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>Failure #5: “One by one, every bank that had initially responded positively changed their minds. Worse, not a single one of them would tell me why.[…] I never

by gond 2y ago

>Failure #5: “One by one, every bank that had initially responded positively changed their minds. Worse, not a single one of them would tell me why.[…] I never got a straight answer from any of the banks about why they changed their minds.” Is anybody around with enough insight in that business to make an educated guess as to what happened?

antihipocrat 2y ago
Some possibilities - Bank operators responding to queries have no idea why a decision was made - Banks rely on algorithms to determine credit worthiness, these are run centrally so a bank manager at a branch may say positive things but the system generates a report independently. - The algorithms also can raise flags for other risks, such as anti money laundering. The bank will not disclose anything if a flag has been raised as a regulatory requirement.
hathawsh 2y ago
Since around the start of the Internet, there has been a steady decline in the number of banks and credit unions in the US. [1] They have mostly consolidated with other financial institutions. The shrinkage seems attributable to customers moving their banking online and no longer depending on tellers, buildings, or geographical location in general. Most banks are seeing this happening and acting as conservatively as they can. They are avoiding change because they don't want to be the next victim of the financial industry crisis. It's not a shadowy cabal; it's really just the fear of going out of business. A few key banks, OTOH, are embracing change and innovating. Having strong relationships with them is key to making progress. It takes a very long time; 6 years sounds too short. I'm not sure the startup timeline could ever stomach the length of time it takes to build those relationships. So my guess is that the author didn't have as strong a relationship as what he actually needed. My company has also worked with enthusiastic executives who turned out not to have as much weight in the company decisions as they hoped. [1] https://usafacts.org/articles/whats-behind-the-decline-in-us-banks/ https://usafacts.org/articles/whats-behind-the-decline-in-us...
- sails 2y ago
  > It's not a shadowy cabal; it's really just the fear of going out of business. Thanks for the insight, I was wondering about this point. I generally tend to try and attribute what _feels_ like coordinated cabal behaviour to general incompetence or lack of control. This feels like one of those situations. I've worked around banks and this erratic behaviour is pretty common, and mostly due to short term personal motivations, and lack of coordination rather than an excess of coordination (i.e. collusion - which is not to say that banks aren't guilty on this point, but I think mostly not the case)
Alex_Bond 2y ago
My bet will be on core banking software provider issues. I think they did try to talk to theirs and got a response like, "We can do it in 5 years, and you will have to pay XXX million to us to do it". There was a large-ish scandal in the late 2010s when some core banking providers were delaying Zelle integrations for smaller FIs, and they started complaining as customers were demanding it and leaving the larger competitors with it. Another option can be as simple as this - they fear tech as most don't understand it. When I was working on a corporate charge card startup, my co-founder and I faced this issue many times. The craziest experience was when the bank was ok to be issuing bank for us but requested our clients to go to their branches to sign paperwork (the bank literally has maybe 5 branches in the whole USA).

by gond 2y ago

antihipocrat 2y ago

Some possibilities - Bank operators responding to queries have no idea why a decision was made - Banks rely on algorithms to determine credit worthiness, these are run centrally so a bank manager at a branch may say positive things but the system generates a report independently. - The algorithms also can raise flags for other risks, such as anti money laundering. The bank will not disclose anything if a flag has been raised as a regulatory requirement.

hathawsh 2y ago

Since around the start of the Internet, there has been a steady decline in the number of banks and credit unions in the US. [1] They have mostly consolidated with other financial institutions. The shrinkage seems attributable to customers moving their banking online and no longer depending on tellers, buildings, or geographical location in general. Most banks are seeing this happening and acting as conservatively as they can. They are avoiding change because they don't want to be the next victim of the financial industry crisis. It's not a shadowy cabal; it's really just the fear of going out of business. A few key banks, OTOH, are embracing change and innovating. Having strong relationships with them is key to making progress. It takes a very long time; 6 years sounds too short. I'm not sure the startup timeline could ever stomach the length of time it takes to build those relationships. So my guess is that the author didn't have as strong a relationship as what he actually needed. My company has also worked with enthusiastic executives who turned out not to have as much weight in the company decisions as they hoped. [1] https://usafacts.org/articles/whats-behind-the-decline-in-us-banks/ https://usafacts.org/articles/whats-behind-the-decline-in-us...

sails 2y ago
> It's not a shadowy cabal; it's really just the fear of going out of business. Thanks for the insight, I was wondering about this point. I generally tend to try and attribute what _feels_ like coordinated cabal behaviour to general incompetence or lack of control. This feels like one of those situations. I've worked around banks and this erratic behaviour is pretty common, and mostly due to short term personal motivations, and lack of coordination rather than an excess of coordination (i.e. collusion - which is not to say that banks aren't guilty on this point, but I think mostly not the case)

Alex_Bond 2y ago

My bet will be on core banking software provider issues. I think they did try to talk to theirs and got a response like, "We can do it in 5 years, and you will have to pay XXX million to us to do it". There was a large-ish scandal in the late 2010s when some core banking providers were delaying Zelle integrations for smaller FIs, and they started complaining as customers were demanding it and leaving the larger competitors with it. Another option can be as simple as this - they fear tech as most don't understand it. When I was working on a corporate charge card startup, my co-founder and I faced this issue many times. The craziest experience was when the bank was ok to be issuing bank for us but requested our clients to go to their branches to sign paperwork (the bank literally has maybe 5 branches in the whole USA).