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Building a Bank from Scratch

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The bank of the future probably won’t be made of brick or stone, and may not be much to look at. It’s easier to say what it will do. Entrepreneur and startup mentor Jack Gavigan, who traded tweets with Marc Andreessen and others on the subject back in February, elaborated on his vision for a bank of the future in a blogpost yesterday. Gavigan believes that a bank charter — i.e. being a bank — is necessary for disrupting banking. Thus Movenbank and BankSimple are derided as being mere “presentation layers” on top of someone else’s banking infrastructure. The full stack is needed, Gavigan wrote. He then defined banking as the fusion of two businesses: A bank can be broken down into two distinct businesses. The first is the infrastructure required to offer banking services: the banking licence or charter, branches and call centres (increasingly optional), IT systems, ATMs, AML and KYC procedures, connections to domestic inter-bank networks and SWIFT, the ability to issue credit and debit cards, etc. Some of these are revenue-generating (e.g. fees on SWIFT transfers, payment card interchange fees) but, traditionally, retail banks have offered “free” banking to attract customers so that the second business can offer them financial products like credit, overdrafts, loans, savings, investments, pensions, […]

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