Congratulations on the launch! I wonder if this kind of business model, where it looks like there is basically "one really rich guy self-funding" for a couple of years, is going to be more common.
That is, just looking at the site, my guess is that building everything from the ground up (core banking stack, acquiring the chartered bank, then all the APIs and tech on top of that) must have taken many years and many, many millions of dollars. And kudos, because the first thing that struck out at me is the documentation looks excellent. Overall, it looks like something where the the team had all the luxury to "do things right from the ground floor", instead of scrambling and making shortcuts before their runway ran out. I just think it would have been very hard to find a VC willing to be patient enough to wait that long with no revenue or customer feedback ("where's your MVP???")
They seem to have bought Northern California National Bank in Chico, CA.[1] The Column web site doesn't mention it, but they still have a physical branch in Chico.
The FDIC gives their web site as "norcalbank.com", although it does show the name change to Column. Their site has no street address and "domain name only" TLS certificate from Amazon, so you don't really know for sure that column.com is connected to a real bank.
The terms[2] are very unfavorable to the customer, especially for a business which claims to be a real bank.
"THE MAXIMUM AGGREGATE LIABILITY OF BANK AND ITS AFFILIATES, AND ITS AND THEIR LICENSORS AND SERVICE PROVIDERS, FOR ALL DAMAGES, LOSSES, AND CAUSES OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WILL BE TEN U.S. DOLLARS ($10.00)."
There's an arbitration clause, and they demand to use JAMS, which is not as well thought of as the American Arbitration Association. "To reduce the time and expense of the arbitration, the arbitrator will not provide a statement of reasons for his or her award unless requested to do so by all Parties."
This is about the level of legitimacy one sees with the typical crypto operation. If you lose money through an error at their end, they don't have much of an incentive to fix the problem.
Banking is highly regulated at both the state and federal levels, it astounds me that they're able to have such a blatantly consumer hostile clause in their terms. Either this is plainly unenforceable (which happens and companies do all the time), or it is illegal and will get them a fat fine (seems unlikely though), or we live in a dystopian-Randian hellscape (most likely).
> "THE MAXIMUM AGGREGATE LIABILITY OF BANK AND ITS AFFILIATES, AND ITS AND THEIR LICENSORS AND SERVICE PROVIDERS, FOR ALL DAMAGES, LOSSES, AND CAUSES OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WILL BE TEN U.S. DOLLARS ($10.00)."
Got to love agreeing to online contracts where it's not possible to make any changes! That said, isn't this a case where the FDIC steps in and restores a decent chunk of your account if the bank screws up?
That's an interesting question... for a lot of fintechs that "wrap" banks in a unified API, if something goes wrong on the app side the bank is not going to be liable. This is a bit different since they are actually the bank themselves.
> This is about the level of legitimacy one sees with the typical crypto operation.
Ironically, one that will probably not be willing to take the compliance risks of working with all the developers who are doing crypto operations, given how much they have to lose after investing in this bank and messing up AML.
They could carve a lucrative niche for themselves though, this looks slightly more competitive than the state-sponsored crypto banks in Wyoming for the customer. Unless something goes wrong.
An API which allows fast transfers any time of the day or night from your business deposit account to anyone in the world, using a wide variety of money transfer systems, and with little recourse if there's a problem or fraud. What could possibly go wrong?
Yeah, agreed, it looks like they are very efficient. But I'm very familiar with the Bank as a Service space, and your data points very much prove my point:
1. The reason so many BaaS companies partner with existing banks is because the process of getting a bank charter is incredibly time consuming and expensive. There are tons of costs just in legal/compliance before you've even done anything. I'm not 100% clear if Column bought an existing chartered bank or got a new charter, but either route is millions right off the get go.
2. As you point out, they were at 3 years from founding to launch. That's an eternity in the VC-funded startup world. Most startups have an initial MVP in a ~6 month time frame.
Not quite. BaaS just provides the banking rails. The ability the send, receive and store money.
