Maybe so, but please don't post dismissive swipes to HN. It degrades conversation quality and encourages the habit of rejecting new work or new ideas.
It's true that most new work and new ideas won't amount to anything. But those that will, almost never look like they will when they're incipient. So if we don't want to trample on new things of great potential value, we have to adjust our response to all new things, including the ones that seem lame. It takes a certain discipline to practice that suspension of judgment, and we're hoping to cultivate that quality here.
OK: To expand. FinTech startups seem particularly prone to some form of the “the bits of a business I can observe from the outside are obviously shit, so all I have to do is re-create better versions of those & the customers will flock to me in droves & I can take over the world” fallacy.
Be as positive as you like, but any proposal that doesn’t at least nod to the wider issues is going to make me instantly suspicious that the founders don’t actually understand the banking system as is, or the reasons why it’s structured that way.
Here’s a small list of issues that I’d like to see covered in at least some fashion in a FinTech proposal, but are often glossed over or completely omitted. I’m sure others could think of more.
* Banking is heavily regulated whilst at the same time being the target of some of the most persistent and talented fraudsters on the planet. (Paypal burnt through, what, a $billion or so in fraud whilst trying to establish themselves?) You want to be a global banking solution? You’d better have a damn good idea how you’re going to deal with fraud.
* Did I mention that banking is heavily regulated? Your product brief had better demonstrate how you fit within the existing regulations. Failure to understand this will be terminal for your company (Where by terminal I mean: the execs risk going to prison and / or large fines. The SEC does not mess about.) Move fast and break things is not a valid strategy when ordinary people’s money is at stake.
* US FinTech startups are particularly prone to thinking that the rest of the world has a banking system as broken as the US one. Nothing wrong with trying to fix the US system but if you say you want a billion customers? You’re going to have to take a decent chunk out of the world’s population, which in many cases already has a perfectly decent banking system: Fast same day payments, very low fee international transfers, no-load payments in foreign countries, the works. Don’t think that the rest of the world works like the US.
* Every transaction is two sided - banks are middlemen - so your wonderful product had better appeal to both sides if it’s going to be successful. It’s pretty much doomed to fail if it only benefits one party in a transaction. If your plan is full of details about how wonderful your product is for people making purchases but very light on anything that would appeal to vendors (or vice versa) then I’m going to think that you don’t understand what makes payment systems successful.
* Banking is as much about reputation and credit management as it is about the boring details of money transfer. What allows me to buy things at a distance without cash is that my bank stands behind me and tells the vendor that my credit is good. If your bank is going to do that for me, then they have to have the standing to do that with the vendors I wish to purchase from. Can your FinTech payment system product do this? If not, it’s going to fail.
No doubt. Where does the assumption come from that banks aren't aware of this market. And how on earth does one compare near lawlessness of Facebook with the most heavily regulated sector of banking. Lastly, is the author completely unaware that not all business models try to maximize "eyeballs", or customers and that some attempt simply to maximixe revenue or profit.
Great critiques! Please understand that when you write a pitch the tone has to be a bit assertive. It wasn't meant to be insulting but rather invigorating. However I apologize for any offence if might have caused. We didn't mean any of it.
Having said that you raise many important points. Let me try to respond to them
>Where does the assumption come from that banks aren't aware of this market.
I'll concede that they probably are aware of this market. Now we want to build a service that caters to this market. And in the process make a profit for everyone involved. We know that there are businesses like revolut that have proven a part of this concept. We want to take it further.
If the market has been observed, services have been shown to be deficient and the concept proposed has been shown to be working then it should be smooth sailing.
>"not all business models try to maximize "eyeballs", or customers and that some attempt simply to maximixe revenue or profit"
There may be some business that don't try to maximize eyeballs or customers. But banks are not one of them for sure. If you look at the history of original credit cards they were made popular by
>"mass mailing of unsolicited credit cards (actual working cards, not mere applications) to a large population.[1]
It has also been my personal observation that banks put on large advertisements to attract new customers based on attributes like interest rates and after a certain period of time these attributes
get constant across banks. We are suggesting that it could be beneficial in the long run to look for a different set of customers.
>And how on earth does one compare near lawlessness of Facebook with the most heavily regulated sector of banking
The credit card model is a major departure from classical banking, so I wouldn't consider it a valid counter argument here. And besides, credit cards aren't about maximizing eyeballs, they are about maximizing fees and revenue. And I wasn't suggesting you were advocating lawlessness, I was suggesting you were comparing apples to oranges. Facebook and banking are based on totally different business models.
Banking, proper, retail custmers, includes merchant banks, investment banks, money markets, M&A, public markets debt and equity, and such. The piece seemed to boil it down to retail banking.
Point taken, though I disagree with your assertions that credit cards don't have much to do with classical banking and that they are not about promotion.
It's also true that banking services are entirely different from facebook. But the goals are similar.
I guess one way to restate my opinion in a couple of lines would be
There are markets and customers that are not immediately in the operational radius of a local bank. Any bank that can create offerings that would appeal to such markets would stand to gain profit.
Also to flip the discussion we could ask if facebook were to create a bank how would they do it?
It's true that most new work and new ideas won't amount to anything. But those that will, almost never look like they will when they're incipient. So if we don't want to trample on new things of great potential value, we have to adjust our response to all new things, including the ones that seem lame. It takes a certain discipline to practice that suspension of judgment, and we're hoping to cultivate that quality here.