4 ms·
I work in finance and I am not sure if I want to applaud or feel for people starting neobanks. The amount of regulation and infrastructure needed to deal with o
by mynegation 4y ago
I work in finance and I am not sure if I want to applaud or feel for people starting neobanks. The amount of regulation and infrastructure needed to deal with other people’s or companies’ money is downright insane and requires tons of upfront investment.
Maybe I do not understand what “neobank” is. Is it that they concentrate on a very narrow part of banking functionality that is relatively light on regulation? Or do they try to creatively interpret the regulation, Uber-style?
- PaywallBuster 4y agoMost neobanks don't start with a banking license. So they're the equivalent of Paypal (Money transmitting license?) They can hold/transfer money but they're not protected by regular banking deposit garantees. So yes, they can have reduced costs/regulatory overhead when starting up. Also they avoid legacy infra (physical and digital) - No 1000s of branches/employees across the country - No legacy digital systems (Mainframes/COBOL) - No M&A spaguetti from acquiring 10x banks over time
- O__________O 4y agoObviously depends on jurisdiction, but believe some jurisdictions have traditional banks that specialize in being the “backbone” for some neobanks and the customers are really just customers of those banks.