But it’s up to their customers to build actual products on top of it. Such as bank accounts, loans etc. Otherwise all you really have is a REST API that happens to be able to move money. But good luck getting your average consumer to pay for that.
And who's owning the banking license in that case? Because to me that sounds a lot like, well, banking. And wasn't aware that the ability to move money from one account to another is actually a big issue. And if it's just the software banks use, well, they already use it, don't they?
The diagram on Column's homepage (scroll down a bit to "our advantage") explains it quite well.
There are a bunch of banking-as-a-service middleware providers like Galileo, Treasury Prime, Unit, Synapse etc. who provide nice, easy-to-use APIs for things like opening a bank account, sending an ACH, provisioning a debit card, etc. Doing these things "on your own" can be incredibly difficult, e.g. the NACHA rules around sending and receiving ACH files are incredibly complex. These companies do NOT own a bank charter. Instead, these companies partner with lots of different banks that DO have a bank charter and integrate with their "core banking" systems (core banking systems usually run on mainframes and are provided by companies like Fiserv). Then, fintechs like Chime you want to provide banking services to their clients can focus on the "user facing" part of the experience and less on the difficult, nitty-gritty parts of the banking stack.
What Column has done is consolidate the roles of the middleware provided, core banking system and chartered bank into a single company so there are fewer middlemen to take a cut.
Banking licence is owned by the BaaS company, and they allow others to borrow it when using their platform.
The companies building on top of a BaaS are not banks. They’re fintechs building products like privacy.com, or something else.
Moving money between accounts at the same bank is obviously trivial. I’m talking about the ability to move money to other financial institutions via card payments, wire transfers or whatever.
I think many starts ups are "rich people" self funding (or are parental funded). For instance Microsoft and Bill Gate's and Paul Allen's helped them out a lot. Ditto with Mark Zuckerberg, Elon Musk's Tesla & Space X, Warren Buffett's Berkshire Hathaway. You'll notice everyone aforementioned attended an Ivy League university.
At the very least Berkshire Hathaway is an odd example to be pointing out as a "self funded startup". Warren Buffett was an apprentice under Benjamin Graham for several years, operated several businesses beforehand to make his first millions and acquired the (heavily failing at the time) textile operations of Berkshire Hathaway around 1962, when Berkshire was already over a hundred years old.
He raised a couple million (inflation adjusted) from family and friends, starting with an old auntie. And taking over the textile operation of Berkshire Hathaway almost bankrupted him :)
The Buffet we think of today really emerged with meeting Charlie Munger.
Elon Musk did not found Tesla. He joined later after making an investment.
Founded in July 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors, the company's name is a tribute to inventor and electrical engineer Nikola Tesla. In February 2004, via a $6.5 million investment, X.com co-founder Elon Musk became the largest shareholder of the company and its chairman. He has served as CEO since 2008. [0]
But Musk had to cry about it and sued to be able to be called a co-founder:
"A lawsuit settlement agreed to by Eberhard and Tesla in September 2009 allows all five – Eberhard, Tarpenning, Wright, Musk, and Straubel – to call themselves co-founders."
That seems like a very pedantic distinction. Large scale investment and a leadership position within the first 9 month of company creation seems like a “founder” to me.
IBM... Oracle... Palantir much more so, I mean Tesla figured out how to sell EV credits (that were intended for the Big 3), but SpaceX only recently got government funding after crushing all the competition by their bootstraps. It seems like Elon got his early money from parents and Paypal not the government.
I do however notice a general trend of seeing Libertarians on the dole.
SpaceX got a couple million dollars in direct subsidies over the years [1], the really interesting question is if one also counts the various government-bought services and other incentives (particularly for F9):
- Falcon 1 development was privately funded, but would it have succeeded without DoD/DARPA funding the first three launches of it? [2]
- Falcon 9 development was aided by hundreds of millions of dollars in seed money, not to mention the billions of dollars worth of launch contracts [3]
Sure. But the discussion was about "rich people self funding", with him as an example.
I have a couple ideas I would happily self-fund with the state's mid-10 digit assistance.
> I do however notice a general trend of seeing Libertarians on the dole.
