
Seed (YC W15) Wants to Reinvent Business Banking - emilepetrone
http://techcrunch.com/2015/02/17/yc-backed-seed-wants-to-reinvent-business-banking/
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anemitz
How does this compare to Standard Treasury? It looks like maybe Seed is more
on the consumer/business side and ST would be seen as a wholesale banking
provider (one level up in the bank chain)?

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btmerr
Dan can do a better job of talking about Standard Treasury than I can, so I'll
let him speak for them.

As for us, we are not planning on serving consumers. We are focused on serving
startups and small business customers by providing traditional business
banking services in addition to our API.

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Meekro
Hi Brian! I've read your API docs, and all this is pretty intriguing. As I
understand it, you're offering this service so other people can write consumer
apps for banking, and companies can integrate the API into their internal
systems. I have just a couple of questions..

1\. What are your thoughts on dealing with fraud? While ACH is often
reversible, wire transfers tend not to be. Established banks often have
convoluted wire procedures (that often involve showing up in person at a
branch) precisely because a fraudulent transfer -- even if the fraud was the
user's fault because of phished credentials -- often results in the bank
eating the losses. How will your company handle losses where somebody's API
credentials got hacked, their balance transferred to Romania, and the victim
notices and reports the fraud 59 days later?

2\. One of the biggest limiting factors in bitcoin's growth right now is that
exchanges struggle to get and keep relationships with traditional banks. No-
doubt fraud prevention has a lot to do with this, but any bank that steps up
to the plate could charge its partner exchanges huge fees and still be
swimming in business. Have you thought about being that bank?

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btmerr
Hey there!

One thing I want to be clear about is that we will not support consumer bank
accounts, either directly or through our customers. So it will not be possible
to build your own branded consumer bank on SEED.

We expect our API will be used by companies that see value in automating their
payments and receivables process, have a desire to integrate banking into
their internal backend systems, have a desire to easily do analysis on their
banking data, and so on. In the long run, we expect that most of our customers
will use our mobile and web clients rather than using the API directly.

To answer your other questions:

1\. Properly managing fraud is critical to our business. As you mentioned, the
potential risks are scary both for us and our customers. Some of what we do
will remain private, but over time we'll share more of our approach to
ensuring the safety and security of our customer funds. While we intend to
protect ourselves against loss as well as or better than traditional banks, we
believe there are many ways to do so without the inconveniences that most
banks impose on their customers. Our first hire is an expert in cryptography,
mathematics, and infosec, so that should give you some idea of where our
priorities are.

2\. We have thought a lot about how to best serve the bitcoin community. In
fact, that used to be our pitch -- a bank for the bitcoin economy. As we spent
many months talking to bitcoin merchants and the community at large, what we
found is that the problems they face are the same problems many businesses
face -- existing banks are serving business customers poorly. Until bitcoin
stabilizes as a store of value or derivative strategies are baked into the
exchanges, we don't believe that bitcoin transaction volume will grow
meaningfully, so we're not focused on serving bitcoin merchants right now.
Since our platform is flexible, we'll be able to integrate bitcoin support if
and when it becomes a need for our customer base, so we'll see what happens.
Personally, I own bitcoin and would love to see it or other cryptocurrencies
thrive, and I'm a believer in the blockchain as an enabling technology.

As to banking the exchanges, we're really limited by our regulators. We
believe that properly operated exchanges that have MSB licenses and are
running compliant KYC/AML programs deserve access to banking, and we believe
that we can provide banking services to exchanges in a safe and lawful manner.
However, the risk tolerance of our regulators does not always match our own.
This is something we'll have to work towards. In the meantime, it's heartening
to see that some exchanges appear to have found stable onshore banking
relationships, such as Coinbase + SVB.

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Meekro
Thank you for the insights! Could you elaborate more on the challenges of
convincing regulators to allow you to partner with bitcoin exchanges? Clearly
it's not prohibited, if SVB is able to do it with Coinbase, but what exactly
are the regulators saying or doing that prevents you guys from getting into
that game?

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btmerr
If only it were black and white. Banks are regulated by a variety of groups -
the FDIC, the OCC, the Fed, and state regulators. Different regulators have
different viewpoints. Then, even within the same regulatory agency, different
individual regulators have different viewpoints. Meanwhile each individual
bank is unique - different capitalization, risk profile, market, and so on.

There are a lot of situations where there is no hard and fast law that
prohibits banking a particular customer, but the opinion of a regulator goes a
long way in encouraging or discouraging any particular bank from doing so.
Marijuana banking is an example of the murky waters banks must wade through.
Is it legal or not? Depends on who you ask.

