APIs, App Stores, and the Era of Mass Customization in Banking | Hacker News Reader

APIs, App Stores, and the Era of Mass Customization in Banking

blog.zactownsend.com

16 pointszt9 comments

Almost seems like a pr piece for Standard Treasury, http://standardtreasury.com/. White labeled customer (developer) facing api's, I believe. I'm not entirely certain how this scales for ST because even though they will provide a standard forward facing api, ST will have to custom fit that on the backend to each customer. (Possibly more disjointed than the industry I'm involved with, healthcare, because at least in healthcare there are a handful of major EMR vendors that all the major institutions use.) In Big Finance most everything is custom legacy, I would imagine. On top of all this, they have the taint of the startup about them. Large industry is loathe to get in bed with startups simply because they are not proven and can not be relied upon in the long term, further, startups are prone to get acquired. How would you like to be Citibank and have a competitor, say BoA, buy the company whose product you just deployed? See Simple.

Although I do see the need, I don't see the innovation from Big Finance. As with anything else trying to disrupt an entrenched industry, it will take early wins to get the ball rolling. In order for this to work Banks would have to become tech shops with all that entails, this has been discussed on HN previously. It is just not in their nature. Banks don't do board shorts and dogs in the office. Modern techies are loathe to work for banks. Where does the innovation come from?

FTA:

> Zachary Townsend Co-Founder of Standard Treasury (YC S13). Angel Investor. Statistician.

Ha, I didn't scroll down to the footer!

Ya :). Most of my writing to date hasn't been about ST, per se, but this was my first trial. Sorry that if it is too marketing-y.

Sorry, zt. Didn't scroll down to the footer/know that you were connected to ST. I'm sure you're doing great stuff but it's hard to see how you get customers without a big bond/insurance against buyout. How do you change hearts in minds and the C suite of Big Finance? I know in my field it is virtually impossible to get Bit Health to buy from startups - even though health is used to constant change (research>better care>new care protocols).

Basically we sign long contracts that don't have many outs. (We also put our code in code escrow). In this way, even if we were bought by Bank 1, they would be obligated to serve the contract of Bank 2. In essence, the moment we signed one long-term deal, we became unacquirable to other FIs and are left with folks like First Data, FIS, Fiserv. Basically, we aren't selling.

Without giving away the secret sauce, could you talk a little about how you unlock growth by decoupling from the incredibly time intensive task of custom integration with each customers (Financial Insitution's) backend? Or maybe you don't and it just is what it is. I imagine you have some internal model you code to that is multi-tenant in some fashion but you are still bound by integration time with each client and then each client needs to be constantly monitored for change management basically forever. Like you need to be inserted in their change management process so they don't break your product. Eeep!

most banks (esp in asia ) didn't have much tech investments(other than the core investment they anyway make for banking services) in fee-based-revenues(against interest-based-revenues)(and hence its management) for sometime until the 80's or 90's.Later a lot of them started getting into the fee-income management for almost all their services.Some even got into product-catalog management (if that's what you call prod-eco-system) building their own service eco-system(eg many payment gateways in developing economies were run by banks) and loyalty management systems.

Service customization was a long run topic, in banks (esp europe and americas) , not that they were less agonized with technology but most corporate and wealth clients (of these banks) enjoyed lots of (un-federated) customization benefits.The very costs of these services led to them being so.(eg we have very few payment gateways in town , even today!)

However with depreciating computation costs these services opened up for federation , hence more customization.

However the repo-runs etc in the recent past led some raising very skeptical views of these.(e.g. fee based rev estimation on ABCP charges etc...)

Its however a very complex and dynamic market.Long time back DB research had a paper on complexities in retail pricing.(https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD000...)

Overall the thing being:service federation, service eco-system , service-customization etc are not something new banks for banks (that they have to learn from others)

Its only the revenue vs cost benefit that keept it away from these.

With regulatory policy changes in investment-banking post the repo-run era , banks are left with fee-based income as one more tap to top!Thus we see these banks doing these nowadays(as though suddenly jumping).Its not tech that led to these decisions.

Usually in reatail-banks : decisions are not driven by successful technologies , but rather by late application of those ...

I bet there is so much inertia in the big banks that it's going to be left to startups like GoBank and Simple to build these things while there's less risk to them due to their size.

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