If nothing else, it must help with finding the time to write freedom screeds.
More seriously, just about every rich person will tell you all about their bootstraps. I just wish fewer were crass enough to whine so loudly about others getting similar, ah, bootstrap assistance, to theirs.
> Create account numbers that point to a single bank account and create specific permissions and limits for each one.
I love that; there are so many places that give a 6% discount for using ACH but I don't want to give out my bank account details willy-nilly
---
If you have influence over it, I wouldn't recommend having https://status.column.com/uptime default to "Sandbox" since I doubt seriously that's what anyone would care about when going to an uptime page, and can also mislead a reader in a hurry if the Sandbox environment is having woes but Production is fine
I'm glad you noticed the account numbers as pointers concept - we think its pretty cool. I think there's some rad use cases that people will come up with!
Thank you for being so responsive in this comments thread.
One other minor (accessibility) thing on the Status page: The dropdown (Sandbox/others) doesn't get hinted with Vimium (a keyboard accessibility add-on for fox and Chrom) or also with qutebrowser (a keyboard-first browser)
There's some info about it here, but it's basically it's made as a <div>
Some context: Patio11 wrote a bit about how businesses can use virtual account numbers this week:
> This is generally done via a mechanism called Virtual Bank Accounts (VBAs), which are a product available from the banking industry in Japan, the U.S., Mexico, Brazil, and many other countries. You contract with your financial institution of choice to reserve a block of bank account numbers corresponding to a far smaller number of actual bank accounts. You give out those numbers to your customers rather than giving out your “real” bank account number. You then take action based on which account number your customers use.
> Due to technical and social issues within the financial industry, the banks offering VBAs generally expect you to bring your own implementation work at this point. Should you e.g. re-use VBAs within your block? They probably don’t have a straightforward answer to that question; up to you. Should you treat them as secrets? Up to you. Should you share them between customers? Up to you. What should you do once you know one of your VBAs has received a transfer? The bank will give you your money, what you do with the data is up to you.
> Stripe does basically the simplest thing that works: give each customer/business pairing a unique VBA, shared across all invoices for that pairing (to avoid e.g. a customer not updating their supplier management system with the new bank account number on the second month’s invoice). Use ability to introspect invoices (and their open/closed/etc state) and inferences to tie incoming payments to the invoice they’re most likely associated with. Kick all the exceptions to a human or computer system, whichever the user specifies.
Wow that was depressing. Even back in the era before online banking and e-billing, in Finland an invoice would include a barcode you could scan that would auto-fill a reference number on the payment (with a checksum to minimize corrupt input).
Credit card networks offer a similar thing. They call it payment network tokens. Basically, the network gives the merchant/processor/store/etc a Uuid string that's an identifier for your credit card. Then the merchant sends that UUID string (the token) to the network and the network sends the real credit card details to the issuer for authorization.
So instead of giving merchants real financial info, they just get a pass to charge your credit card without the details of it.
Yes, I've been making heavy use of that over the years, from Amex's early offering through Privacy.com and now Capital One's anemic offering
There's still quite a few merchants which give it the evil eye since evidently one can distinguish them from "real" credit cards if the processor chooses to look, but it's better than nothing
Column is the first I've ever heard of a bank offering this level of financial firewalling
Yeah, I use Privacy extensively and on rare occasions have been rejected by merchants because of their no gift cards allowed policy. So apparently that is the category Privacy virtual cards come under.
That changed recently. As part of the migration, they had to reissue all cards, but they’re now charge cards instead of prepaid debit. https://news.ycombinator.com/item?id=29432683
Hey founder (and OP) here. This has been a labor of love for the past few years and I'm super stoked on what we shipped. Would love any and all feedback, thoughts and questions!
I'm excited about this because it may help with a problem I've had for many years: in a word, being my family's CFO.
I'm a data scientist, and I'd like to be able to report as easily on my own personal finances as I can on the data of the company I work for. This is not a small thing for me. I want to take care of my family's finances, but I'm impatient with bullshit. I don't want to spend an hour every weekend logging into 10 different services, clicking on 10 different things in each company's always-different, always-shitty web UI to pull all the data I need. The easier and more convenient this is to do, the better job I will do managing my money and protecting my family.
