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> The big potential in this space is building a new banking platform from scratch, instead of relying on existing/legacy technology. It's likely nearly impossi

> The big potential in this space is building a new banking platform from scratch, instead of relying on existing/legacy technology. It's likely nearly impossible to build a bank from scratch because of regulatory hurdles. That's why Simple had to team up with a partner bank instead of going it 100% alone. I remember reading a blog post from Simple about it, it seemed they had no choice to partner with an existing bank (if I find the post I'll share it). The banking system is broken on purpose. This is why banks operate like it's the stone age and get away with awful service and fees - there's little chance of nimbler competitors coming along and eating their lunch.

maxerickson 13y ago
Another piece of the puzzle is that a single new bank isn't going to have it a whole lot better when it comes to interbank stuff (probably they have it worse, having to build useful relationships).
- tanzam75 13y ago
  > Another piece of the puzzle is that a single new bank isn't going to have it a whole lot better when it comes to interbank stuff (probably they have it worse, having to build useful relationships). Interbank transfers -- wire and ACH -- are processed through central clearinghouses. You just show up with a copy of your bank charter, pay the fees, and you're now on equal terms with any other bank when it comes to moving money around. The hard part is getting that charter in the first place. Just two months ago, the Bank of Bird-in-Hand, Pennsylvania became the first new consumer bank to be chartered in the United States since 2010. One bank, in the past three years. It was huge news in the banking world, even made the Wall Street Journal and the Financial Times. It's an Amish bank -- they have a drive-through lane for horses and buggies.
  - jackgavigan 13y ago
    They had to spend $800,000 just to get approved. http://lancasteronline.com/business/new-bank-of-bird-in-hand-result-of-long-approval/article_3b1f38d1-5125-54e7-8868-794b5fe303fc.html http://lancasteronline.com/business/new-bank-of-bird-in-hand...
  - maxerickson 13y ago
    Okay, that means that it won't be any harder for them, but their money transfers will still be just as bad as everybody else.
justincormack 13y ago
Not so sure. In the UK we had Metro Bank a US funded startup bank, started a couple of years ago.
- jackgavigan 13y ago
  It's been a long, hard slog for Metro Bank. To date, they've raised £641m (that's over $1bn) in investment and racked up total cumulative losses of over £130m ($220m). And don't forget Metro didn't build their own platform - they outsourced all their technology. Despite their apparent enthusiasm (see links at the bottom of this post), I don't think VCs are ready to sink over a billion dollars into a single startup, even if it is a bank. They're looking for billion-dollar exits like Facebook and Whatsapp, not a $1bn investment with a $100+bn exit. VCs Start Pining to Own a Bank - http://www.bankinnovation.net/2014/02/vcs-start-pining-for-a-bank/ http://www.bankinnovation.net/2014/02/vcs-start-pining-for-a... “I am dying to fund a disruptive bank.” - Marc Andreessen - https://twitter.com/pmarca/status/432651247909208064 https://twitter.com/pmarca/status/432651247909208064

maxerickson 13y ago

Another piece of the puzzle is that a single new bank isn't going to have it a whole lot better when it comes to interbank stuff (probably they have it worse, having to build useful relationships).

tanzam75 13y ago
> Another piece of the puzzle is that a single new bank isn't going to have it a whole lot better when it comes to interbank stuff (probably they have it worse, having to build useful relationships). Interbank transfers -- wire and ACH -- are processed through central clearinghouses. You just show up with a copy of your bank charter, pay the fees, and you're now on equal terms with any other bank when it comes to moving money around. The hard part is getting that charter in the first place. Just two months ago, the Bank of Bird-in-Hand, Pennsylvania became the first new consumer bank to be chartered in the United States since 2010. One bank, in the past three years. It was huge news in the banking world, even made the Wall Street Journal and the Financial Times. It's an Amish bank -- they have a drive-through lane for horses and buggies.
- jackgavigan 13y ago
  They had to spend $800,000 just to get approved. http://lancasteronline.com/business/new-bank-of-bird-in-hand-result-of-long-approval/article_3b1f38d1-5125-54e7-8868-794b5fe303fc.html http://lancasteronline.com/business/new-bank-of-bird-in-hand...
- maxerickson 13y ago
  Okay, that means that it won't be any harder for them, but their money transfers will still be just as bad as everybody else.

justincormack 13y ago

Not so sure. In the UK we had Metro Bank a US funded startup bank, started a couple of years ago.

jackgavigan 13y ago
It's been a long, hard slog for Metro Bank. To date, they've raised £641m (that's over $1bn) in investment and racked up total cumulative losses of over £130m ($220m). And don't forget Metro didn't build their own platform - they outsourced all their technology. Despite their apparent enthusiasm (see links at the bottom of this post), I don't think VCs are ready to sink over a billion dollars into a single startup, even if it is a bank. They're looking for billion-dollar exits like Facebook and Whatsapp, not a $1bn investment with a $100+bn exit. VCs Start Pining to Own a Bank - http://www.bankinnovation.net/2014/02/vcs-start-pining-for-a-bank/ http://www.bankinnovation.net/2014/02/vcs-start-pining-for-a... “I am dying to fund a disruptive bank.” - Marc Andreessen - https://twitter.com/pmarca/status/432651247909208064 https://twitter.com/pmarca/status/432651247909208064