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Comment by __MatrixMan__ | Hacker News Reader

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few).

It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being compliant on our behalf.

The waste is incredible. It's all promises of "we'll handle that" but never any actual contact with somebody who can code and you know... handle it. I'm beginning to think it's just parasites all the way down. And if that's how it's gonna be, why not cut out the middlemen and be the only parasite in the loop?

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Exactly.

I talk to several Fintech startups a month complaining about this sort of thing. Forgive me if I can't quite gin up any sympathy. It's a business with centuries of baggage, massive inertia, vast resources, but what I typically hear is "I'm gonna Uber/Tesla/Bird this financial industry thing in 6/12/18/24 months, ignore the rules because 'disruption' and find someone else to push all the risk, compliance and governance issues off onto. I'm going to pretend it's not a cost of doing business and hope no one catches on before we find an exit and get rich". And now you're finding those 'others' aren't the suckers you wanted them to be, and that complying with regulations, especially across the world, actually costs money. Tons of it.

And most of all...real disruption is incredibly hard, no matter the SV mythmaking. The Fintechs that are going to be unicorns aren't complaining that the people they tried to outsource the hard parts of the business to aren't making all the hard problems magically disappear.

Thank you. Finally a succinct, true statement regarding financial regulation.

I work in finanance and a huge chunk of my work is generating reports for regulators. Specifically in derivatives (swaps and such), which was fairly wild west before the financial crisis.

There's a lot of catching up and a lot of interest into the trades by regulators, which were basically off-exchange and which are a big part of structured products. Those are financial products, which Warren Buffet deigned "Financial Products of Mass Destruction"

And you know what? I agree with those regulations despite the fact that it can be a real pain.

And if anybody really believes such regulation is crap and just there to support entrenched market players. Well; essentially banks self regulated before the financial crisis.

And what could ever go wrong with that?

I don’t know if it is specific to banks but there is a common pattern I have seen among internal developers: not only a complete lack of curiosity to understand finance, the underlying business, but an active resistance to any attempt to explain them. They want the numbers to be data, and don’t want to have to know anything about this data, and be told exactly what to do with it and they will code it up.

I am sure there are exceptions, but my point is if you talk to someone who understand what is going on in a bank, you would be extremely lucky that this person also can code.

This is slowly changing as I see an increasing number of junior bankers who are also interested in picking up coding skills. They won’t be developers per se but will certainly become technically literate interlocutors. But it will take some time.

As a counter, I've contracted for a bank and big business generally, and they are activly resistent to allowing you to interface with the business in any meaningful way.

There's several reasons for this, but at the end of the day people don't take kindly for your making them redundent and there's a lot of fiefdoms going around.

Why would any developer who wants a deeper look stick around?

That is profoundly untrue in my experience (13 years of working as a Dev manager at UBS and BofAML). The knowledge of how the business really works sits largely with the long-served IT and Operations staff. This is certainly the case in the back office (clearing and settlement) and in the regulatory space. I can't speak so much for the front office, but it seemed that the developers with successful careers were those who understood the business and therefore could talk to traders and desk heads in their own language (far more successful than the developers who were actually any good at producing maintainable software, but that's a different rant).

There are lots of things wrong with technology in large banks but the business knowledge of developers is pretty low on the list.

I left banking a few months ago, so I am no apologist for the sector.

I've seen that pattern too, and perhaps I'm a little guilty of it.

But if you say:

> we want to encrypt this field with your public key before sending it to you

and they respond:

> yeah, we can handle that

and then contracts with deadlines and penalties are signed... Wouldn't you expect there to be somebody on the other end that is willing/capable to generate a GPG keypair?

At what point is it worth holding their hand through the technical bits, and at which point would it be better to replace them?

Because that's how the cycle continues and the status quo remains the same.

It once started out with someone asking the exact same question and evolved into this.

«why not cut out the middlemen and be the only parasite in the loop?»

Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.

> No middleman

except for a handful of giant server farms in china

Miners don't have middlemen powers. They can't censor your transactions like a true middleman could. Even if 9 out of 10 miners colluded to censor you, all you need is 1 out of the 10 to be honest, and your transactions would still go through.

But the biggest actors in crypto are the exchanges, literally the middlemen between buyers and sellers. The volume of trade with crypto as a medium of exchange is dwarfed by the amounts changing hands via the exchanges.

You may need an exchange once to acquire crypto (and even then, not really, you could buy crypto from an individual, or mine it, or just take a payment in crypto...) but once you're "in the system" so to speak, you can pay and receive crypto without ever having to deal with exchanges anymore.

I've made this observation too.

We spend a lot of time trying to achieve consensus with our neighbor parasites about the status of a transaction (slice the pie n ways, perhaps your database says that m of those n got paid, but mine says that m-1 got paid...), but if it were on a public blockchain there would be nothing to dispute.

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