As a data scientist, I can handle writing a little code to make some API calls and crunch the numbers that come back. If APIs were available to me for all companies I have assets or liabilities with, I'd have no trouble being an awesome family CFO. But... there is nobody that wants to make this secure and easy for me!! I would have to go to a company like Personal Capital, give them ALL MY ACTUAL BANK LOGIN CREDENTIALS, and they'll go login and do some screen-scraping to get the data. Half the time that won't work because of 2FA complications. They'll bring that data into their little ecosystem, serve it through some shitty web interface, and use it to serve me whatever ad nonsense they want. It's immensely unpleasant, slow, unreliable, and insecure. It sucks ass.
Is your company going to fix this, or perhaps be one part of the solution? One day, will I be able to run my own R and Python scripts that pull all my data, balance my checkbook against receipt screenshots, automatic fraud detection, show me how all my investments are doing? Maybe even open-source it so that others can do the same?
Thank you so much, in advance, for reading and any reply you can make! I'm very excited for this!
You might be interested in Tiller Money https://www.tillerhq.com/. They provide something very much along these lines, with the output being an auto-updating Google Sheet that you can do whatever you like with. You do still need to update credentials sometimes, but I've been using it for a few years and it works quite well.
Hey there, you will be able to do all of this with our Klutch credit card. Full disclaimer I am the cofounder. But what we built is exactly what you are describing. Here is a link to our documentation- https://dev.klutchcard.com/docs
I would set all accounts to send monthly/weekly statements and get PDF's that way into an email. Then all that is needed is a python downloader + scraper + visualizer based on how much automation you need.
I'd avoid using any service to do this for you after what PLAID pulled off on people by storing their credentials and getting more info than what was actually needed.
This seems to be the US equivalent to Solarisbank, which operates only in some EU countries. I don't know any specifics, but I have encountered Solaris a few times. For example they are used by TradeRepublic, basically the German Robinhood equivalent, and a handful of Neobank providers. Those Neobanks usually focus onto a specific niche and build their product based on the services offered by Solaris.
I would imagine that Column could provide similar their services to similar companies and make the development of financial products significantly faster.
I imagine these limitations are going to be a moving target as they grow.
A lot of developer driven organizations are very happy to outsource complex parts of development to managed services so they can focus on their core differentiators, especially when it comes to parts of the stack that need super high availability and security. This is why Auth0/Okta are big businesses and not everyone rolls their own key cloak / shibboleth instances, as one of many examples.
This clearly seems like the Apex/Drivewealth model but for challenger banks or new online banking operations. It is hard to predict what startups or new projects will need this because those platforms can unlock innovation for new categories (e.g. no one imagined commission free trading in 2008, and Robinhood wouldn't exist without Apex).
I guess my point is that payment and ledger back-ends aren't the hardest part about running a bank, they aren't even the hardest technology component. This isn't "for developers" in the same sense that Stripe is. It is for people ready to run a bank. Sure it will save you paying lawyers and regulators for charters and it will save you from buying a mainframe to run some crufty COBOL ledger but that still leaves a lot of yak shaving before you even get to the interesting part of your Fintech product.
Okta is successful because almost every application needs authentication, almost every organization needs SSO, and no one considers it a core competency.
The intersection of organizations who can run a bank but don't already have entrenched software to do so, and want to build all the other software themselves seems vanishingly small.
> The intersection of organizations who can run a bank but don't already have entrenched software to do so, and want to build all the other software themselves seems vanishingly small.
Most FinTech is like this though. User Facing front end custom services built on top of bank infra. The bank infra is typically a bank partner and rarely is something like Stripe depending on the exact use case. This basically provides an intermediate alternative between Stripe and bespoke banking relationship.
Column's website says the company is "100% founder and employee owned."
