Having worked as a vendor to the financial space for many years, I think it is easy to underestimate how hard it is get off the ground in finance (either banking or money management). There are many obscure regulations, and often the numbers just don't add up. In the end, this probably was a fair deal for Simple.<p>I think WealthFront is another good example of the difficulty. I like the direction they are going, but they had to pivot many times to get to were they are now, and they are still a fraction of the size of established players in the market. It still isn't clear if their business model is going to work.<p>With that said, the inefficiency in the money management business is pretty ridiculous. I think companies built from the ground up on new technology will eventually replace existing players in the market, but the margins will probably be a lot less as well.
Met Zach at the ST holiday party through a mutual acquaintance. I found him to be quite upbeat and aware of the challenges that are omnipresent in infrastructure businesses (source: I'm deeply involved in an infrastructure business involving a horse of a different color). One must bet big to win when it comes to infrastructure games.<p>For standard treasury, I believe that becoming a bank is a logical step and one that I would welcome wholeheartedly. There are so many things about the current monoliths I deal with that I hate and I feel like it's entirely possible for almost anyone to deliver a better experience.<p>They're in a hard place right now though. I don't think ST has any revenues to speak of and they don't appear to have raised any money post-YC. This is a business I really want to succeed but it seems unlikely to do so without a major cash infusion. I really like zt but they're in a hard place with no shelter in sight.<p>To put this in perspective, you probably need about $50M to start a chartered bank and you probably need $20-30M to buy a distressed one. Those are not ridiculous numbers for the kinds of returns this could have, but a bank will never have 97% margins as a business and so I don't know if this is a venture backable business. Now, a fund with longer time horizons... That might be interesting.<p>Edit: For the sake of clarity, I want to be explicit when I say that I'm pulling for standard treasury. It's a hard business and I really want them to succeed because I think it would be a net-benefit to almost all of us.
There's gotta be some viable way to "rent" the services of a small, forward-thinking bank (or, better, Utah industrial loan comp/corp) that would let you control most or all of the customer-facing aspects, no?<p>We went down this route at X.com (PayPal pre-cursor) but the intent was to eventually buy FWNB (<a href="http://www.netbanker.com/xcom/" rel="nofollow">http://www.netbanker.com/xcom/</a>).
It kind of makes me sad. Banking in the US is soooo outdated (paper checks?), and banks themselves together with government seem not able to come up with better ways of organizing this industry.<p>Let's hope somebody takes Zac's advise and goes for it. I hear a couple of just dudes got $16 billion, that sounds like enough to start with.
I sound like a broken record, but it all comes down to money transmission laws.<p><a href="http://www.thinkcomputer.com/20140214.cfpbcomment.pdf" rel="nofollow">http://www.thinkcomputer.com/20140214.cfpbcomment.pdf</a>
I'm seriously thinking about starting a bank. That's partly the end goal. A hedge fund is how I'm going to begin. If anyone's interested, let me know. I'm a few months from launching the fund. ricky@this_hackernews_account_name.com
I just closed my Simple account that I've had for a couple years now because of this. Call me crazy but I don't like the idea of contributing to social atrocity that is big banking. Really disappointed in Simple. Congrats to them though.
What sorts of services did you have in mind for your idealized bank? Is it just taking deposits and making loans? Maybe automated payments? Any corporate finance stuff?
So you need a huge amount of capital, talent, and fresh faces, but will be plagued by launch delays... sounds like Clinkle to me. Maybe this is what they're up to?