10 ms·

'Silicon Valley Is Coming' Warns JP Morgan CEO

180 points by pyabo 12y ago

presidentender 12y ago
It's not just that startups are identifying cool new technologies like cybercurrencies, and it's not just that they're using new models to offer loans faster. Startups have started to take on markets which banks pretty clearly knew about, but refused to touch - you can refinance a federal student loan with SoFi or commonbond now, which was unheard of five years ago. The problem is that the little guys' competitive advantage seems to lie only in their willingness to enter the space. Once the market is proven, Wells Fargo and JP Morgan won't really have a difficult time stepping in with boringly normal technology and using their giant pile of money to dominate the market. What can finance startups do to avoid being squeezed out by the older, established banks?
- thinkcomp 12y ago
  Invalidate or change the laws that favor them. http://www.plainsite.org/dockets/8l0ickx4/california-northern-district-court/think-computer-corp-v-venchiarutti-et-al/ http://www.plainsite.org/dockets/8l0ickx4/california-norther...
- pyabo 12y ago
  The pile of money will be used to buy dominant players of the new technologies, but they may had problems with margins like record labels.
_broody 12y ago
For sure, defeating banks in the matter of customer interaction seems like low-hanging fruit. As the article says, they are too slow, too cumbersome, and I'll add that they are too unfun, and their sales departments are pushy and intrusive. Do we even need monolithic financial entities in this day and age? Most transactions would be better handled by smaller, specialized and modern service companies. Banks are to financial startups what taxi driver unions are to Uber. And the financial sector definitely deserves a shakedown, after they essentially plunged the rest of the world into a decade of misery with their securities fraud during the housing crisis, and went unpunished for it.
- WaxProlix 12y ago
  > Banks are to financial startups what taxi driver unions are to Uber. Not quite - taxi driver unions are less competitive (in part at least) because they choose not to disregard regulations.
  - Florin_Andrei 12y ago
    Also because they have less money - by many, many orders of magnitude.
    - WaxProlix 12y ago
      They should have disrupted more! Meritocracy, motherfuckers.
      - Terr_ 12y ago
        * taps the dial of his sarcasmometer, puzzled * If by "disrupting" and "meritocracy" you mean "break the law" and "kleptocracy"...
        WaxProlix 12y ago
        HN downvoter herd mentality types can't handle the individuality and personal responsibility of libertarian utopias that Uber and its ilk will usher in, so they fight back with the only tools at their disposal. Stupid laws are meant to be broken, and 'kleptocracy' is a shibboleth, identifying you as a poor (or, worse, a poor-sympathizer).
        obastani 12y ago
        The laws put in place are not stupid -- they are put in place to protect both riders and drivers against well-known market failures such as information asymmetry and market-for-lemons [1,2]. They may be outdated and in need of revision, but I think it's premature to conclude that Uber has all the right answers. [1] http://en.wikipedia.org/wiki/The_Market_for_Lemons http://en.wikipedia.org/wiki/The_Market_for_Lemons [2] http://time.com/3592035/uber-taxi-history/ http://time.com/3592035/uber-taxi-history/
serve_yay 12y ago
Wall Street, Silicon Valley - what's the difference?
- Sven7 12y ago
  The dress code. That is all. Vampire squids on both coasts.
  - klipt 12y ago
    Hey, hey. No need to judge vampire squids just because they look funny.
- RickS 12y ago
  Iteration cycle speed.
- hnnewguy 12y ago
  I guess SV has better PR.
  - blumkvist 12y ago
    Depends on who is the public.
BallinBige 12y ago
"Building financial technology is hard. Really hard. Startups are always hard, but fin tech is a whole different level of self-inflicted pain. You’ll be regulated. You’ll deal with big banks. They’ll see you as little and cute until you’re meaningful. Once that happens, they’ll want to crush you out of existence." - Max Levchin http://fortune.com/2015/03/27/max-levchin-hates-credit-cards/ http://fortune.com/2015/03/27/max-levchin-hates-credit-cards...
- erbo 12y ago
  Because, at that point, you'll be seriously threatening the ability of the bankster fraudsters to keep stealing from the public.
- rcarrigan87 12y ago
  This has been my experience in most industries. Once you gain traction the main players will do everything they can to stop you. Frivolous lawsuits are probably the most annoying tactic.
diminoten 12y ago
Maybe this will result in banks upgrading their systems from COBOL/FORTRAN to something slightly more modern, like... Java/C++. Or are they just going to skip a generation, and move directly to io.js/Node.js?
- BallinBige 12y ago
  that made me chuckle
  - harryh 12y ago
    Indeed. #ShitHNSays worthy.
    - KurtMueller 12y ago
      What makes you say that?
      - anonbanker 12y ago
        HN likes to promote upgrading technology stacks to the new hotness (which at one time was Java, and is now Javascript/Node.js) for no other reason than the old standard being old. This is often under the guise of "Disruption" when the good trolls are doing it.
  - rpcope1 12y ago
    I am surprised it didn't get upvoted to the top...because javascript.
- melling 12y ago
  You have no idea what you're talking about. Java is big on Wall Street. Some companies are even more progressive and use Scala, Haskell, or oCaml (e.g. https://blogs.janestreet.com/category/ocaml/ https://blogs.janestreet.com/category/ocaml/, http://adtmag.com/articles/2011/07/29/why-hft-programmers-earn-top-salaries.aspx?m=2 http://adtmag.com/articles/2011/07/29/why-hft-programmers-ea...) Btw, the creator of C++ works on Wall Street. http://www.morganstanley.com/profiles/bjarne-stroustrup-managing-director-technology/ http://www.morganstanley.com/profiles/bjarne-stroustrup-mana...
