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Bank failures is just not something that most startups think about. It's also weird that we expect large depositors to think about it. If we created the syste
by aeternum 4y ago
Bank failures is just not something that most startups think about.
It's also weird that we expect large depositors to think about it. If we created the system today, we would never think it okay to just destroy people's money at scale. Large depositors get almost nothing (very low interest rate) in return for that immense risk.
- kurthr 4y agoExactly, so why are they holding it there? It could have provided 5-10% of (their negative) net income.
- aeternum 4y agoIt takes time & effort to engage with one of the few fintech companies that ensures you store only 250k in each bank. That also opens you up to other types of risk as now you have some relatively new startup that has access to your company funds. Companies and individuals are not trying to invest in their bank when they open a checking account. Does it really make sense that they need to dive into their bank's financials?
- kurthr 4y agoUmmm, if it nets you $10-20M a year in risk free income on a highly liquid asset it does! Pay someone to do it. It's not a full time job. We're not talking about a special fintech, we're talking about a MoneyMarket or Treasury account, which are higher interest and lower risk than a bank account, but you're limited to a withdrawal or two a week.