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I think by the amount of "what is this" questions in this thread it's pretty clear the messaging is confusing to say the least. I'm going to pile on because eve

I think by the amount of "what is this" questions in this thread it's pretty clear the messaging is confusing to say the least. I'm going to pile on because even with the explanations in this thread I don't really understand what this is. Is this for B2C or B2B? Is this something I, the average consumer who happens to be a developer, could use to build my own personal finance tools?

zachthewf 4y ago
It's a B2B2C product (sold to businesses that are building consumer fintech products). There are a bunch of neobank fintech startups whose offering is "Banking for X", where X is some segment of the population with specific needs that are not well served by traditional banks. (Here for example is X = "Spanish speakers in the US".) [0] To build a startup like that, you need to build a product layer on top of a banking API, which lets you avoid having to write code that hooks into payment rails, interfaces with credit card manufacturers, stores credit card numbers, etc. Now you can focus on the differentiating aspects of your user base instead of building common banking infra. There are a bunch of companies that offer banking APIs as a service already. The most popular of these is Galileo, a 20 year old company that was recently acquired by SoFi [1]. The developer experience of Galileo is absolute trash. I haven't used any other companies first hand but I've heard they're not much better. So presumably Increase is trying to provide an actually good developer experience for devs building banking products. [0] https://www.ycombinator.com/companies/seis https://www.ycombinator.com/companies/seis [1] https://www.sofi.com/press/sofi-to-acquire-galileo https://www.sofi.com/press/sofi-to-acquire-galileo
- swyx 4y ago
  ok so followup question - lets say i buy this message and want to start "Banking for Medical Students" (well known gap, they have terrible credit history but are about to be good credits). The precise segment doesnt matter, my question is - how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right?
  - deleted 4y ago
    [deleted]
  - zachthewf 4y ago
    These startups are not actually banks—they will partner with banks that fulfill those capital requirements. For example, the Robinhood debit card is issued by Sutton Bank [0], a 100 year old bank in Ohio that very successfully provided the backing bank to a bunch of hot new fintech products. So you would have to go through Sutton bank or another bank, but I think there are enough of these companies now that there's a fairly tried and true path. If you're seriously investigating this I can connect you to people who know more about it than I do. [0] https://robinhood.com/us/en/support/articles/robinhood-debit-card/ https://robinhood.com/us/en/support/articles/robinhood-debit... and ctrl+f "Sutton"
  - unethical_ban 4y ago
    What I imagine is that there is either some kind of delegation of lending here, or that you get the backing/start a bank on your own and utilize this service to do the needful around account servicing more easily
  - bob1029 4y ago
    > how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right? If you want to start an actual bank, you need a charter from the FDIC. This is commonly referred to as a De Novo bank. Also known as "virtually impossible".
  - zhivota 4y ago
    Increase will have to partner with banks to provide the service, so you won't have to be an actual capitalized bank yourself, and you won't have to go find one. You can see in the fine print at the bottom of their page: "Bank accounts and banking services are provided by Increase’s partner banks, members FDIC." The only way they can provide all this functionality is to do all the hard work of integrating with whatever legacy junk the partner bank is running (along with all the Visa stuff, Stripe stuff, and whatever else they are using here). You could actually do this yourself, and some fintechs are attempting that, but it's very hard and expensive due to the PCI-DSS requirements, among other things. I'll be curious to see if they will require their customers to have PCI-DSS or if they'll be able to tokenize everything in a way that doesn't require it. When I worked at Visa the big issue was that handling card data, even after tokenization, required PCI-DSS, which of course makes no sense, but the immune systems around the payments industry takes a long time to change.
- mousetree 4y ago
  Would love to chat with you about your experience with Galileo. About two years back we decided to NOT go with Galileo and went with another provider. Absolute trash too and now we're going to go looking around again - which at our current scale is not going to be pleasant. Would be great to trade notes (email in my profile).
  - zachthewf 4y ago
    Funnily enough the company I worked at also switched to Galileo from another provider that was even worse. Shooting you an email now.
swyx 4y ago
or is it like a Plaid in the sense that you could build a Robinhood ontop of Plaid... or are you meant to be starting like an "MVNO Bank"... so many questions honestly i dont think its their fault, this is such an alien space to most of us that we just need more handholding than normal