rndmize 12y ago
I wonder sometimes what is left for banks to do that couldn't be fully automated (at least on the consumer side). Creating accounts, making deposits, withdrawals, transfers, paying bills can all be done online or through apps. Getting a loan or credit card seems to largely be a matter of 1) obtain credit score 2) calculate terms. Investments can be done through the likes of Vanguard/Wealthfront/Betterment. I feel like I must be missing something here, or maybe people really like talking with someone they know at the bank when getting a loan or mortgage.
- mrfollicle 12y ago
  Agreed. At least from a consumer standpoint. I use an online only bank account after switching. And there's plenty out there. Better service, fewer fees, and without a physical "bank" location in the traditional sense it can keep costs lower. Haven't looked back. I don't need a physical bank to accomplish 99.9% of my banking needs. With offerings like Ally, Simple, etc I think the traditional and big banks will only be necessary for non consumer facing stuff: large investments, mass ACH, trading (including high frequency stuff), etc
  - fluxquanta 12y ago
    I was nervous before switching to Simple, but then I thought about how the only time I went to my physical bank in the last 3 years was to exchange currency, and in that time they charged me $300 in fees for one reason or another. It's been almost a year with zero fees and zero regrets.
    - jjulius 12y ago
      I've been using Simple since January of last year, and I am incredibly thrilled with them overall. I could ramble for days about their outstanding customer service, how their "Goals" system has significantly improved my own ability to save money, yadda yadda. Chase was the bank I had to suffer with prior to switching to Simple, so I have to admit that it makes me ridiculously happy to see Dimon legitimately concerned about companies that actually give a fuck about people.
- 12y ago
huu 12y ago
I find it curious that pain points is given the inner quotes treatment whenever the JP Morgan CEO uses that term. It's almost like such a concept didn't exist before startups started addressing it.
niche 12y ago
I think what is especially interesting about this comment is that Wall St, which is on the East Coast, uses the internet in very different ways than Silicon Valley does, which on the West Coast. Both have ground to make up in this sense; Silicon Valley could be much more in tune with their East Coast counter parts...
- wcummings 12y ago
  >the East Coast, uses the internet in very different ways than Silicon Valley does, which on the West Coast In what ways?
Sealy 12y ago
His only mention of Bitcoin: Competitors are coming in the payments area. You all have read about Bitcoin, merchants building their own networks, PayPal and PayPal look-alikes. Payments are a critical business for us – and we are quite good at it. But there is much for us to learn in terms of real-time systems, better encryption tech- niques, and reduction of costs and “pain points” for customers.
chatmasta 12y ago
Everyone in the tech world, specifically the investors, has known this for a while. Marc Andreesen could have told this to Jamie Dimon ten years ago. "Software is eating the world" holds just as true today as it did when he first said it. The problem is that "software is eating the world" only in the long term. It's easy to get behind the mantra when you're imagining software in an idealistic, abstract sense. After all, just look around you. Software is disrupting industries left and right. It's cheap, reproducible, and highly leveraged with low marginal cost. Software is more economically efficient than the incumbent operations of every industry it disrupts. The financial industry is unlike any other industry software is "disrupting." The operations are irrevocably complex because they are inherently driven by human operators. Each year, more tech creeps in between the operators and the operations, and software gradually "eats" the industry. But bankers are not losing their jobs. Why would they? Software is more efficient, it makes them more money. It gives them more time to focus on improving other efficiencies. Bankers see software as a resource they can leverage just like anything else. The more it eats their industry, the more they feed it. As long as it continues making the bankers money, they will keep their own jobs. As long as they keep their jobs, they will keep leveraging their resources, which inevitably increases the complexity of the financial system. The longer humans are in charge of the financial system, the more complicated it becomes. I see very little chance of humans relinquishing complete control of the system to algorithms. There is always a human, or group of humans, at the top -- that is the nature of politics and civilization. Perhaps the human has less input as technology improves, but politics still requires that human to occupy the seat at the top of the economy. Somebody needs to be responsible for the system. We cannot relinquish all control to the robots.
- eru 12y ago
  Bankers are not one homogenous group. Tellers are different from quants.
dataker 12y ago
Most people take SV/WS as a geographical identity, starting a war between the two. However, rather than war, we've been seeing a confluence. WS is nothing but a group of workers, morality, tradition and culture. Right now, WS is not being destroyed: it's merely being mixed into the SV. Either by bringing its top executives or fostering a 'brogrammer' culture, the similarity between the two are becoming clearer and clearer.
- nissimk 12y ago