I'm curious about that ownership structure. I'm assuming you're not organized as a worker cooperative, with a "one worker, one vote" structure? Would you be willing to offer any details about the ownership stake of the founders vs. the other employees and what sort of decision making employees' ownership stake entitles them to?
"Employee owned" almost always just means the company has an ESOP.[1]
It doesn't mean employees get any say in anything at all, it just means the employees are the company's shareholders. The board and upper management still has full say in all policies and operations.
Source: I worked almost exclusively at employee owned companies (though not intentionally). Working for an employee owned company is not meaningfully different than working for a public company or private company.
BTW, ESOPs have significant tax advantages for a founder [2]
This looks like an awesome shiny tool but I'm not sure what I could do with it!
Some Use Cases of successful or hypothetical customers using your product might help other understand how they can use Column for their business.
Is Column Use case to create cards/accounts for a business' customers like Apple did with the Apple credit card?
In my case, I'm the founder of https://www.waiterio.com which is a B2B order management system for restaurants... can I use Column to offer bank accounts and cards to restaurants owners? Or restaurant diners?
What are the winnings for me related to revenues/branding/customers retention?
Yes, you can use Column to create and offer bank accounts as well as build debit/credit/charge programs. There's a part of the website that describes some common use cases https://column.com/docs/guides/#use-cases
Here's an example of what one could do building off a platform like Column:
I previously worked at Center (https://getcenter.com), which after a few pivots, landed on offering expense management and analytics software to businesses. They partner with a vendor (not Column) to issue credit cards.
Center gets a realtime feed of card activity into their system to properly categorize the spend based on various signals or rules, which may, for example, prompt employee to attach a receipt. They focus on companies with decent T+E spend because they get the card interchange fees — that's the biz model: earn money from the card spend / merchant fees (as opposed to competitors such as Expensify that charge per user/card/report/etc).
And for the business using Center cards, they get nice software, instant visibility into spend, spending controls, et al, all at no cost to them. I don't mean to make this an ad for Center (I have zero financial stake in the company), just illustrating what you could do atop a platform like Column based on this specific example I worked closely on.
According to Column, their credit card service remits 100% of the interchange fee to the developer company, so you could build any number of services to enhance this data and service.
I wanted to make a community bank and then build the software to run it and start selling to other credit unions / community banks and start getting rid of the jack henry crap everywhere.
The product looks incredibly good. What I absolutely love the most is the fact the web site immediately addresses people with a human language at the left and plain code at the right. No marketingspeak. Love it.
However the title is a bit misleading. It says "a chartered bank for developers" while the correct title would be "a chartered bank for U.S. developers". I feel like in the IT community we see deeper diversity of nations and citizenships compared to the other industries, so much more people from the rest of the world.
To make sure I had to dug into the documentation. Indeed, US-specific properties are marked as required in the person creation API call[1]. So Column is a non-starter for anyone outside the `default_country`. It would be nice to mention this somewhere on the site perhaps to set proper expectations.
I don't see a link on your website to Column N.A.'s legal disclosures. I'm trying to determine whether you have your own direct connection to FedWire/FedACH, are going through a 3rd party service provider like Fiserv/FIS, or are going through another bank.
Oh, that’s good to hear. You should be in a good position to add support for FedNow having your own in-house connectivity solution. How are you feeling about being ready for that?
From what I gather this is the Tesla of banks (comparing new kid on the block to the old guard – Tesla vs GM): meaning it's a modern bank with systems that run on something newer than COBOL with an open API. It's extremely cool and looks like it may set the standard of what banks must be in the future to compete with newer generations coming into the market.
The most direct connection possible to the federal reserve with as little overhead as possible, accessible entirely over battle tested modern network API technology
We plan on rolling out some corresponding banking services this year to help people with multi-currency accounts and international wires - but it would still be under our US charter. No short term plans to go international - there's a lot of ground we need to cover here. We tend to like to go very deep in an area instead of getting to spread thin.
I can tell you MANY countries are NOT being served by services like STRIPE (South Africa for example) ! I always feel like there is a big opportunity bringing "these financial startups" to where the major players are NOT.
