I'm a bit confused about why one would want to do this! If you become your own bank, what are the pieces you have to do yourself? (I imagine things like fraud?)
It's white-label banking, allows non-bank businesses to have a bank account product with their name on it, confusing everybody in the process. It's naff but not nefarious.
You're not actually becoming a bank. They are just providing an API so you can act like a bank. Your money is still going to be held by an actual bank. The banking services are still being provided by an actual bank.
Submitted title was "Increase: Become your own bank". Since that seems to be a bit confusing and I don't see that text on the page, I've reverted the title to what the page says.
Yeah it's one of those things where it's not technically correct, but it's probably correct from the user's point of view. Customers of Increase will look a lot like a bank to an end user, but they'll be 2 layers removed from the actual bank, and everything they do will mention the actual bank's name on it for FDIC/regulatory purposes.
Who are the target customers of Stripe Treasury? Existing banks who are fully ultra integrated with legacy mainframe offerings?
Who is looking into open a new bank/credit union and like... how much money is needed? How do you compete with Ally or any other "online" bank? How do you build trust and get people to give you their money, and for what benefit to them?
I have a real-life scenario that applies to my business: we employee 50+ freelancers ee pay every month. I dread when it comes time to pay them, because I have to log into multiple bank account and manually send each transfer using clunky web UIs. I am just copy-pasting all this data from a spreadsheet where it's already been verified. If I could automate payments to a sizeable portion of the freelancers, it would save me a lot of time and reduce potential for mistakes during data entry
ah ok. so this is a workaround of the traditional banks having crappy UI/APIs? what about using Stripe/Braintree/Paypal/etc (i know those are not exact matches, but just enquiring about the general problem space)
This is completely different. Stripe/Braintree are ways to charge customers on their credit/debit card on your website, completely unwieldy for paying freelancers. You'd have to have freelancers set up Stripe merchant accounts and receive card payments, that would be very weird and broken use case, especially considering Stripe's fees. I can send a freelancer an ACH transfer for $0, why would I want to pay 3+%?
As for PayPal, some freelancer (especially outside US) do get paid using it, but paypal's fees are outrageous and we try to get anyone we can on an alternative like zelle, ach etc.
That looks reasonable, having worked with Stripe's APIs before I know that part would at least be nice. But I am worried about pricing with the "contact sales". If they charged per transfer initiated that would be a dealbreaker.
Payoneer is one of the options we use to pay freelancers, in fact many of them quite like it, but for the freelancers' sake, I prefer 100% free methods like Zelle or ACH where possible because you have to pay a fee to take money out of payoneer you receive. At least it's better than paypal
I use Zelle through the BoA small business account's web interface, there is no charge. I tried getting Zelle API access through US Bank but they never replied so I'm stuck with BoA web.
Payoneer is really cagey about how you unlock better features, our account got upgraded to VIP though because we pay a lot through it. We still use their interface, maybe I'll figure out how to get their API someday
I'm considering it for foreign payments, but what I'm looking for is really a good API for ACH, Wire etc. because different freelancers want to use different payment methods. Honestly if Mercury (which we have an account with) would just let us do International Wires through their API it would already make life easier, but for whatever reason they only condone ACH transfers through their API (even though the web UI uses an API for wires...). Even then though, I still have to deal with other freelancers who want to use another payment method. That's why I'm looking for the most complete service out there in terms of financial system integration. The OP's service looks appealing to me because it says "ACH transfers", "Wire transfers", and "Real-Time Payments". That covers quite a portion of what freelancers want, unlike e.g. Wise, which is a single method. I'll keep doing my research for now.
$49/contract per month is just way way too much, sorry. Some freelancers don't even get paid that much in a month with the work they are doing. And with the churn we have as well, at a per contract rate we'd be pouring insane amounts of money into this solution. And they also aren't open about what payout payment methods they offer, that is not a good start.
Is a payroll company not an option? I'm not from the US but presumably there are companies that can do this for you at a relatively low cost per employee?
I think the difference is that the freelancers in our business can be paid very different amounts in a month, from ~$10-5000 in range. Deel is probably fine for you with what you're paying freelancers with its price, but imagine we have a freelancer only do, let's say, $30 worth of work in a month. Deel's cheapest plan is $49/mo. That is more than we're paying the FL! If you're paying the FL e.g. $3000/mo it's worth your money, but for us this would be a 163% fee. And with 50+ freelancers, that's at least ~$2.5k per month. At that price I might as well hire someone to click the buttons for me.
Have you looked at Upwork? We pay some of our offshore Customer Service people through Upwork. I'm not directly involved in that but presumably the economics work as their hourly rates are between $5-$15 per hour.
I think I wasn't clear enough in my initial post, but we personally reach out to and recruit and manage the freelancers ourselves, not through a jobs platform. Our business needs very specialized people you can't really find on Upwork
Is this like Vodeno in europe? When looking at job listings, I realized that Aion Bank appears to be just a marketing wrapper around Vodeno, which handles all the administration, technical stuff and even banking license and customer support.
It sounds cool, but I don't fully understand: is this a fully-fledged US bank (with a banking license, FDIC insurance, audited,...) that allows you to do all banking transactions through an API, or is this a framework that you can use if you are already a bank to expose all your transactions through an API, or something else?
I think they provide a backend so you can issue your own cards, with bank accounts routable through normal banking systems. Payoneer famously rely on third party "back-end" banks for their services, as they issue cards, offer routable bank accounts, cash withdrawal, etc.
This is an extremely niche use case of course, but it's not the first time they popped up on HN at least.
In mobile ISPs, MVNOs are quite common, and there is a large amount of customer base because they simplify KYC, sales, and customer on-boarding. Technically, this API should provide the platform to build a similar "Virtual bank". I do not think anybody without a significant technical and financial resources will be able to pull it off.
