Banking and fintech: An unlikely romance blossoms for startups | Hacker News Reader

Banking and fintech: An unlikely romance blossoms for startups

economist.com

28 pointse15ctr0n6 comments

Everybody wants a piece of the customer facing business. That's understandable because most people are familiar with banking through their own interaction as a customer; however, Silicon Valley is missing all the stuff that goes on behind the scenes. Working in a bank is a technology nightmare. If you could just liberate me and my colleagues from a few horribly designed yet highly used pieces of software, then so much more could get done. You'd probably also save a life or two through the amount of stress better tools would eliminate. I'd do it myself, and I have tried once before with a small undercapitalized team, but doing anything in the financial space is strictly against the terms of my employment.

I'd love to hear more about what obstacles you faced (besides being undercapitalized) and which ones you were able to overcome.

Same here, would love to hear about your tools and current workflow.

The article is about JPMorgan Chase, but I think this Taibbi quote about Goldman Sachs applies:

These banks are a 'great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.'

don't go quietly into the night of downvotes :)

I worked earlier this year for a fintech company and they are doing their best, within their realm of understanding humanity, to improve people's access to life-changing finance, but what actually happened in the financial crisis is that the _businesses_ behind underwriting all of these loans started going belly up, so when your debt ends up in a spreadsheet sold to three different collection agencies and you pay the wrong one and your debt is never settled, fintech can't fix that, and is IMO putting their clients at greater risk of that than larger banks.

In fact, the only reason Wells Fargo received any bailout money is that they saved another bank, but they still underserved that bank's customers because they did not have the resources to manage the fallout, so a lot of people were foreclosed upon illegally and unnecessarily and with little financial benefit to the bank or certainly society.

This rationale behind relationships like this is pretty straightforward. Banks can't profitably lend amounts below $250k to small businesses, because underwriting a $250k loan costs them about as much as underwriting a $1 million loan. If they can partner with a company that can do it, then banks can underwrite more loans without any increase in acquisition cost.

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