  It's been going on like that for years. Think of all the wall st folks who made their careers on tech stocks of the past, like Rick Sherlund at Goldman with Microsoft, and Mary Meeker. The funny thing about the overwhelming attitude regarding the financial industry on HN is that the venture capital business is just another area of the financial industry and it has all of the same (mis)behaviors: managers benefiting from information asymmetry, high fees for questionable returns / risks, etc.
deleted 12y ago
[deleted]
arbuge 12y ago
>> “Rest assured, we analyze all of our competitors in excruciating detail – so we can learn what they are doing and develop our own strategies accordingly,” he said. Perhaps worrying more about analyzing their customers needs and less about their competitors would be better. I also found it amusing he considers PayPal a "new payment technology"...
kokey 12y ago
I worked for JP Morgan Chase a couple of years ago, as part of the main technology division for the entire bank. If I remember correctly, this 'IT department' had the same headcount as Apple. It was an interesting place. There was a lot of technologies being used through the organisation, lots of python and Java code, perl with Mojolicious, puppet and cfengine, desktops were Linux based terminals connected to virtualised Windows desktops, Hadoop and Cassandra was being rolled out, interesting things with FPGAs were being done e.g. http://web.stanford.edu/class/ee380/Abstracts/110511-slides.pdf http://web.stanford.edu/class/ee380/Abstracts/110511-slides.... I worked with many skilled and experienced people, and nice people too. I have worked for many multinationals before, and this bank was certainly the most nimble of them all while being the biggest and most stable at the same time.
- arthurcolle 12y ago
  Why did you leave?
  - jbob2000 12y ago
    >I worked for JP Morgan Chase a couple of years ago My guess is that when they caused the recession, he got laid off.
  - kokey 12y ago
    I got persuaded to join a start up full time, one I co founded years before joining the bank. In retrospect I should have remained at the bank.
    - arthurcolle 11y ago
      Cool I am starting at GS this summer so I was curious if you decided to move on from banking or of it was more you deciding to try something new.
- loganfrederick 12y ago
  I also worked for approximately two years at JPMC. My anecdotal experience (and of many friends in other departments) is that the bank is so large, that the following phenomena can be seen: 1. Yes, there is a lot of variety in technologies used. 2. This variation is due to the large organization not being structured for different departments to communicate with each other. 3. Therefore, for every department using Hadoop, you have one on COBOL. For every Scheme group on Linux, you have a Visual Basic group on Windows.
bko 12y ago
One reason I don't think JP Morgan or traditional banks can compete effectively with smaller startups is the regulatory framework that they operate in. New startups can structure themselves outside this framework and be more nimble. For instance, Lending Club essentially passes through all credit risk to its investors with its assets and liabilities perfectly matched. So every dollar loss in loans is a dollar less to the holders of the notes. If a bank tried to have this sort of structure, it would be incredibly leveraged and would require a large amount of capital reserves. There was a great Bloomberg article addressing just this [0] [0] http://www.bloombergview.com/articles/2014-08-27/lending-club-can-be-a-better-bank-than-the-banks http://www.bloombergview.com/articles/2014-08-27/lending-clu...
chiph 12y ago
The problem with starting a new institution these days is that the regulatory & audit issues mean that you'll be a small bank, with the overhead of a large bank. There's also the package integrations to deal with. Banks tend to buy packages for their core functions, and then (try) and integrate them. There's an opportunity here for someone who can offer a "Bank In A Box" -- all the software needed to start a bank/credit union that is well-integrated and complete -- from GL/AP to lending, depositor management, ACH + Fedwire connections, and disaster recovery.
- morgante 12y ago
  I've been thinking of developing a "Betterment in a box."
smoorman1024 12y ago
Relevant to discuss the viability of different fintech startup ideas: https://news.ycombinator.com/item?id=9321019 https://news.ycombinator.com/item?id=9321019 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3cd0995e0da3 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3c... I agree that there is some naivety when attacking huge institutions as mentioned in the article. Particularly when it comes to dodging regulation. Rather than putting you on top dodging regulation is probably going to put you out of business when it comes to Financial Institutions. [P.S. will the Gods of HN please upvote my comment so I can have the slightest visibility here]
cubano 12y ago
So Facebook basically gave everyone a personalized website and social graph. Twitter, everyone got their own chatroom. Instagram, a photo-album. Perhaps the next killer finapp is to allow everyone to become their own bank?
fsk 12y ago
Banks have one advantage in this area. The have government regulations and many other laws making it hard to organize competition, such as anti-money-laundering and know-your-customer laws. Look at what happened to E-Gold. It was a threat to traditional banking, laws were changed, and the business was declared illegal (and many of the operators went to prison for violating laws that were passed after they started operating).
pjc50 11y ago
On this subject, from the finserve side: https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3cd0995e0da3 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3c... The author applies heavy skepticism, but does rate some of the fintech business models as worthwhile.