Another use case I can think of are market places like ebay, Amazon, Aliexpress, etc. Each seller receive a bank account that they get their payments deposited to, and can be withdrawn from their branded card. I do not see this being a commercially viable option for many, because pretty much every country has free or almost free systems in place to simply transfer money, and not take the unnecessary burden of issue cards, maintaining bank accounts, etc. Payoneer used to run a similar program, with branded cards, custom fee structures, etc, but it eventually failed as far as I know.
There's always a real bank backing this, and they are going to throw up requirements. Seems Increase is calling them "partner banks" (Blue Ridge, First Internet). If you're using this API, presumably you would have to get KYB'd, give insight into your books, and commit to certain minimum volumes. This is not Stripe. But maybe I'm wrong (very possible).
Increase is not a chartered depository institution. We work with our partner banks to provide depository and payment services. When you open an Increase account, you agree to the Increase Terms of Service below. When you use the Increase service to set up a deposit account, the account is with First Internet Bank or Blue Ridge Bank and is subject to your agreement with the Bank Terms below. Finally, Increase's use of your personal information is described in the Privacy Policy below.
Doesn't look like they provide an API for any sort of brokerage services. I have written a lot of sqlite to track my progress with buying/selling stock options but the biggest pain point for me is transcribing my transactions into my sqlite database. If they expand their API to brokerage services then this could be a killer feature for me.
Seems like bbaas, banking backend as a service, solves a significant need in the world, considering existing alternatives. For example in Europe there’s Mambu that seems to do something similar.
Not sure what the exact customer pain is here, could be that banks were the first to adopt IT and now have a large legacy where there is little value in rebuilding it with modern stacks, as it offers little competitive differentiation.
Or maybe there’s a need to quickly bring new banking products to market, and the backend stuff is so standardized that it’s best to buy it off the shelve.
There are lots of companies that are providing these BaaS in the US. Stripe, Modern Treasury, Treasury Prime, Lithic, SynapseFi, Gallileo, I2C come to mind. Probably another 20 more.
Then there's of course many CBS providers including the more modern ones like Mambu.
We're early days and not quite ready for open sign-ups yet (sorry, known bug). We'll be more public over the coming weeks and months.
We're banking for developers; you can programatically create accounts, cards, and move money.
Our users are primarily financial technology companies.
We're a small team from Stripe, Robinhood, and Visa building the bank we always wanted. If this sounds interesting to you we're hiring: jobs@increase.com
What’s the problem with that? If non-US actors wanted to wreak havoc in the country there are much lower hanging fruits (that would also provide better “returns” on investment) than infiltrating a banking startup.
But few as thoroughly regulated. Wait until the regulators fall off of influence from those capitalizing on the outsourcing take. See PPP as an example of the system turning to new ventures to actually get anything done and the zenith of offshoring in general.
heya! i'm casually interested in the space, and also have been tracking Column (https://column.com/)
to a distant observer, you look similar, but i'm sure there are real differences between you, so I'd love something like a "top 3 things to note" about Increase vs Column, in a least-getting-you-in-trouble way as possible - its hard to compare because i dont know what I don't know.
This is super important – if you are a chartered/regulated bank that's functioning currently then whatever you claim has merit. Otherwise it is just another software project that's going to struggle to get adoption because they won't have thought through all the regulatory and compliance issues.
Yes! We're obviously not the first to see the need!
I think there are many engineers who are frustrated knowing the data and capabilities that exist in banking that aren't exposed programmatically.
There are at least four (and I'm undoubtedly missing many!) interesting companies aiming to combine technology and a bank charter:
- Luna[0].
- M1 Finance[1].
- Column[2].
- Increase[3].
Building a bank involves reading, understanding, and respecting regulation. It invovles integrating with large financial networks. It involves rallying a team for a years-long adventure. Each of these is early days and it'll be a few years before any of us understands how this super large and important problem will be solved.
No, Teller is more of a competitor to Plaid (https://plaid.com/). Plaid offers an API to perform a variety of actions with existing banks, and charges through the wazoo for it as a middleware.
Column is an actual bank, and offers exhaustive developer-first APIs. I suspect you can do a lot of things with them you cannot do with Plaid, and at highly reduced cost comparatively. Increase doesn't seem to be a bank but is a much lower-level API than Plaid and allows things like opening accounts, FWICT.
BTW, bunq (https://www.bunq.com/) is a cool nl-based bank which offers an incredibly in-depth API. But I would not call it dev-centric, the DX is awful.
> Our users are primarily financial technology companies.
As a developer, I'd love to have some more information about the typical problems that inspired Increase's value proposition. If I was meeting with a financial tech CEO tomorrow, should I assume that they probably have these problems or need this service? Are there resources that I could peruse to learn more about these common problems?
Our users are financial technology companies. They build things like payroll, loan servicing, business payments, consumer payments, investment platforms, and neo-banks.
When we built Stripe, one of the largest points of friction was getting a banking partner. It took months and only after signing were we even able to start assessing the technology. There are so many potential companies that simply don't make it past the partnership step. We want to fix that.
The US needs a bank (holding a bank charter) that's also a technology company. Increase certainly isn't there yet (patches welcome: jobs@increase.com) but we already have integrations with the Federal Reserve, Visa, and The Clearing House. Our API already serves businesses you know and love.
> The US needs a bank (holding a bank charter) that's also a technology company.
Do you have plans on becoming a bank and getting a bank charter then? I've worked with several payment processors and BaaS providers that are most definitely not on that path. (CTO at neo bank).
Do you really have an integration with the Federal Reserve and the Clearing House or do you have an integration to a bank that has it? Last time I checked at least one of them required participants to be a chartered financial institution.
We took the approach of starting with an intentionally bad name (in our case, bnk.dev) and using it until a good domain became available to purchase for a reasonable price.
Their lead UI guy was previously the UI lead at Stripe. I think of him as someone who appreciates and understands the importance of well-thought-out UI so I'm looking forward to how Increase pans out for that reason in particular.