Congrats on releasing ! :)
I would use it, if it was available in South Africa :P
Yeah, it's a tough spot. For the big players, there's heavy investment to enter a new market due to local regulations. A local startup could probably do it more easily, but while they grow there's always the risk the big players might decide they're a threat, they want that market, and invest rapidly and dump the local startup.
Excited to kick the tires on this. Assuming it's correct to think of Column as a very special BaaS vendor (which owns its own bank and thus AVOIDS the double program manager problem), how would you compare and contrast your your unique value prop compared to other BaaS vendors like a Unit, Synapse, Treasury Prime?
Would it be fair to assume better economics because your supply chain is more vertically integrated, or is there more to it than that which I'm missing?
Eng @ Column here. Unlike the other BaaS providers, we ARE the bank. So the buck stops with us so to speak. You won't have to deal with middleware or a bunch of other partner banks, which we like to think is a much better experience.
That is certainly great from the experience side of things, but what I'm wondering about is the economics side of things -- that is, will I get more competitive revenue shares than with other BaaS vendors given that you are the bank?
I see you mention this in your docs, but do you provide any tools for the compliance side that would be required to use your API? E.g. if opening accounts on behalf of customers, all of those customers need to go through KYC. Do you monitor transactions for BSA/AML, or is that up to the user of the API?
This is giving me so many flashbacks to my time at jpmorgan. There’s a bunch of wonderfully interesting corner cases I’d really love to learn about how you address!
I know Chase at least offers an OFX endpoint if you pay a monthly fee (like ~$10/mo). I wrote a tool a while back that would automatically use that to download my transaction data and store it in a local format for personal accounting purposes. It worked well, but I abandoned it out of laziness.
Hey, I’m an ex-Square that is part of founding engineering team at Column. My team will be monitoring this thread and we’ll be happy to answer any questions! Especially those about ACH, I’m sure you have plenty and we know it through-out!
2. It seems like I can use your API to create bank accounts with your bank. Does this mean I could become a "bank wrapper" and use your API to generate real bank accounts and become a digital bank without having to go through the legal processes of becoming a real bank?
this is probably closer to the truth that you might have imagined :) that at that most of the $1T+ ACH transfers that happen daily in the US banking system happen over plaintext files and SFTP (source: I've written one of these files)
Hi, I am an Engineer at Unit.co, a company that also builds Banking as a Service.
I can share that not only we do not use COBOL, but our entire backend is written in Pure Functional Scala (and typescript for UI).
Engineer at Column here - we have definitely considered creating SDK's but most of our customers prefer the HTTP API's, which will likely remain the best way to use Column for a while.
Can you talk about instant ACH, why do some charter partners like Robinhood and Coinbase support it but other legacy banks don't?
How is instant ACH different to regular? Also, is it true that ACH is not instant bank to bank – essentially the banks settle up at the end of each month with 1 giant transaction?
What about P2P support via Zelle, I recently learned it's lipstick on a pig and basically ACH under the hood.
Sorry in advance if the questions are outside the scope of this thread.
We’re an issuing bank and sponsor card programs on Visa & Mastercard. Our partners can offer both physical and virtual cards to users. Checks are currently in beta but please get in touch if we can help! https://dashboard.column.com/contact
Hi, I am an engineer at Unit.co, a company that also builds Banking as a Service.
We use PostgreSQL as database, and currently thinking about adding ElasticSearch to allow our users to do text search.
Friend, its in poor taste to hijack a question about a competitors product to spruik your own - I would be less likely to consider Unit.co as a result of what you're doing here.
My answer was written with the intention of helping others and sharing my knowledge with fellow engineers, I enjoy talking about tech and engineering and even thinking of writing a blog post about it.
Friend, it's bad form to impute negative motives where (over)exuberance is a sufficient explanation. This guy cares a lot about the product he or she works on, simply move on if their comment is not for you.
There’s something about this that smells like “anyone can now operate a bank without a charter or being subjected to regulatory oversight” that’s maximally distressing and I think it’s incumbent upon the founders to clarify their intent.