180 points by pyabo 12y ago

It's not just that startups are identifying cool new technologies like cybercurrencies, and it's not just that they're using new models to offer loans faster. Startups have started to take on markets which banks pretty clearly knew about, but refused to touch - you can refinance a federal student loan with SoFi or commonbond now, which was unheard of five years ago. The problem is that the little guys' competitive advantage seems to lie only in their willingness to enter the space. Once the market is proven, Wells Fargo and JP Morgan won't really have a difficult time stepping in with boringly normal technology and using their giant pile of money to dominate the market. What can finance startups do to avoid being squeezed out by the older, established banks?

thinkcomp 12y ago
Invalidate or change the laws that favor them. http://www.plainsite.org/dockets/8l0ickx4/california-northern-district-court/think-computer-corp-v-venchiarutti-et-al/ http://www.plainsite.org/dockets/8l0ickx4/california-norther...
pyabo 12y ago
The pile of money will be used to buy dominant players of the new technologies, but they may had problems with margins like record labels.

_broody 12y ago

For sure, defeating banks in the matter of customer interaction seems like low-hanging fruit. As the article says, they are too slow, too cumbersome, and I'll add that they are too unfun, and their sales departments are pushy and intrusive. Do we even need monolithic financial entities in this day and age? Most transactions would be better handled by smaller, specialized and modern service companies. Banks are to financial startups what taxi driver unions are to Uber. And the financial sector definitely deserves a shakedown, after they essentially plunged the rest of the world into a decade of misery with their securities fraud during the housing crisis, and went unpunished for it.

