their "core banking" systems (core banking systems usually run on mainframes and are provided by companies like Fiserv). Then, fintechs like Chime you want to provide banking services to their clients can focus on the "user facing" part of the experience and less on the difficult, nitty-gritty parts of the banking stack. What Column has done is consolidate the roles of the middleware provided, core banking system and chartered bank into a single company so there are fewer middlemen to take a cut.

hef19898 5y ago

And who's owning the banking license in that case? Because to me that sounds a lot like, well, banking. And wasn't aware that the ability to move money from one account to another is actually a big issue. And if it's just the software banks use, well, they already use it, don't they?

avianlyric 5y ago
Banking licence is owned by the BaaS company, and they allow others to borrow it when using their platform. The companies building on top of a BaaS are not banks. They’re fintechs building products like privacy.com, or something else. Moving money between accounts at the same bank is obviously trivial. I’m talking about the ability to move money to other financial institutions via card payments, wire transfers or whatever.
hn_throwaway_99 5y ago
The diagram on Column's homepage (scroll down a bit to "our advantage") explains it quite well. There are a bunch of banking-as-a-service middleware providers like Galileo, Treasury Prime, Unit, Synapse etc. who provide nice, easy-to-use APIs for things like opening a bank account, sending an ACH, provisioning a debit card, etc. Doing these things "on your own" can be incredibly difficult, e.g. the NACHA rules around sending and receiving ACH files are incredibly complex. These companies do NOT own a bank charter. Instead, these companies partner with lots of different banks that DO have a bank charter and integrate with their "core banking" systems (core banking systems usually run on mainframes and are provided by companies like Fiserv). Then, fintechs like Chime you want to provide banking services to their clients can focus on the "user facing" part of the experience and less on the difficult, nitty-gritty parts of the banking stack. What Column has done is consolidate the roles of the middleware provided, core banking system and chartered bank into a single company so there are fewer middlemen to take a cut.