
Banking and fintech: An unlikely romance blossoms for startups - e15ctr0n
http://www.economist.com/news/finance-and-economics/21679478-unlikely-romance-blossoms-love-and-war
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karlorykard
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.

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

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baccredited
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.'

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justizin
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.

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cm2012
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.