WaxProlix 12y ago
> Banks are to financial startups what taxi driver unions are to Uber. Not quite - taxi driver unions are less competitive (in part at least) because they choose not to disregard regulations.
- Florin_Andrei 12y ago
  Also because they have less money - by many, many orders of magnitude.
  - WaxProlix 12y ago
    They should have disrupted more! Meritocracy, motherfuckers.
    - Terr_ 12y ago
      * taps the dial of his sarcasmometer, puzzled * If by "disrupting" and "meritocracy" you mean "break the law" and "kleptocracy"...
      - WaxProlix 12y ago
        HN downvoter herd mentality types can't handle the individuality and personal responsibility of libertarian utopias that Uber and its ilk will usher in, so they fight back with the only tools at their disposal. Stupid laws are meant to be broken, and 'kleptocracy' is a shibboleth, identifying you as a poor (or, worse, a poor-sympathizer).
        obastani 12y ago
        The laws put in place are not stupid -- they are put in place to protect both riders and drivers against well-known market failures such as information asymmetry and market-for-lemons [1,2]. They may be outdated and in need of revision, but I think it's premature to conclude that Uber has all the right answers. [1] http://en.wikipedia.org/wiki/The_Market_for_Lemons http://en.wikipedia.org/wiki/The_Market_for_Lemons [2] http://time.com/3592035/uber-taxi-history/ http://time.com/3592035/uber-taxi-history/

serve_yay 12y ago

Wall Street, Silicon Valley - what's the difference?

Sven7 12y ago
The dress code. That is all. Vampire squids on both coasts.
- klipt 12y ago
  Hey, hey. No need to judge vampire squids just because they look funny.
RickS 12y ago
Iteration cycle speed.
hnnewguy 12y ago
I guess SV has better PR.
- blumkvist 12y ago
  Depends on who is the public.

BallinBige 12y ago

"Building financial technology is hard. Really hard. Startups are always hard, but fin tech is a whole different level of self-inflicted pain. You’ll be regulated. You’ll deal with big banks. They’ll see you as little and cute until you’re meaningful. Once that happens, they’ll want to crush you out of existence." - Max Levchin http://fortune.com/2015/03/27/max-levchin-hates-credit-cards/ http://fortune.com/2015/03/27/max-levchin-hates-credit-cards...

erbo 12y ago
Because, at that point, you'll be seriously threatening the ability of the bankster fraudsters to keep stealing from the public.
rcarrigan87 12y ago
This has been my experience in most industries. Once you gain traction the main players will do everything they can to stop you. Frivolous lawsuits are probably the most annoying tactic.

diminoten 12y ago

Maybe this will result in banks upgrading their systems from COBOL/FORTRAN to something slightly more modern, like... Java/C++. Or are they just going to skip a generation, and move directly to io.js/Node.js?

BallinBige 12y ago
that made me chuckle
- harryh 12y ago
  Indeed. #ShitHNSays worthy.
  - KurtMueller 12y ago
    What makes you say that?
    - anonbanker 12y ago
      HN likes to promote upgrading technology stacks to the new hotness (which at one time was Java, and is now Javascript/Node.js) for no other reason than the old standard being old. This is often under the guise of "Disruption" when the good trolls are doing it.
- rpcope1 12y ago
  I am surprised it didn't get upvoted to the top...because javascript.
melling 12y ago
You have no idea what you're talking about. Java is big on Wall Street. Some companies are even more progressive and use Scala, Haskell, or oCaml (e.g. https://blogs.janestreet.com/category/ocaml/ https://blogs.janestreet.com/category/ocaml/, http://adtmag.com/articles/2011/07/29/why-hft-programmers-earn-top-salaries.aspx?m=2 http://adtmag.com/articles/2011/07/29/why-hft-programmers-ea...) Btw, the creator of C++ works on Wall Street. http://www.morganstanley.com/profiles/bjarne-stroustrup-managing-director-technology/ http://www.morganstanley.com/profiles/bjarne-stroustrup-mana...

rndmize 12y ago

I wonder sometimes what is left for banks to do that couldn't be fully automated (at least on the consumer side). Creating accounts, making deposits, withdrawals, transfers, paying bills can all be done online or through apps. Getting a loan or credit card seems to largely be a matter of 1) obtain credit score 2) calculate terms. Investments can be done through the likes of Vanguard/Wealthfront/Betterment. I feel like I must be missing something here, or maybe people really like talking with someone they know at the bank when getting a loan or mortgage.

