Seed (YC W15) Wants to Reinvent Business Banking

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.

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.

This is great perspective!

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

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.

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?