I'm not privy to any details, but I assume that SVB's regulators feel that the
bank does not present a risk to the system by banking an exchange. SVB is the
50th biggest bank in the country or so, so they're in a different situation
than a startup or community bank.

I suspect this isn't a very satisfying answer. All I can say is that in the
long run we are motivated to offer banking services to every lawful business
that we can ably serve.

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online_reader_
Read the article, visited the website, read the docs -- still don't know why
this exists or what the value proposition is; however, I'm not a business
owner and don't do business banking. That said, I don't think I'm all that far
off from the target audience as I do deal with billing, account balances and
money transfers through third party api's.

As an aside, someone needs to 'disrupt' the home mortgage loan process from
top to bottom. Super opaque and really annoying to go through (even the
information gathering phase) when compared to almost everything else I've
experienced as an adult.

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btmerr
Our API offering is directed at a niche audience, but we'll be offering more
products in the future, such as traditional online business banking, lending,
and so on.

+1 to someone fixing home mortgages. Super painful.

~~~
sighype
Can you toss out a few use cases where I'd kill to have you guys over a
traditional bank?

I'm curious how you pitched yourself to YC. Did you say you were going to be a
sort of venue for people looking to build custom financial services on top of
your API?

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btmerr
We're building a better business banking service.

To do so, we built an API first. Rather than waiting to release our mobile and
web clients to serve traditional banking customers, we decided to release our
API first, so that any companies that can take advantage of it can get after
it. We've talked to a lot of companies that want to automate ACH payments,
wires, check sending, and so on, rather than relying on manual and offline
processes. Most businesses will be best served by our apps, once they're
available.

As for use cases, our conversations with business owners have led us to
believe that nearly everyone is frustrated with the existing banks.
Applications are difficult to use, offline forms are required, service is
poor, and so on.

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salusinarduis
This is great perspective!

Seems like I could build my own personal banking/accounting site securely with
this.

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btmerr
Hey there, I'm Brian Merritt, the CEO of SEED. I'm happy to answer any
questions you might have. You can also email me at brian at seed.co.

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rahimnathwani
One of the key elements of business banking is short/medium term credit (e.g.
overdrafts and small business loans). These are typically offered by a
company's main bank (as this bank has complete info on the company's past cash
flows).

Do you intend to offer loans and/or overdrafts, either yourselves, or in
partnership with other companies?

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btmerr
Short answer, yes. We have a lot of ideas about how to offer credit and
lending products, both ourselves, and with partners. We're spending a lot of
time talking to companies to understand the current pain points, and we'll be
able to share more soon.

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levlandau
Is Seed similar to Plaid ([http://www.plaid.com](http://www.plaid.com))?

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btmerr
We love Plaid, but we're different. We compete with other banks -- Chase,
Silicon Valley Bank, First Republic, Wells Fargo, etc.

Zach can speak for Plaid, but to my understanding they're focused on providing
API's that improve banking experiences for existing banks and bank customers.

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toufka
Gotta say from an outsider's perspective, Seed [1] and Plaid [2] are pretty
hard to distinguish from each other...

[1] The world's first business banking API

[2] The API for banking data

[1]
[https://seed.co/images/graphics/seed_logo_blue.png](https://seed.co/images/graphics/seed_logo_blue.png)

[2]
[http://farm6.static.flickr.com/5572/15111751177_d74935b2b4.j...](http://farm6.static.flickr.com/5572/15111751177_d74935b2b4.jpg)

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btmerr
Fair point. We'll work to do a better job of helping people understand what we
offer. Our focus has been to get our API into the hands of our early customers
as soon as possible.

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logn
What tool are they using to write their API docs? I think Stripe uses the same
thing. [http://docs.seed.co/v1.0/docs/authentication-
login](http://docs.seed.co/v1.0/docs/authentication-login)

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JOfferijns
On the bottom of the page it says "Powered by readme" and links here:
[https://readme.io/](https://readme.io/)

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gdillon
Hey, I'm one of the ReadMe founders. Stripe was certainly an inspiration for
us. I'm so psyched to have SEED building their API using our documentation
tool—nice job SEED!

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btmerr
We couldn't have done it without y'all, thank you!

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justkd
I really love what you are doing. And it was about time:) I love you for
tackling such a huge problem for us. Thx!

~~~
btmerr
Thank you. We're honored to have the privilege to work on this problem and
help the business community in any way possible.