I think while others have commented on how beautiful your creations are, I rather admire you for the care and detail you put on UI. Beautiful things are not always easy to use, and things that are well-laid-out and easy-to-use are not always beautiful. You have somehow arrived at the magical place where you've got them both down.
Thank you, I'm glad you like it! I try to find a good balance between form and function, and create a consistent environment for the customer. The homepage is definitely more "artistic" than the dashboard, for instance, but hopefully they clearly belong to the same brand and give you a similar look and feel.
(For the anecdote and because you mentioned it, it always annoyed me that we had a pretty different visual language at Stripe between the site and the dashboard. I designed Stripe's homepage but not its dashboard, whereas I did both at the same time for Increase. Consistency is really hard to achieve between multiple products as the optimal visual treatment is different for a site and an information-dense UI.)
I think by the amount of "what is this" questions in this thread it's pretty clear the messaging is confusing to say the least. I'm going to pile on because even with the explanations in this thread I don't really understand what this is. Is this for B2C or B2B? Is this something I, the average consumer who happens to be a developer, could use to build my own personal finance tools?
It's a B2B2C product (sold to businesses that are building consumer fintech products). There are a bunch of neobank fintech startups whose offering is "Banking for X", where X is some segment of the population with specific needs that are not well served by traditional banks. (Here for example is X = "Spanish speakers in the US".) [0]
To build a startup like that, you need to build a product layer on top of a banking API, which lets you avoid having to write code that hooks into payment rails, interfaces with credit card manufacturers, stores credit card numbers, etc. Now you can focus on the differentiating aspects of your user base instead of building common banking infra.
There are a bunch of companies that offer banking APIs as a service already. The most popular of these is Galileo, a 20 year old company that was recently acquired by SoFi [1]. The developer experience of Galileo is absolute trash. I haven't used any other companies first hand but I've heard they're not much better. So presumably Increase is trying to provide an actually good developer experience for devs building banking products.
ok so followup question - lets say i buy this message and want to start "Banking for Medical Students" (well known gap, they have terrible credit history but are about to be good credits).
The precise segment doesnt matter, my question is - how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right?
These startups are not actually banks—they will partner with banks that fulfill those capital requirements. For example, the Robinhood debit card is issued by Sutton Bank [0], a 100 year old bank in Ohio that very successfully provided the backing bank to a bunch of hot new fintech products.
So you would have to go through Sutton bank or another bank, but I think there are enough of these companies now that there's a fairly tried and true path. If you're seriously investigating this I can connect you to people who know more about it than I do.
What I imagine is that there is either some kind of delegation of lending here, or that you get the backing/start a bank on your own and utilize this service to do the needful around account servicing more easily
> how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right?
If you want to start an actual bank, you need a charter from the FDIC. This is commonly referred to as a De Novo bank. Also known as "virtually impossible".
Increase will have to partner with banks to provide the service, so you won't have to be an actual capitalized bank yourself, and you won't have to go find one. You can see in the fine print at the bottom of their page:
"Bank accounts and banking services are provided by Increase’s partner banks, members FDIC."
The only way they can provide all this functionality is to do all the hard work of integrating with whatever legacy junk the partner bank is running (along with all the Visa stuff, Stripe stuff, and whatever else they are using here). You could actually do this yourself, and some fintechs are attempting that, but it's very hard and expensive due to the PCI-DSS requirements, among other things.
I'll be curious to see if they will require their customers to have PCI-DSS or if they'll be able to tokenize everything in a way that doesn't require it. When I worked at Visa the big issue was that handling card data, even after tokenization, required PCI-DSS, which of course makes no sense, but the immune systems around the payments industry takes a long time to change.
None, you won't be a bank. You'll need to work with another bank (directly) or via some BaaS that has a pre-existing relationship with a bank.
Depending on who "manages the program" you'll probably still have significant work to do our your side related to KYC and Compliance. You can offload this to the BaaS if they have a pre-existing relationship with a sponsoring bank but then you have very limited latitude to change how your perform KYC etc.
For context, when we started, straight out of YC we worked with a company called Synapse (synapsefi.com) who had a pre-existing relationship with Evolve (sponsor bank) and managed our entire program. They were responsible for KYC, fraud, compliance etc. We basically built an app on top of their APIs.
As we grew we needed more control and a direct relationship with a bank (this also improves the unit economics). We now manage the entire program and the payment rails part and banking APIs are maybe only 5% of the work involved (even within engineering a huge portion of our time is on fraud/compliance/kyc etc).
Would love to chat with you about your experience with Galileo. About two years back we decided to NOT go with Galileo and went with another provider. Absolute trash too and now we're going to go looking around again - which at our current scale is not going to be pleasant. Would be great to trade notes (email in my profile).
or is it like a Plaid in the sense that you could build a Robinhood ontop of Plaid... or are you meant to be starting like an "MVNO Bank"... so many questions
honestly i dont think its their fault, this is such an alien space to most of us that we just need more handholding than normal
I led a team building a similar thing for one of the existing big three bank technology companies. Hope you've got backpressure and all the compliance work locked-in. Outages and some serious audits are in your future integrating with those more legacy bank cores.
Wish your team all the best! This sort of innovation / competition is needed in that space.
> Accounts are eligible to receive interest on balances. The interest rate is the Federal Funds Target Rate less 50 basis points with a floor of 0%.
Target rate right now is 2.25-2.50%, so i'm guessing that you are subtracting 50 BP from the lower end, so that's 1.75%. That's actually pretty good for a bank right now (not the highest, but certainly on the higher end.
One thing that's unclear... is this a checking account, savings, etc.?
Is there any service like this for individuals? Specifically, I want to be able to open and close checking accounts at will with different card numbers, with different spending limits. The purpose would be to serve as an envelope system and budgeting tool.
If you're an enterprising individuals you can "kinda" do this but it's not easy and definitely 100% a headache.