mrfollicle 12y ago
Agreed. At least from a consumer standpoint. I use an online only bank account after switching. And there's plenty out there. Better service, fewer fees, and without a physical "bank" location in the traditional sense it can keep costs lower. Haven't looked back. I don't need a physical bank to accomplish 99.9% of my banking needs. With offerings like Ally, Simple, etc I think the traditional and big banks will only be necessary for non consumer facing stuff: large investments, mass ACH, trading (including high frequency stuff), etc
- fluxquanta 12y ago
  I was nervous before switching to Simple, but then I thought about how the only time I went to my physical bank in the last 3 years was to exchange currency, and in that time they charged me $300 in fees for one reason or another. It's been almost a year with zero fees and zero regrets.
  - jjulius 12y ago
    I've been using Simple since January of last year, and I am incredibly thrilled with them overall. I could ramble for days about their outstanding customer service, how their "Goals" system has significantly improved my own ability to save money, yadda yadda. Chase was the bank I had to suffer with prior to switching to Simple, so I have to admit that it makes me ridiculously happy to see Dimon legitimately concerned about companies that actually give a fuck about people.
12y ago

huu 12y ago

I find it curious that pain points is given the inner quotes treatment whenever the JP Morgan CEO uses that term. It's almost like such a concept didn't exist before startups started addressing it.

niche 12y ago

I think what is especially interesting about this comment is that Wall St, which is on the East Coast, uses the internet in very different ways than Silicon Valley does, which on the West Coast. Both have ground to make up in this sense; Silicon Valley could be much more in tune with their East Coast counter parts...

wcummings 12y ago
>the East Coast, uses the internet in very different ways than Silicon Valley does, which on the West Coast In what ways?

Sealy 12y ago

His only mention of Bitcoin: Competitors are coming in the payments area. You all have read about Bitcoin, merchants building their own networks, PayPal and PayPal look-alikes. Payments are a critical business for us – and we are quite good at it. But there is much for us to learn in terms of real-time systems, better encryption tech- niques, and reduction of costs and “pain points” for customers.

chatmasta 12y ago

Everyone in the tech world, specifically the investors, has known this for a while. Marc Andreesen could have told this to Jamie Dimon ten years ago. "Software is eating the world" holds just as true today as it did when he first said it. The problem is that "software is eating the world" only in the long term. It's easy to get behind the mantra when you're imagining software in an idealistic, abstract sense. After all, just look around you. Software is disrupting industries left and right. It's cheap, reproducible, and highly leveraged with low marginal cost. Software is more economically efficient than the incumbent operations of every industry it disrupts. The financial industry is unlike any other industry software is "disrupting." The operations are irrevocably complex because they are inherently driven by human operators. Each year, more tech creeps in between the operators and the operations, and software gradually "eats" the industry. But bankers are not losing their jobs. Why would they? Software is more efficient, it makes them more money. It gives them more time to focus on improving other efficiencies. Bankers see software as a resource they can leverage just like anything else. The more it eats their industry, the more they feed it. As long as it continues making the bankers money, they will keep their own jobs. As long as they keep their jobs, they will keep leveraging their resources, which inevitably increases the complexity of the financial system. The longer humans are in charge of the financial system, the more complicated it becomes. I see very little chance of humans relinquishing complete control of the system to algorithms. There is always a human, or group of humans, at the top -- that is the nature of politics and civilization. Perhaps the human has less input as technology improves, but politics still requires that human to occupy the seat at the top of the economy. Somebody needs to be responsible for the system. We cannot relinquish all control to the robots.

eru 12y ago
Bankers are not one homogenous group. Tellers are different from quants.

dataker 12y ago

Most people take SV/WS as a geographical identity, starting a war between the two. However, rather than war, we've been seeing a confluence. WS is nothing but a group of workers, morality, tradition and culture. Right now, WS is not being destroyed: it's merely being mixed into the SV. Either by bringing its top executives or fostering a 'brogrammer' culture, the similarity between the two are becoming clearer and clearer.

nissimk 12y ago
It's been going on like that for years. Think of all the wall st folks who made their careers on tech stocks of the past, like Rick Sherlund at Goldman with Microsoft, and Mary Meeker. The funny thing about the overwhelming attitude regarding the financial industry on HN is that the venture capital business is just another area of the financial industry and it has all of the same (mis)behaviors: managers benefiting from information asymmetry, high fees for questionable returns / risks, etc.

deleted 12y ago

[deleted]

arbuge 12y ago

>> “Rest assured, we analyze all of our competitors in excruciating detail – so we can learn what they are doing and develop our own strategies accordingly,” he said. Perhaps worrying more about analyzing their customers needs and less about their competitors would be better. I also found it amusing he considers PayPal a "new payment technology"...