A proliferation of loosely regulated banking entities was the basis for an economic disaster over a century ago in the US when fractional reserve logic had yet to be formalized. I’m sure that Column enforces reserve requirements, but this has the stench of something that could enable some analogous calamity in the financial (and therefore real) world.
It was no less esteemed a figure than Galbraith himself who noted that there’s really no such thing as innovation in finance - it’s just people finding ways to run the same kinds of scams over and over again.
What’s to stop someone from using this to create a ‘virtual’ depository institution, issue bad loans against deposits that it attracts with the promise of extraordinary interest, monetize the loans for personal enrichment, and then crash and burn when the aggregate default rate of the loan portfolio becomes unsustainable, sticking the FDIC (and therefore taxpayers) with the bill? And that’s just one of many possible fraud scenarios.
The answer is either “nothing” or that Column doesn’t really matter as a company because the theoretical customer base is vanishingly small and it doesn’t solve the truly important problems in banking.
OR
There is a large prospective customer base and all assets/liabilities of these customers are reflected on Column's balance sheet and subject to the same oversight by the OCC and FDIC as any other community or national bank (of its size).
If this is a US-only service, it should say so on the website somewhere.
I've also had this experience with e.g. Betterment and Wealthfront. The only way to find out they're US-only is halfway through sign up process, not even anywhere in FAQ's.
The first line under the main heading starts with "The only nationally chartered bank...". That, combined with the dot com domain, implies pretty heavily that it's a US only thing. At least, it did for me.
I knew that there was zero chance of this being in Canada so that automatically left this being a US only operation. Very cool, I'm curious what sort of apps you could build on this, it seems that while you can get some programmatic access to banking, there's so many state specific regulations and law you have to abide by.
Money transfer license alone is quite expensive for each state.
I am not a professional developer, but I have been developing little projects because I realized the importance, both personally and professionally, of keeping up with new technologies. I would be interested in setting up an account with Column, if only to grow familiar with its advantages. I have been working with Stripe to handle my business' e-commerce and in-person payments. I am curious to know if there is an advantage to using Column in conjunction with a service like Stripe. I know Stripe does things like card issuing. What are the reasons, either explicit or esoteric, for using Column's features rather than a service like Stripe where those features overlap?
This looks interesting. Their “before” picture is a bit misleading though; it’s a worst-case. You can already get an account with Silicon Valley Bank as a startup and originate ACH directly over NACHA (source: I built this).
However, providing an API abstraction over ACH is cool. I would say it’s worth paying a bit more to Stripe to not have to deal with ACH directly, but then you add a payment hop between you and your payees (==delay) so having a bank that offers a nice API without adding a hop would be very useful.
Note that “FBO” (for benefit of) bank accounts are actually quite a valuable feature that is expensive to set up as a startup, and let you execute some exotic legal/funds-flow structures. So pretty cool that you can get those.
Will you support FedNow instant payments when it GAs next year? Alias support for transfers and payments?
Also, my favorite part of your site is this part of your Careers page:
> I don’t fit into any of these roles.
> You get Column and you think you can drive value on day one. We’ll be honest the bar will be pretty high for us to hire outside of these roles - but fuck it, surprise us. Give us a compelling narrative and hustle....and we promise we’ll read the email!
Very cool product, excited to see it grow. Def the future of fintech.
Engineer at Column here. We absolutely want to be early adopters of all new Fed technologies and payment rails. That being said, the rollout on these things is...slow. The Fed moves at its own pace, but we will definitely be right there with them.
Thank you for the reply. One more question: is it possible to sign up as an institutional investor to buy loans originated on the platform alongside Column’s buy side?
So this is what Will wanted to do when he left Plaid. Having the financial means to "buy" a bank certainly helped. Nice!
Getting a new bank charter since the financial crisis of 2008-2009 has been virtually impossible. The number of banks in the US in the past decade or so has come down from ~6K to ~4K. New licenses for banks (State or Federal ) since 2008 have been negligible. So, let's buy a "small" bank. So far so good
Next part is core banking software as well as Money movement software. This is where is gets interesting.