Neobanks sometimes use this notion of a virtual bank account. My understanding is that it's a single FDIC insured account that they subdivide using their own ledger.
For cards, you can use Stripe Treasury or Lithic to issue your own virtual cards and their dev limits are pretty friendly. I think privacy.com does this as a consumer experience really well. Note you said `checking accounts at will with different card numbers`. Depository accounts are a totally different notion and resource than cards.
However should you do this? I can't think of a reason why you'd want to for your own purposes. The reason fintech is so annoying is not because banks/tech players don't want you to have nice things, is that there is a ridiculous amount of regulatory overhead.
> I can't think of a reason why you'd want to for your own purposes.
It's quite simple. For argument's sake let's say I am an individual with limited willpower. Say I budget $200 per month on restaurants, and I need to stick to this to meet some other financial goal. How, as someone with limited willpower, do I enforce this?
Option 1 is to keep track of and categorize all bank transactions, either manually or via a third party budgeting app, and check my "restaurant" balance each time before I order food. This is unlikely to happen because I am lazy and assume I have the money.
Option 2 is to keep a physical envelope of cash that I put $200 in. When the money runs out, I don't have any to buy restaurant food. This works, but is very inconvenient. How can I use Doordash, Venmo a friend, etc with this?
Option 3 is to have a debit card that only has restaurant money on it. Now the card simply doesn't work anymore when I'm out of money. It's effectively the same as the envelope, but now I can use it online as well.
What you're describing sounds like what most people refer to as virtual cards. Three of my banks provide that for free, even though only two allow setting up a per-card limit.
If you have at least 2 credit cards from the same bank (eg one card with $20k limit and 5% cashback on restaurants and another card with $10k limit and 2% cashback on all purchases), you can call the bank and tell them to move $19,800 of the credit limit from one card to the other. That way you can't spend over $200 without using the wrong card.
Virtual debit cards are another ubiquitous solution, but they cost a lot more despite being free. Your option 3 subsidizes smarter consumers when you pay full price (which has interchange fees built-in) on everything without getting any fees returned to you in the form of cashback.
(One issue with my solution is that a lot of banks let you spend 2x your credit limit on visa signature and similar tier cards. In that case you'll have to reduce the limit to $100)
> Anything that you can achieve with PDFs, presence, and persistence in a bank branch you can do with our API.
Not sure how to take this. With a small tweak like "you can eventually do" I would let it pass without criticism.
I work with bank cores, imaging, BSA and related middleware on a daily basis. The scope and complexity of these systems is incomprehensible to most. Many of our clients don't even try to think about how fucked up their business is. They prefer to hire Deloitte and other vendors like us to be stressed about it for them.
To give you an idea of how comprehensive a "full" banking API is, our combined WSDL and XSD references total ~9 megabytes. This is before codegen. The final reference sources as generated into the .NET codebase total nearly 20 megabytes. This is just the types & method signatures. The actual implementations live in an IBM system manufactured some time during the previous millennium.
But, none of that really matters. Whatever API method you call against a specific bank will have behavior that ultimately depends on a million things specific to them _and the region within which they operate_. So, its not enough to simply integrate with this massive API. You also have to understand a multi-dimensional matrix of regulations, end-customer behaviors, technological constraints, active geopolitical affairs, et. al.
Traditional banks have literally decades of legacy to deal with which drags them down. Many neobanks have shown that it's possible to provide a better and cheaper service when you start from scratch. A few examples of features neobanks i use provide that traditional banks don't have - virtual cards on the fly, for free; SEPA Instant for free; Open API; smart dynamic budgeting and expense sharing.
A non-zero amount of that legacy is due to regulations and compliance.
Most of what a bank does is totally invisible to the end customer. A "neobank" is almost always just a shiny consumer-oriented facade in front of a grumpy old bank. Someone still has to follow all of those laws.
This website is operated by Monzo Inc. Monzo reserves the right to restrict or revoke any and all offers at any time. The Monzo mobile banking app facilitates access to banking services through *Sutton Bank*, Member FDIC. The Monzo Mastercard Debit Card is issued by Sutton Bank, pursuant to a license from Mastercard International Incorporated. Monzo accounts are FDIC insured up to $250,000. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
That's for the US branch. Monzo in the UK is a real bank.
> Starling Bank
That one is an actual bank. In the UK, it's easier to open a real bank, than in the US. Bank of England has a special division dedicated to guiding "small" companies in becoming a real bank.
> A non-zero amount of that legacy is due to regulations and compliance.
Although there's a kernel of truth there, it's far from accurate. Most of the legacy is due to the assumption of regulations and compliance. The truth is that most of the systems are in fact out of compliance, but as long as you don't touch them the likelihood of a serious audit is small. The complexity is more about erecting an impenetrable wall to make the auditor assume it's probably compliant.
It's essentially about overwhelming auditors with details to fatigue them. Not to dissimilar to when lawyers flood each other with documents in tv shows.
I should have specified that I'm talking about EU-based neobanks, which are all real banks as far as I am aware (some are entities of bigger banking groups, some are standalone startups).
US banking being largely obsolete as a whole (checks? paid wire transfers that take days to arrive?) probably explains why there are no real neobanks in the US and they're all just a UI in front of a legacy bank. I doubt it has much to do with regulations, because I really doubt US banks are more heavily regulated than EU banks, who also have country differences to deal with if they operate in multiple countries (Revolut, N26), and they also have to check if the customers are American tax residents and handle that case too (or simply refuse them to become customers as some banks do).
> In December 2018, Revolut secured a Challenger bank licence from the European Central Bank, facilitated by the Bank of Lithuania, authorising it to accept deposits and offer consumer credits, but not to provide investment services. At the same time, an Electronic Money Institution licence was also issued by the Bank of Lithuania.
What are you talking about? Revolut is a real bank, same as Monzo, N26, Aumax (part of a larger banking group so it hardly counts), Kard. Specifically regarding Revolut, they are a real bank in multiple countries now - UK, Lithuania, US and a bunch of other European countries.