zachthewf 4y ago

It's a B2B2C product (sold to businesses that are building consumer fintech products). There are a bunch of neobank fintech startups whose offering is "Banking for X", where X is some segment of the population with specific needs that are not well served by traditional banks. (Here for example is X = "Spanish speakers in the US".) [0] To build a startup like that, you need to build a product layer on top of a banking API, which lets you avoid having to write code that hooks into payment rails, interfaces with credit card manufacturers, stores credit card numbers, etc. Now you can focus on the differentiating aspects of your user base instead of building common banking infra. There are a bunch of companies that offer banking APIs as a service already. The most popular of these is Galileo, a 20 year old company that was recently acquired by SoFi [1]. The developer experience of Galileo is absolute trash. I haven't used any other companies first hand but I've heard they're not much better. So presumably Increase is trying to provide an actually good developer experience for devs building banking products. [0] https://www.ycombinator.com/companies/seis https://www.ycombinator.com/companies/seis [1] https://www.sofi.com/press/sofi-to-acquire-galileo https://www.sofi.com/press/sofi-to-acquire-galileo

swyx 4y ago
ok so followup question - lets say i buy this message and want to start "Banking for Medical Students" (well known gap, they have terrible credit history but are about to be good credits). The precise segment doesnt matter, my question is - how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right?
- deleted 4y ago
  [deleted]
- zachthewf 4y ago
  These startups are not actually banks—they will partner with banks that fulfill those capital requirements. For example, the Robinhood debit card is issued by Sutton Bank [0], a 100 year old bank in Ohio that very successfully provided the backing bank to a bunch of hot new fintech products. So you would have to go through Sutton bank or another bank, but I think there are enough of these companies now that there's a fairly tried and true path. If you're seriously investigating this I can connect you to people who know more about it than I do. [0] https://robinhood.com/us/en/support/articles/robinhood-debit-card/ https://robinhood.com/us/en/support/articles/robinhood-debit... and ctrl+f "Sutton"
- unethical_ban 4y ago
  What I imagine is that there is either some kind of delegation of lending here, or that you get the backing/start a bank on your own and utilize this service to do the needful around account servicing more easily
- bob1029 4y ago
  > how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right? If you want to start an actual bank, you need a charter from the FDIC. This is commonly referred to as a De Novo bank. Also known as "virtually impossible".
- zhivota 4y ago
  Increase will have to partner with banks to provide the service, so you won't have to be an actual capitalized bank yourself, and you won't have to go find one. You can see in the fine print at the bottom of their page: "Bank accounts and banking services are provided by Increase’s partner banks, members FDIC." The only way they can provide all this functionality is to do all the hard work of integrating with whatever legacy junk the partner bank is running (along with all the Visa stuff, Stripe stuff, and whatever else they are using here). You could actually do this yourself, and some fintechs are attempting that, but it's very hard and expensive due to the PCI-DSS requirements, among other things. I'll be curious to see if they will require their customers to have PCI-DSS or if they'll be able to tokenize everything in a way that doesn't require it. When I worked at Visa the big issue was that handling card data, even after tokenization, required PCI-DSS, which of course makes no sense, but the immune systems around the payments industry takes a long time to change.
mousetree 4y ago
Would love to chat with you about your experience with Galileo. About two years back we decided to NOT go with Galileo and went with another provider. Absolute trash too and now we're going to go looking around again - which at our current scale is not going to be pleasant. Would be great to trade notes (email in my profile).
- zachthewf 4y ago
  Funnily enough the company I worked at also switched to Galileo from another provider that was even worse. Shooting you an email now.

swyx 4y ago

or is it like a Plaid in the sense that you could build a Robinhood ontop of Plaid... or are you meant to be starting like an "MVNO Bank"... so many questions honestly i dont think its their fault, this is such an alien space to most of us that we just need more handholding than normal