Getting a new banking charter in the US is hard, but it's straightforward to be a challenger bank in the UK. Jarvis moved (back) to London from SF to start Griffin.

The banks in the US that have APIs tend to focus on large fintech partnerships, so even simple APIs will be expensive compared to a regular bank account. Grasshopper Bank in the US (for example) is one of the few that will do APIs on top of regular commercial bank accounts.

(I work at Treasury Prime, which powers many US banks that do APIs.)

It’s hard in the UK too! Just not “infeasible” hard. (Plus, it’s easier to finance as you don’t have those pesky Bank Holding Company Act regs dinging your investors)

I see new banks popping up all the time in the US. I would enjoy seeing a comparison of the process in the US vs the UK.

Do you mean Neobanks that generally attach to existing banks through partnerships? The OCC nearly stopped granting de novo banking charters since 2008: https://crsreports.congress.gov/product/pdf/R/R47014 (see Figure 1 on page 21)

Nah, real banks, but I did some looking and it seems they have state charters rather than national ones from the OCC. What the implications of that would be are rather unclear to me, other than that state banks are regulated by both the state and the FDIC, and national banks are regulated by the OCC.

UK has government mandated API requirements for banks. In the USA it's left to the "free market" which in practice means having to trust unreliable 3rd parties like Yodlee or Plaid.

Lol plaid wanted my username and password for access to my bank for a third party. No way

In part because of the "Regulatory Sandbox" - https://www.fca.org.uk/firms/innovation/regulatory-sandbox

Actually, no - the regulatory sandbox cannot be used by prospective banks.

It's fairly common in Russia, too. Mostly because some "challenger banks" forced everyone else to modernise.

Does anyone know why this is the case in Australia too? Is there a regulatory reason or is it just a matter of market size?

Iirc nab has an API

> Why are these API banks always in the UK?

I can think of 835 million reasons: https://www.reuters.com/article/eu-rbs-britain/corrected-uk-...

Plus, Open Banking and Faster Payments (which were EU initiatives before Brexit) maybe helped.

faster payments had nothing to do with the EU

"open" banking did (and accordingly you have to be a large company to participate at all)

Instant interbank transfer is basically everywhere[1] - China, India, Korea, Singapore, Malaysia, Indonesia, etc...

[1] https://www.imf.org/-/media/Files/Publications/WP/2022/Engli...

yes, the EU launched a separate instant payment scheme a decade later

doesn't mean the EU had anything to do with the UK's domestic faster payments scheme

(SEPA is also euro only)

I was thinking of PSD (the original one), but it turns out that only required end of next business day settlement.

U.S. banking is surprisingly far behind the curve, and hasn’t led the world from a tech or innovation perspective for many decades.

The UK on the other hand has actively encouraged new banks and new tech. It’s had things like instant, free, payments between personal accounts for almost two decades. Contactless transactions for at least a decade, mobile banking for decades, and government mandated banking API for almost 5 years.

In short, the UK has a very active banking sector that’s been rapidly (for banks) innovating for many decades. So the environment and ecosystem are well developed for further and faster innovation.

In the U.S., it seems banks gave up on tech innovation decades ago, and decided that innovation in fees and punitive treatment of customers was their preferred approach. As a result there just isn’t an environment for new innovation, the incumbents find it much easier to crush competition, rather than compete. Why the same isn’t true in UK (which until recently had remarkably few distinct banks), is probably down to the nature of law and regulation, which gives customers lots of rights, and actively punishes banks that don’t uphold them.

> It’s had things like instant, free, payments between personal accounts for almost two decades.

Thanks for making me feel old I was thinking "it hasn't been anywhere near that long, I remember the rollout like it was yesterday". Turns out that rollout was 15 years ago.

US banks are very tightly regulated, and the regulators haven't ordered these inventions yet.

U.S. bank regulation is a joke compared to the UK and EU. Regulation isn’t the reason US banks are lagging so far behind.

> The UK on the other hand has actively encouraged new banks and new tech. It’s had things like instant, free, payments between personal accounts for almost two decades. Contactless transactions for at least a decade, mobile banking for decades, and government mandated banking API for almost 5 years.

I think most of those things are EU initiatives, which the UK was a member of at the time.

At least we have all of them in Denmark as well.

> I think most of those things are EU initiatives

no, only the mandated banking API (which is impossible to get access to if you're a startup or an individual)

Counter-anecdote: my brother is building a startup (cashflow forecasting tool, check out https://tailwindapp.eu/) on top of those banking APIs. Granted, he's spent many years in the industry, but as I understand, API access was by far not the hardest part of it.

You're referring to PSD2 / OpenBanking?

What do you mean it's impossible to get access to?

If you're a start-up wanting to share your customers' financial data, you can make an API.

If you're a start-up wanting to get access to your (potential) customers' financial data from other institutions, you can get access through one of the many providers (Tink, GoCardless etc), or become a provider yourself with enough work.