Revolut has applied for a UK banking license (PRA and FCA authorisations), but they seem to be encountering difficulties and delays in having them granted.
Revolut's links to Russia are, perhaps, not helping with that.
Conventional banks provide all of the above (including open banking API) except instant virtual cards here in Scandinavia, so nothing to do with building from scratch. Just a matter of priorities and healthy competition.
The neobanks are all very incremental improvements, and is largely just packaging. E.g., Lunar being app-only obviously has a somewhat more modern app than the average bank.
I happen to work in a bank in Scandinavia, and you're both sort of right. We did at one point provide "open banking APIs" although we only ever approved one partner to use it, and have since shuttered it.
The truth of the matter is that banking is horribly entrenched. Actual business decisions are mostly driven by arbitrary considerations of which laws to follow that day. Although we provide a ton of functionality and business capability, we are still woefully behind on any sort of compliance measure, not because compliance is hard or impossible, but because nobody is actually critically examining the systems.
The problem for the "neobank" is not one of building technology to catch up. It's in cultivating an image where they are seen as systemically critical such that they will be afforded the same leniency in policing that the established sector already has.
Open banking is really something that needs to be mandated by regulators. That's what happened in the UK, and now you have a wide choice of financial apps that can access accounts at any bank that implements the standard UK Open Banking APIs: https://www.openbanking.org.uk
You're missing part of my point. Here in Denmark it supposedly already is a legal requirement. The point is that the legal obligation means nothing, because the banks are so entangled with the government that no actual policing is done.
I worked with this in the UK - the regulation needs standards with regards to uptime, functionality, data quality and frequent audits to ensure banks are actually compliant. At the moment, besides the neobanks that somewhat know what they’re doing, everyone else’s Open Banking APIs have significant problems that make them unusable for anything serious.
These figures only include the “top 9” UK banks that are required to implement open banking, not smaller banks like Monzo.
I’d argue that open banking is already being used for lots of serious stuff. Credit checking, for example. And of course pretty much any accounting/financial software supports open banking now days.
Ironically the smaller banks like Monzo are the only ones that actually do a decent job.
By serious stuff I meant stuff that requires perfect accuracy and integrity - credit checking wouldn't care if you're missing one transaction here or there, or if the timestamps are a little off.
But for accountancy, perfect accuracy is required and OB with legacy banks is far from perfect in that regard - the data quality is bad, you get missing/duplicate transactions, timestamps are off (due to TZ issues). Modern banks are the only ones where the data is any good. For accountancy services, this ends up causing significant support overhead to companies where customers complain their numbers are off and the company can't do anything because the bank sends incorrect data, not to mention engineering overhead where you have to try and clean up the data in-house (the problems are different for each bank, so you have to essentially reverse-engineer how each bank mangles the data and implement bank-specific workarounds).
> Uptime and performance seems to be monitored pretty closely since 2020
Uptime, sure. I too can make a 100% uptime API that returns random data.
When it comes to data quality, there didn't seem to be any authority (in terms of real, practical outcomes - not theoretical powers that never end up being used like the GDPR for example) to complain to - which I find to be a fatal mistake in a situation where banks otherwise have zero incentive to provide a functional & usable OB API (in fact, OB is detrimental to their business as it would allow customers to use a third-party's - often better - service over the bank's own one). Even the OB "gateways" like Plaid, TrueLayer, etc have their hands tied when it comes to this - once the issue is confirmed to be with the bank, the lead time on getting any kind of resolution is often months, during which you have a disgruntled customer breathing down your neck and blaming you for the problem.
Except "neobanks" legally not allowed to call themselves banks because they aren't banks. They are white-label service on top of someone who provides a banking API, and those usually sit on top of someone who provides them with some other API. There are like 3.5 real banks with "public" API that have bank chapter, if not less.
Like this Increase, "build your own bank", but themselves it isn't a bank. It's just an API to their partner banks.
LOL I had to change bank accounts because of a neobank that managed to get clumsy barely working IT taped together systems and pathetic app worse than any "traditional" bank. They achieved in 2 years the same crap it took the incumbent 2 centuries to do.
I learned (almost) the hard way how important legacy features are.
For me it was buying a house and realizing that you must be able to wire money.
When the stakes were high, Varo failed me (they promised they could do it, but on the day I needed it they refused) and I had to scramble at my traditional bank to make the payment in time to avoid $20k on penalties.
Other than the most important transaction of my life, though, they've been great!
>Other than the most important transaction of my life, though, they've been great!
I don't know Varo but would you imagine continuing using them for other transactions and using the traditional bank for traditional purchases (house, etc.) After all, people don't go through the most important transaction of their life frequently.
A better, cheaper and much more limited service. For many people and businesses, most of the time this is indeed enough but this legacy is being used and needed.
As others have mentioned legacy banks here in Scandinavia are slowly catching up, the main reason being the slow trickle of custeos to neobanks.
Obviously the word "anything that you can achieve ..." in your quote is an exaggeration. It is quite obvious that fintech wants to simplify the banking process to basic daily procedures most of the people need (like money transfer and accounting), and ignore the rest. It won't be the first FinTech doing so and it won't be the last. But it is one where "we want to have a high quality API" is the unique selling point.
From reading the comments there are two groups of people. People who don't know what a banking API is and why you'd need one. And people who do but don't understand how Increase is different from existing Banking API / Banking As A Service solutions. I'm in the latter.
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[ 4.0 ms ] story [ 263 ms ] threadhttps://increase.com/terms
Who is looking into open a new bank/credit union and like... how much money is needed? How do you compete with Ally or any other "online" bank? How do you build trust and get people to give you their money, and for what benefit to them?
As for PayPal, some freelancer (especially outside US) do get paid using it, but paypal's fees are outrageous and we try to get anyone we can on an alternative like zelle, ach etc.
