Podcast: A Silent Banking Tsunami That Just Happened
How programming with money and Banking as a utility is changing the landscape
I sat down with Shamir Karkal (CEO of SilaMoney), Brion Bonkowski (CEO & Founder at Tern) to talk about Fintech, the Equity/Crypto market correction, and the future.
We covered a lot of ground and in order to make it easy to navigate the podcast, I have included a table of timestamps and our infographic view of the Payment value chain along with Fintech Elder recap of the podcast.
0.10-7.05 - Introduction
7.05-16.00 Challenger Bank evolution - segment-specific lifestyle applications
16.00-16.50 Inclusion - Kilimanjaro initiative
16.50- 27.00 Equity Markets and Crypto markets - is there a correlation?
27.00- 37.00 what my guests are building - Programming with money, Democratizing fintech, and more
37.00-39.06 Advice from Shamir on perspective to take on downturn (before he runs to catch his flight)
39.06-52.28 - Future of BaaS, Banking as a utility, Cross-border payments future
Enjoy and always Be in the Know!
(Violin piece in podcast courtesy of my daughter Ilina)
There is a continued focus on digital payments innovation. iValley sees disruptors across the value chain as shown in the infographics below.
A Silent Banking Tsunami That Just Happened
By the Fintech Elder
I chanced upon this charming haiku about tsunamis by Carole Dwinell:
A towering wave
Eats small islands and is gone
A butterfly bows
Many things just creep up while you’re looking elsewhere. Something is so incomprehensible, such an outlier in the grand scheme of things, that it doesn’t seem to merit any attention.
And then, you’re swept away.
That’s what is happening in banking today. It’s all very well to talk about removing friction and moving money faster and so on, but it takes a real visionary to make things truly happen.
So when I heard that the highly-connected Paddy Ramanathan from iValley was planning to host a Fintechtalk panel discussion with two individuals who are blazing their own trails in banking, I decided to drop in and see what was going on.
I wasn’t disappointed.
On the hot seats were Shamir Karkal from SilaMoney and Brion Bonkowski from Tern. Both have done some ground-breaking work on enabling Banking as a Service and creating a new paradigm for payments and micro-segmentation.
First, the harsh truth. Despite the hysteria about challenger banks and how everything has changed, the fact remains that less than 10% of accounts are with these new kids on the block. The majority of people prefer to bank with names they recognize.
On the other hand, this is going to rapidly change as technology and fresh ideas reimagine banking.
Anyone wishing to start a bank in the traditional way has several hurdles to clear: regulatory, technical, manpower and more. It can take months or even years to put together the building blocks. It's not for the weak or impatient.
But it's significantly easier now than before. Silamoney, for instance, has been hard at work making things easier with Banking, Digital Wallet & ACH Payments APIs. All you need to do is plug in the right API and some aspect of banking happens!
What has been discovered (late perhaps?) is that community banking has very interesting little niches. Golfers, immigrant groups, and other demographic groups – all have very specific characteristics and if you think about what they specifically need, then the cost of acquisition becomes lower. That means community banks could easily become effective by deploying these APIs instead of spinning wheels and wasting time and money trying to do it from scratch. Think about it! You get a lock-in and have a better understanding of the Lifetime Value of such customers.
Likewise, there are segments that need help with cross-border payments, which is both expensive and vexing. Other communities have traditions of pooling resources and being comfortable with inter-community lending. Opening such banks that provide these niche services only helps!
Faster end-user verification, ACH integration, providing ways to work with cryptocurrencies, and practically instantaneous money transfers – these are some of the new demands people have, and banks that respond will benefit. And new banks can now go live in about 8 weeks!
Tern has, in turn, been working on helping banks create highly tuned credit cards. The limits could be as low as $50 or it could be valid at only certain businesses. There are options to auto-invest in crypto too! The specificity of such offerings is quite mindboggling!
What you’re reading about is fundamentally a democratizing of the entire banking process!
After all, what do early-stage challenger banks need? They don’t want to program, or do KYC, and such important but distracting activities. They need to concentrate on establishing their product fit. Silamoney and Tern help them do that!
Did I say tsunami?
I slowly shut my laptop, trying to absorb all this. I could quite see that the silent tsunami has crept through banking, changing everything. For everyone.
The Fintech Elder plans to start a bank.
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11040 Bollinger Canyon Rd, E-909
San Ramon, CA 94582,
The United States.