I thought we were talking about PSD2, which the European Parliament adopted in 2015. I recall many startups were launched specifically to capitalise on new opportunities provided by PSD2, so I find your comment confusing.

What am I missing?

the UK had contactless transactions, free instant payments and mobile banking years before PSD2

(the mostly useless open banking stuff is however due to PSD2)

That appears to be a red herring.

In the article, Griffin is described as:

> Their services allow Fintech businesses to integrate banking features quickly and securely.

So this is about integration with other FinTech businesses, which I think squarely falls under open banking and PSD2.

I'm not sure why you describe PSD2 as "mostly useless". Did you vote for Brexit by any chance?

you should prefix all of your posts with "I don't really know much about this topic, but here are my opinions regardless."

Wow. You really went through my recent comments to come up with this sick burn.

That's sad.

I'm not here to engage in flamewars, so let's just leave this here.

> I'm not here to engage in flamewars

-> ends previous comment in an ad-hominem

It’s a mix. Many of these innovations came into existence before their EU counterparts. Faster payments, for example, is a completely different system to instant SWIFT payments which most of the EU uses.

Having said that, Denmark is another notable country for its innovation financial systems, ahead of the U.S., many of its EU neighbours and in some areas ahead of the UK.

But the UK has always had a vibrant and innovative financial services sector. Something the EU always had a bit of love-hate relationship with, and something Brexit has seriously damaged.

> But the UK has always had a vibrant and innovative financial services sector. Something the EU always had a bit of love-hate relationship with, and something Brexit has seriously damaged.

To be fair, most of the regulations were EU ones, but they were driven by the UK as a member, and they supported them nationally.

Contrast Ireland, which has the same EU regs but is much, much further behind the curve because our regulators focus on different things.

Instant SEPA, not SWIFT.

> Instant SEPA

Faster payments in the UK don't attract an additional charge. Is this the case for instant SEPA?

Not sure if anyone else can comment on prevalent software in banking. But it seems like IBM’s FTM is fairly prevalent. The underlying technology from a glance seems dated (Java 8, bunch of uncontainerized shell scripts running the show) and highly proprietary in the bad ways. E.g the proprietary stack hasn’t seen innovation. Add to that, the same teams deploying this software.

Yes! I need an api bank for personal use too!!

After the financial crash of 2008 and the subsequent succession of banking scandals, in which the taxpayer bailed out multiple prominent banks, the UK's government at the time introduced a series of measures to promote smaller banks. For individual personal accounts, Monzo and Starling are probably the most well-known of these so-called 'challenger banks'[1].

[1]: https://en.wikipedia.org/wiki/Challenger_bank

Further more, banks that were bailed out signed a deal to actively help those smaller banks by transitioning clients to them. I know that because my bank offered me a few times to the point of nagging to switch my business accounts from them to one of the smaller ones. They offered to pay me a sum of a few thousand pounds to do that. I declined at the time due to me liking my bank and appreciating one app for all my business and personal accounts. When I pushed why are they willing to pay me large sums to leave them, the told me the above.

I learnt about this situation, as it happens, from the founder of Griffin, so was particularly interested in this blog post. It seems like the initial excitement of developing a banking system in Clojure might have transitioned to more bread-and-butter aspects of banking now, but immutable data is an ideal match for their mandatory audit trails.

I have to admit that I wouldn't mind being paid a large sum to switch to Griffin, but then again, my current provider is one of the more responsible ones which didn't have to be bailed out in the crisis :)

There are benefits to being with irresponsible banks :-)

Hi. My company, Keeta [0], is making this available in many countries, including the US.

[0] https://keeta.com/

It's not. Doing payment or wire transfer is not same as being a bank in most country, even to the customers

I have a bit more information than you on the topic. We provide bank accounts, this includes checking and savings in the US.

Can people from other countries opt for this bank account?

Hi. The short answer is no.

The way our system works, the legal address of the end-user determines which bank the bank account is within -- this is largely due to regulatory requirements within the various banking systems.

There is one mechanism by which this could potentially be done from my understanding, but it will take us a few years to fully explore and integrate into that kind of model.

Another model we explored (but again, do not implement) is that instead of holding end-user funds in FDIC-insured bank accounts (in the US -- bank accounts in other countries are not FDIC insured) is treating the funds as a security backed against deposits, which is significantly different, but could make non-US users able to open US-based accounts, but they would not at that point be bank accounts.

The UK is friendly to money-laundering, presenting the more respectable faces of an international network of questionable banks and financial institutions. API banking will allow a faster cycle of wash, rinse, repeat, an innovation in shady.

We shouldn't avoid making finance easier and more efficient simply because it might make criminals more effective by the same ratio!

The US banking world seems to be firmly stuck in the 80s and banks need to be dragged kicking and screaming to implement anything recent, so this doesn't surprise me at all.

Now there's https://column.com as discussed here last year:

Column – a chartered bank for developers

https://news.ycombinator.com/item?id=31109170

[delayed]