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Blue oceans for banks

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Re: Blue oceans for banks

#31

Post by neffy »

brickcap wrote: post #27
cs702 wrote: post #25

The very smart, very shrewd, hard-working folks at Simple tried building a new kind of bank... and found out that the business of banking is FAR more complicated than it seems. Ultimately, Simple decided it would be best to sell to a giant established bank, BBVA (USD 800 billion in assets): https://www.simple.com/company/the-next-chapter The OP is a short ambitious document written by two guys who think they can do b…

The idea of posting it on hacker news is to make sure that if we can't do it someone else (better) can. There is a market. There is big money to be made. Banks are more receptive of startups than they've ever been. It'd be a shame to see this opportunity pass by. Further we're not building a new bank. We're proposing to use the existing systems available, in any international bank today ,in a new way. Simple was a ch…

What you´re describing isn´t a bank. It´s an international payment facilitator. There´s more competition in that space than you realise. If you want to be a bank, you´ll need to solve lending, and you should also investigate nostro/vostro accounts.

Re: Blue oceans for banks

#32

Post by brickcap »

JustUhThought wrote: post #22
pja wrote: post #14

There ain’t no hubris like FinTech startup hubris.

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

But we didn't suggest any lawlessness!

[1]https://en.wikipedia.org/wiki/Visa_Inc.#History

Re: Blue oceans for banks

#33

Post by nickpsecurity »

tiatia wrote: post #29
vidarh wrote: post #21

Since they mention airlines: Norwegian (the airline) started it's own bank: https://en.wikipedia.org/wiki/Bank_Norwegian

This has very likely tax reasons. Many major companies have their own banks and even insurances. An insurance is an easily available tax shelter.

I'm sure there's tax benefits but wouldn't it also reduce fees and increase flexibility due to founding company's control of bank?

Re: Blue oceans for banks

#34

Post by brickcap »

osullivj wrote: post #24
brickcap wrote: post #23

Earlier quoted context omitted.

Yes! and virgin has a bank as well. This is a very lucrative market.

Yes, Virgin Money does a range of retail financial products. Their residential and buy to let mortgage offerings are based on their 2012 purchase of Northern Rock from the British Gov't. Northern Rock collapsed during the 2008 financial crisis due to the poor quality of its loan book and loss of access to wholesale money markets. Borrow short and lend long to sub prime borrowers turned out to be a bad strategy! I've…

>the UK mortgage industry is technologically stone age!

Very interesting. Would love to have more details!

May I also ask if Virgin money has services that integrate with their other business, like say virgin airlines, as well?

Re: Blue oceans for banks

#36

Post by neximo64 »

brickcap wrote: post #26
neximo64 wrote: post #16

Earlier quoted context omitted.

The idea of using Barclays, or any 3rd party bank, is just to get enough traction so they have their own participation method later. Also it doesn't show Barclays on the statement from my usage - it shows the end merchants details. I didn't really know it was Barclays till now. Barclays has been known to help startups by lending them their (global) infrastructure in the UK. Another Example is Dopay where Egyptian Bar…

You misunderstand me.... You can think of revolut as a front end for barclays client pool account. This is a very simplistic explanation but what I'm trying to emphasize here is that the money revolut manages is effectively with Barclays. So the idea of having Barclays is not to get traction or to have their own participation method later but to have the muscle of a bank that can handle large scale international paym…

> Yes, but why? Barclays profits with every customer that revolut brings/ will bring. Other banks would want to profit in a similar way.

Actually they hope the startup does well so they can buy them later. Revolut's cost of acquiring a user is far less than Barclays (Barclay's deal isn't free, they take equity in exchange for letting startups using their infrastructure, it's not that expensive considering what they give though.

I think I know what you're getting at, at replacing the Correspondent bank system. There's another one, Transferwise, that seems to be getting transaction where Banks in other countries use it internally to avoid correspondent banks (transferwise often matches transfers to avoid transfers).

The BoE's 2020 system isn't for an ordinary firm to replace a banking partner. It's to join the payment network and have an account backed by the BoE/blockchain without it being at a designated high street bank. It wont be easy to use I guess, but it would be compelling enough for a Fintech company to use it.

I can see alot of value with the service you're describing, I don't think the level of value would be high out of countries which have high legislative requirements/forex controls. I had a similar idea a few years ago and my base assumptions were incorrect regarding people's needs for my service.

Re: Blue oceans for banks

#37

Post by JustUhThought »

brickcap wrote: post #32
JustUhThought wrote: post #22

Earlier quoted context omitted.

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…

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.

Re: Blue oceans for banks

#38

Post by brickcap »

tiatia wrote: post #28
cs702 wrote: post #25

The very smart, very shrewd, hard-working folks at Simple tried building a new kind of bank... and found out that the business of banking is FAR more complicated than it seems. Ultimately, Simple decided it would be best to sell to a giant established bank, BBVA (USD 800 billion in assets): https://www.simple.com/company/the-next-chapter The OP is a short ambitious document written by two guys who think they can do b…

The paper contains a lot of bullshit and I don't see any new idea in it. Foreign transaction costs are not "prohibitive" expensive and there are CC in the US with no foreign transaction fees. You can use transferwise or WU in the worst case (just wired a buddy who is broke US$ 300 online). Social network and payments? Use Wechat! There are three major problems that they won't be able to solve. 1. KYC regulations 2. F…

The website is out of sync with our ideas. We need to update it. Apologies for any confusion caused.

If you don't see any new idea then can you at least see a concept that has been proven already by revolut. If so can you see a possibility that this concept can be taken further to include other businesses and banks? If you do can you can you imagine a scenario where ideas we suggest might be probable?

And if we are able to overcome the challenges you put forth would you say that this idea is a winner?

Re: Blue oceans for banks

#39

Post by brickcap »

JustUhThought wrote: post #37
brickcap wrote: post #32

Earlier quoted context omitted.

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…

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, pr…

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?

Re: Blue oceans for banks

#40

Post by osullivj »

brickcap wrote: post #34
osullivj wrote: post #24

Earlier quoted context omitted.

Yes, Virgin Money does a range of retail financial products. Their residential and buy to let mortgage offerings are based on their 2012 purchase of Northern Rock from the British Gov't. Northern Rock collapsed during the 2008 financial crisis due to the poor quality of its loan book and loss of access to wholesale money markets. Borrow short and lend long to sub prime borrowers turned out to be a bad strategy! I've…

>the UK mortgage industry is technologically stone age! Very interesting. Would love to have more details! May I also ask if Virgin money has services that integrate with their other business, like say virgin airlines, as well?

Happy to answer questions by email - see my profile for the addr...
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