Stripe has a banking as a service segment now -
https://stripe.com/treasury
(possibly I'm misreading Stripe marketplaces' offerings, please correct me if I am)
Do you make use of Payoneer API for payouts? How do you find it?
Payoneer is really cagey about how you unlock better features, our account got upgraded to VIP though because we pay a lot through it. We still use their interface, maybe I'll figure out how to get their API someday
For those that don’t know what Column is.
This is an extremely niche use case of course, but it's not the first time they popped up on HN at least.
In mobile ISPs, MVNOs are quite common, and there is a large amount of customer base because they simplify KYC, sales, and customer on-boarding. Technically, this API should provide the platform to build a similar "Virtual bank". I do not think anybody without a significant technical and financial resources will be able to pull it off.
Another use case I can think of are market places like ebay, Amazon, Aliexpress, etc. Each seller receive a bank account that they get their payments deposited to, and can be withdrawn from their branded card. I do not see this being a commercially viable option for many, because pretty much every country has free or almost free systems in place to simply transfer money, and not take the unnecessary burden of issue cards, maintaining bank accounts, etc. Payoneer used to run a similar program, with branded cards, custom fee structures, etc, but it eventually failed as far as I know.
...until you accidentally do it again when trying to re-invoke some other command from your command history.
you do not have an address line 3
the amount data type is not clear (is that an integer representing pennies, is it a floating point? shouldnt be using floating point for banking)
recipient name is not broken up into first name, middle name, last name. are you users going to be putting "last, first" as well as "first last"?
if you sent that from the command line, then your banking information would be in your bash history, saved on disk
etc etc etc etc
Bash history can be cleared about as easily as other places people routinely put similar information.
There are a number of competitors in this "Banking as a Service" API space like Treasury Prime and Galileo.
Increase is not a chartered depository institution. We work with our partner banks to provide depository and payment services. When you open an Increase account, you agree to the Increase Terms of Service below. When you use the Increase service to set up a deposit account, the account is with First Internet Bank or Blue Ridge Bank and is subject to your agreement with the Bank Terms below. Finally, Increase's use of your personal information is described in the Privacy Policy below.
[0] https://increase.com/terms
Not sure what the exact customer pain is here, could be that banks were the first to adopt IT and now have a large legacy where there is little value in rebuilding it with modern stacks, as it offers little competitive differentiation.
Or maybe there’s a need to quickly bring new banking products to market, and the backend stuff is so standardized that it’s best to buy it off the shelve.
Then there's of course many CBS providers including the more modern ones like Mambu.
We're early days and not quite ready for open sign-ups yet (sorry, known bug). We'll be more public over the coming weeks and months.
We're banking for developers; you can programatically create accounts, cards, and move money.
Our users are primarily financial technology companies.
We're a small team from Stripe, Robinhood, and Visa building the bank we always wanted. If this sounds interesting to you we're hiring: jobs@increase.com
If I can be helpful, I'm at darragh@increase.com.
to a distant observer, you look similar, but i'm sure there are real differences between you, so I'd love something like a "top 3 things to note" about Increase vs Column, in a least-getting-you-in-trouble way as possible - its hard to compare because i dont know what I don't know.
I think there are many engineers who are frustrated knowing the data and capabilities that exist in banking that aren't exposed programmatically.
There are at least four (and I'm undoubtedly missing many!) interesting companies aiming to combine technology and a bank charter:
- Luna[0].
- M1 Finance[1].
- Column[2].
- Increase[3].
Building a bank involves reading, understanding, and respecting regulation. It invovles integrating with large financial networks. It involves rallying a team for a years-long adventure. Each of these is early days and it'll be a few years before any of us understands how this super large and important problem will be solved.
0. https://www.americanbanker.com/news/former-square-exec-leads...
1. https://m1.com/blog/bank-and-board
2. https://column.com/
3. https://increase.com/
Column is an actual bank, and offers exhaustive developer-first APIs. I suspect you can do a lot of things with them you cannot do with Plaid, and at highly reduced cost comparatively. Increase doesn't seem to be a bank but is a much lower-level API than Plaid and allows things like opening accounts, FWICT.
BTW, bunq (https://www.bunq.com/) is a cool nl-based bank which offers an incredibly in-depth API. But I would not call it dev-centric, the DX is awful.
As a developer, I'd love to have some more information about the typical problems that inspired Increase's value proposition. If I was meeting with a financial tech CEO tomorrow, should I assume that they probably have these problems or need this service? Are there resources that I could peruse to learn more about these common problems?
When we built Stripe, one of the largest points of friction was getting a banking partner. It took months and only after signing were we even able to start assessing the technology. There are so many potential companies that simply don't make it past the partnership step. We want to fix that.
The US needs a bank (holding a bank charter) that's also a technology company. Increase certainly isn't there yet (patches welcome: jobs@increase.com) but we already have integrations with the Federal Reserve, Visa, and The Clearing House. Our API already serves businesses you know and love.
Do you have plans on becoming a bank and getting a bank charter then? I've worked with several payment processors and BaaS providers that are most definitely not on that path. (CTO at neo bank).
We took the approach of starting with an intentionally bad name (in our case, bnk.dev) and using it until a good domain became available to purchase for a reasonable price.
Related: http://www.paulgraham.com/name.html
Or something like credit karma has?
Do you need a large amount of money upfront?
https://twitter.com/bdc/status/1546866502225346560
I think while others have commented on how beautiful your creations are, I rather admire you for the care and detail you put on UI. Beautiful things are not always easy to use, and things that are well-laid-out and easy-to-use are not always beautiful. You have somehow arrived at the magical place where you've got them both down.
(For the anecdote and because you mentioned it, it always annoyed me that we had a pretty different visual language at Stripe between the site and the dashboard. I designed Stripe's homepage but not its dashboard, whereas I did both at the same time for Increase. Consistency is really hard to achieve between multiple products as the optimal visual treatment is different for a site and an information-dense UI.)
https://www.linkedin.com/company/increasebank/people/
Column
Stripe Treasury
Treasury Prime
Unit
Cross River Bank
Any BaaS I'm missing?
