Griffin – A fully-regulated, API-driven bank, with Clojure

I see. So this helps you build a Neobank or something like that. It's Mambu for the UK?

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Unfortunately in the UK a bank can (and do) freeze your account with no reason for up to 2 years without any recourse or access to funds. With API access you risk your money being frozen due to automatic fraud detection. The government have given up policing of finance to banks and they take the least risky options

It's fairly common in Russia, too. Mostly because some "challenger banks" forced everyone else to modernise.

Its not clear there will be small banks in the US to use this tech in the future. Here's why:

1. Deposit flight. Small banks are struggling to attract deposits at a time when money markets pay considerably more than deposit accounts.

2. Investment scarcity. Small banks are struggling to find places invest deposits where returns are safe, on a reporting adjusted basis. Meaning, small banks invest(ed) in US Treasuries, but as the Fed has rapidly hiked rates, the mark-to-market value of these investments has declined (though the funds are safe). The same can be said of new lending, which has similar problems due to credit risk, primarily in commercial real-estate.

3. Perceived risk. Rather than allow depositors to purchase additional FDIC insurance (above the $250k limit), which insurance would generate revenue for the FDIC and banks, the USGOV had done nothing. If you want to insurance excess deposits you must use an IntraFI account that spread deposits among different banks, and/or brokered CD's which does the same for that banking product. Both are higher friction, and both prevent instant access to funds - regardless of one's tolerance for penalties.

4. FISERV missteps. Small banks rely on Fiserv and a few other vendors to for back office and retail banking systems. In Fiserv's case their software is well behind big bank products that provide more features and easier user interfaces. Younger banking customers prefer big bank systems.

5. Regulatory overreach. Complex issue, but in sum its not clear bank regulators understand the banking business, or if they do, that they have any flexibility. By way of a few examples, its not clear to me regulators understand the safety & utility of brokered deposit use by small banks; the worthlessness of many bank capital asset appraisals, or the immense risk real-estate heavy loan portfolios are facing.

6. Asset-based lending death. Pre-2008 one could borrow against many types of capital assets, allowing businesses to purchase those assets with, say, 20% down. The asset secured the loan, with little or no reliance on personal guarantees or recent cash flow analysis. This practice led to problems in the 2008 GFC, but instead of tweaking the approach, lenders and regulators simply eliminated asset-based lending. When I write 'eliminated' I fully understand its still advertised as a lending product, but underwriting is reliant on cash flow, personal financial statements, and other factors that make 'asset based lending' a marketing term, not reality. This was profitable business for banks and didn't need to die.

More threats lie ahead for small banks in the US. Folks in the know speculate USGOV prefers the Canadian model, where most deposits are held by several big banks. It might be the case FedCoin opens new possibilities for small banks, reducing Fiserv and friends hold on small banking business. One can always hope.