kokey 12y ago

I worked for JP Morgan Chase a couple of years ago, as part of the main technology division for the entire bank. If I remember correctly, this 'IT department' had the same headcount as Apple. It was an interesting place. There was a lot of technologies being used through the organisation, lots of python and Java code, perl with Mojolicious, puppet and cfengine, desktops were Linux based terminals connected to virtualised Windows desktops, Hadoop and Cassandra was being rolled out, interesting things with FPGAs were being done e.g. http://web.stanford.edu/class/ee380/Abstracts/110511-slides.pdf http://web.stanford.edu/class/ee380/Abstracts/110511-slides.... I worked with many skilled and experienced people, and nice people too. I have worked for many multinationals before, and this bank was certainly the most nimble of them all while being the biggest and most stable at the same time.

arthurcolle 12y ago
Why did you leave?
- jbob2000 12y ago
  >I worked for JP Morgan Chase a couple of years ago My guess is that when they caused the recession, he got laid off.
- kokey 12y ago
  I got persuaded to join a start up full time, one I co founded years before joining the bank. In retrospect I should have remained at the bank.
  - arthurcolle 11y ago
    Cool I am starting at GS this summer so I was curious if you decided to move on from banking or of it was more you deciding to try something new.
loganfrederick 12y ago
I also worked for approximately two years at JPMC. My anecdotal experience (and of many friends in other departments) is that the bank is so large, that the following phenomena can be seen: 1. Yes, there is a lot of variety in technologies used. 2. This variation is due to the large organization not being structured for different departments to communicate with each other. 3. Therefore, for every department using Hadoop, you have one on COBOL. For every Scheme group on Linux, you have a Visual Basic group on Windows.

bko 12y ago

One reason I don't think JP Morgan or traditional banks can compete effectively with smaller startups is the regulatory framework that they operate in. New startups can structure themselves outside this framework and be more nimble. For instance, Lending Club essentially passes through all credit risk to its investors with its assets and liabilities perfectly matched. So every dollar loss in loans is a dollar less to the holders of the notes. If a bank tried to have this sort of structure, it would be incredibly leveraged and would require a large amount of capital reserves. There was a great Bloomberg article addressing just this [0] [0] http://www.bloombergview.com/articles/2014-08-27/lending-club-can-be-a-better-bank-than-the-banks http://www.bloombergview.com/articles/2014-08-27/lending-clu...

chiph 12y ago

The problem with starting a new institution these days is that the regulatory & audit issues mean that you'll be a small bank, with the overhead of a large bank. There's also the package integrations to deal with. Banks tend to buy packages for their core functions, and then (try) and integrate them. There's an opportunity here for someone who can offer a "Bank In A Box" -- all the software needed to start a bank/credit union that is well-integrated and complete -- from GL/AP to lending, depositor management, ACH + Fedwire connections, and disaster recovery.

morgante 12y ago
I've been thinking of developing a "Betterment in a box."

smoorman1024 12y ago

Relevant to discuss the viability of different fintech startup ideas: https://news.ycombinator.com/item?id=9321019 https://news.ycombinator.com/item?id=9321019 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3cd0995e0da3 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3c... I agree that there is some naivety when attacking huge institutions as mentioned in the article. Particularly when it comes to dodging regulation. Rather than putting you on top dodging regulation is probably going to put you out of business when it comes to Financial Institutions. [P.S. will the Gods of HN please upvote my comment so I can have the slightest visibility here]

cubano 12y ago

So Facebook basically gave everyone a personalized website and social graph. Twitter, everyone got their own chatroom. Instagram, a photo-album. Perhaps the next killer finapp is to allow everyone to become their own bank?

fsk 12y ago

Banks have one advantage in this area. The have government regulations and many other laws making it hard to organize competition, such as anti-money-laundering and know-your-customer laws. Look at what happened to E-Gold. It was a threat to traditional banking, laws were changed, and the business was declared illegal (and many of the operators went to prison for violating laws that were passed after they started operating).

pjc50 11y ago

On this subject, from the finserve side: https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3cd0995e0da3 https://medium.com/bull-market/a-cynic-s-guide-to-fintech-3c... The author applies heavy skepticism, but does rate some of the fintech business models as worthwhile.