???
[0] https://moov.io
[1] https://github.com/moov-io
To build a startup like that, you need to build a product layer on top of a banking API, which lets you avoid having to write code that hooks into payment rails, interfaces with credit card manufacturers, stores credit card numbers, etc. Now you can focus on the differentiating aspects of your user base instead of building common banking infra.
There are a bunch of companies that offer banking APIs as a service already. The most popular of these is Galileo, a 20 year old company that was recently acquired by SoFi [1]. The developer experience of Galileo is absolute trash. I haven't used any other companies first hand but I've heard they're not much better. So presumably Increase is trying to provide an actually good developer experience for devs building banking products.
[0] https://www.ycombinator.com/companies/seis [1] https://www.sofi.com/press/sofi-to-acquire-galileo
The precise segment doesnt matter, my question is - how much of the banking capital requirements do i need to put up? because a bank isn't just about payment rails and credit cards, its also about having literal cash in the bank right?
So you would have to go through Sutton bank or another bank, but I think there are enough of these companies now that there's a fairly tried and true path. If you're seriously investigating this I can connect you to people who know more about it than I do.
[0] https://robinhood.com/us/en/support/articles/robinhood-debit... and ctrl+f "Sutton"
If you want to start an actual bank, you need a charter from the FDIC. This is commonly referred to as a De Novo bank. Also known as "virtually impossible".
"Bank accounts and banking services are provided by Increase’s partner banks, members FDIC."
The only way they can provide all this functionality is to do all the hard work of integrating with whatever legacy junk the partner bank is running (along with all the Visa stuff, Stripe stuff, and whatever else they are using here). You could actually do this yourself, and some fintechs are attempting that, but it's very hard and expensive due to the PCI-DSS requirements, among other things.
I'll be curious to see if they will require their customers to have PCI-DSS or if they'll be able to tokenize everything in a way that doesn't require it. When I worked at Visa the big issue was that handling card data, even after tokenization, required PCI-DSS, which of course makes no sense, but the immune systems around the payments industry takes a long time to change.
Depending on who "manages the program" you'll probably still have significant work to do our your side related to KYC and Compliance. You can offload this to the BaaS if they have a pre-existing relationship with a sponsoring bank but then you have very limited latitude to change how your perform KYC etc.
For context, when we started, straight out of YC we worked with a company called Synapse (synapsefi.com) who had a pre-existing relationship with Evolve (sponsor bank) and managed our entire program. They were responsible for KYC, fraud, compliance etc. We basically built an app on top of their APIs.
As we grew we needed more control and a direct relationship with a bank (this also improves the unit economics). We now manage the entire program and the payment rails part and banking APIs are maybe only 5% of the work involved (even within engineering a huge portion of our time is on fraud/compliance/kyc etc).
Shooting you an email now.
honestly i dont think its their fault, this is such an alien space to most of us that we just need more handholding than normal
Wish your team all the best! This sort of innovation / competition is needed in that space.
Target rate right now is 2.25-2.50%, so i'm guessing that you are subtracting 50 BP from the lower end, so that's 1.75%. That's actually pretty good for a bank right now (not the highest, but certainly on the higher end.
One thing that's unclear... is this a checking account, savings, etc.?
Neobanks sometimes use this notion of a virtual bank account. My understanding is that it's a single FDIC insured account that they subdivide using their own ledger.
For cards, you can use Stripe Treasury or Lithic to issue your own virtual cards and their dev limits are pretty friendly. I think privacy.com does this as a consumer experience really well. Note you said `checking accounts at will with different card numbers`. Depository accounts are a totally different notion and resource than cards.
However should you do this? I can't think of a reason why you'd want to for your own purposes. The reason fintech is so annoying is not because banks/tech players don't want you to have nice things, is that there is a ridiculous amount of regulatory overhead.
It's quite simple. For argument's sake let's say I am an individual with limited willpower. Say I budget $200 per month on restaurants, and I need to stick to this to meet some other financial goal. How, as someone with limited willpower, do I enforce this?
Option 1 is to keep track of and categorize all bank transactions, either manually or via a third party budgeting app, and check my "restaurant" balance each time before I order food. This is unlikely to happen because I am lazy and assume I have the money.
Option 2 is to keep a physical envelope of cash that I put $200 in. When the money runs out, I don't have any to buy restaurant food. This works, but is very inconvenient. How can I use Doordash, Venmo a friend, etc with this?
Option 3 is to have a debit card that only has restaurant money on it. Now the card simply doesn't work anymore when I'm out of money. It's effectively the same as the envelope, but now I can use it online as well.
Virtual debit cards are another ubiquitous solution, but they cost a lot more despite being free. Your option 3 subsidizes smarter consumers when you pay full price (which has interchange fees built-in) on everything without getting any fees returned to you in the form of cashback.
(One issue with my solution is that a lot of banks let you spend 2x your credit limit on visa signature and similar tier cards. In that case you'll have to reduce the limit to $100)
(On a related note, to GP comment, Lithic was actually spun out of Privacy.com)
[1]: https://www.moderntreasury.com/
Not sure how to take this. With a small tweak like "you can eventually do" I would let it pass without criticism.
I work with bank cores, imaging, BSA and related middleware on a daily basis. The scope and complexity of these systems is incomprehensible to most. Many of our clients don't even try to think about how fucked up their business is. They prefer to hire Deloitte and other vendors like us to be stressed about it for them.
To give you an idea of how comprehensive a "full" banking API is, our combined WSDL and XSD references total ~9 megabytes. This is before codegen. The final reference sources as generated into the .NET codebase total nearly 20 megabytes. This is just the types & method signatures. The actual implementations live in an IBM system manufactured some time during the previous millennium.
But, none of that really matters. Whatever API method you call against a specific bank will have behavior that ultimately depends on a million things specific to them _and the region within which they operate_. So, its not enough to simply integrate with this massive API. You also have to understand a multi-dimensional matrix of regulations, end-customer behaviors, technological constraints, active geopolitical affairs, et. al.
A non-zero amount of that legacy is due to regulations and compliance.
Most of what a bank does is totally invisible to the end customer. A "neobank" is almost always just a shiny consumer-oriented facade in front of a grumpy old bank. Someone still has to follow all of those laws.
This website is operated by Monzo Inc. Monzo reserves the right to restrict or revoke any and all offers at any time. The Monzo mobile banking app facilitates access to banking services through *Sutton Bank*, Member FDIC. The Monzo Mastercard Debit Card is issued by Sutton Bank, pursuant to a license from Mastercard International Incorporated. Monzo accounts are FDIC insured up to $250,000. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
That's for the US branch. Monzo in the UK is a real bank.
> Starling Bank
That one is an actual bank. In the UK, it's easier to open a real bank, than in the US. Bank of England has a special division dedicated to guiding "small" companies in becoming a real bank.
Although there's a kernel of truth there, it's far from accurate. Most of the legacy is due to the assumption of regulations and compliance. The truth is that most of the systems are in fact out of compliance, but as long as you don't touch them the likelihood of a serious audit is small. The complexity is more about erecting an impenetrable wall to make the auditor assume it's probably compliant.
It's essentially about overwhelming auditors with details to fatigue them. Not to dissimilar to when lawyers flood each other with documents in tv shows.
https://column.com/
https://www.norcalbank.com/
Their FDIC charter was issued in 2006.
US banking being largely obsolete as a whole (checks? paid wire transfers that take days to arrive?) probably explains why there are no real neobanks in the US and they're all just a UI in front of a legacy bank. I doubt it has much to do with regulations, because I really doubt US banks are more heavily regulated than EU banks, who also have country differences to deal with if they operate in multiple countries (Revolut, N26), and they also have to check if the customers are American tax residents and handle that case too (or simply refuse them to become customers as some banks do).
Even Revolut that you cite was just a frontend until January 2021 where it became a bank, but just in the UK: https://en.wikipedia.org/wiki/Revolut#History
What are you talking about? Revolut is a real bank, same as Monzo, N26, Aumax (part of a larger banking group so it hardly counts), Kard. Specifically regarding Revolut, they are a real bank in multiple countries now - UK, Lithuania, US and a bunch of other European countries.
Revolut's links to Russia are, perhaps, not helping with that.
The neobanks are all very incremental improvements, and is largely just packaging. E.g., Lunar being app-only obviously has a somewhat more modern app than the average bank.
The truth of the matter is that banking is horribly entrenched. Actual business decisions are mostly driven by arbitrary considerations of which laws to follow that day. Although we provide a ton of functionality and business capability, we are still woefully behind on any sort of compliance measure, not because compliance is hard or impossible, but because nobody is actually critically examining the systems.
The problem for the "neobank" is not one of building technology to catch up. It's in cultivating an image where they are seen as systemically critical such that they will be afforded the same leniency in policing that the established sector already has.
It's in Turkish but translate will help you get the idea: https://ohvps.github.io/v1.0.2/contents/odeme-emri-baslatma-...
Here's the api documentation of 25 Danish banks, including the one I'm a part of: https://apiportal.prod.bec.dk/openbanking/sandbox/product/17...
https://www.openbanking.org.uk/api-performance/
These figures only include the “top 9” UK banks that are required to implement open banking, not smaller banks like Monzo.
I’d argue that open banking is already being used for lots of serious stuff. Credit checking, for example. And of course pretty much any accounting/financial software supports open banking now days.
By serious stuff I meant stuff that requires perfect accuracy and integrity - credit checking wouldn't care if you're missing one transaction here or there, or if the timestamps are a little off.
But for accountancy, perfect accuracy is required and OB with legacy banks is far from perfect in that regard - the data quality is bad, you get missing/duplicate transactions, timestamps are off (due to TZ issues). Modern banks are the only ones where the data is any good. For accountancy services, this ends up causing significant support overhead to companies where customers complain their numbers are off and the company can't do anything because the bank sends incorrect data, not to mention engineering overhead where you have to try and clean up the data in-house (the problems are different for each bank, so you have to essentially reverse-engineer how each bank mangles the data and implement bank-specific workarounds).
> Uptime and performance seems to be monitored pretty closely since 2020
Uptime, sure. I too can make a 100% uptime API that returns random data.
When it comes to data quality, there didn't seem to be any authority (in terms of real, practical outcomes - not theoretical powers that never end up being used like the GDPR for example) to complain to - which I find to be a fatal mistake in a situation where banks otherwise have zero incentive to provide a functional & usable OB API (in fact, OB is detrimental to their business as it would allow customers to use a third-party's - often better - service over the bank's own one). Even the OB "gateways" like Plaid, TrueLayer, etc have their hands tied when it comes to this - once the issue is confirmed to be with the bank, the lead time on getting any kind of resolution is often months, during which you have a disgruntled customer breathing down your neck and blaming you for the problem.
Like this Increase, "build your own bank", but themselves it isn't a bank. It's just an API to their partner banks.
For me it was buying a house and realizing that you must be able to wire money.
When the stakes were high, Varo failed me (they promised they could do it, but on the day I needed it they refused) and I had to scramble at my traditional bank to make the payment in time to avoid $20k on penalties.
Other than the most important transaction of my life, though, they've been great!
I don't know Varo but would you imagine continuing using them for other transactions and using the traditional bank for traditional purchases (house, etc.) After all, people don't go through the most important transaction of their life frequently.
As others have mentioned legacy banks here in Scandinavia are slowly catching up, the main reason being the slow trickle of custeos to neobanks.