Smaller banks use Fiserv/FIS/Jack Henry (and a long tail of other core banking providers) and larger ones have a mix of systems with legacy cores e.g. DXC, Misys and bunch of others. While it's tempting to build an entire banking stack from ground up it may not pass regulatory and compliance muster for a while. Plus even some the legacy cores have now built a rich RESTful API. Would be interesting to know how much of the core was built in house over the past 3 years
Next part is Money Movement. This is where ACH, Push to Card, Fedwire and RTP come in
ACH isn't that bad. Most banks use ACH "aggregators" which in turn connect to one of the two ACH Operators. Once a bank has a business relationship with the Fed it's not tough to connect to these aggregators and simply sftp files to/from them
Push to Card is available through VISA Direct and MC Send. Given their financial resources and fintech background it wouldn't be difficult to get a connection going there
RTP would be an interesting one but a relatively easy one since the Clearing House is already used to working with multiple banks and have "plug-ins"
So, now it all boils down to the business procedures and KYC/KYB on Fintechs that want to use Column's services. This can be done very efficiently online
The T&Cs are heavily skewed in favor of column. Some of them may be unenforceable. But those can be negotiated
I just want to vent about something bank-related, and hopefully bait someone to tell me how this solves it. Or something else solves it.
Have you ever heard how you could pay off your mortgage a lot quicker by making bi-weekly payments instead of monthly? Or how you can include extra with your payment and instruct your bank to apply it directly to the premium, helping you reduce your interest?
TLDR, I think people giving this advice haven’t tried applying it.
Well, I wanted to do that - but in practice I found it near impossible to accomplish. First - any form of electronic bill-pay is right out of the window, because any extra payments or amount - the bank will apply as pre-paying your next scheduled payment, which means you are pre-paying not just principal, but the interest as well. Why would anyone want to do that? The bank helpfully told me that “some people maybe are going on vacation and will be away when the bill is due”. Yeah…
You can try to submit a paper invoice with special instructions by postal mail. Then it may or may not work. I don’t know if it’s incompetence or outright customer-hostile behavior from the bank, but this method succeeded only some of the time. You have to follow up by phone to find out and even so making any corrections after the fact is difficult and requires multiple call transfers and waiting on hold.
> Have you ever heard how you could pay off your mortgage a lot quicker by making bi-weekly payments instead of monthly? Or how you can include extra with your payment and instruct your bank to apply it directly to the premium, helping you reduce your interest?
Generally speaking you don't want to do that.
A mortgage with an interest rate of like 3% (to which anyone in the last year refinanced or, or got on purchase - mine's 2.675%) is well below inflation. This means that having the loan is actually earning you money. When inflation is 8.5% and you're paying 3% interest on that loan, you're actually making 5.5% per annum by paying back the loan with future, inflated dollars.
That's before you factor in the mortgage interest tax deduction, and opportunity cost.
All in, not paying off your mortgage faster is likely earning you 6-7% per annum before you factor into account opportunity cost. On a Series I savings bond, that opportunity cost is like [edit] 7.11% [1].
Each time you pay into a Series I bond instead of paying off your mortgage you're earning about 15% per annum on that money vs paying off early.
You want to keep your low-interest mortgage for as long as you possibly can, deduct the interest, and set aside anything you would have put towards early payments. If interest rates ever drop below what you're paying, refinance. Don't pay it off early unless your mortgage APR minus deductions is higher than inflation.
You don’t want to do this now, but there’s a reasonable world we end up in where either inflation hovers at 1%, like most the last 5 years (so you earn 2% by paying down a mortgage, vs -1% when putting it into a savings account), or interest rates stabilize at 10%, or both!
Also some people just hate having debt, and so they want to pay down debts as quickly as possible. Even if it’s “irrational” their goal is to pay down their mortgage in the least amount of time. It is better for them to pay down principal than enqueue future payments.
Long term debt has a mental tax that does not show up in a bank statement. While it may be "smart" to pay the minimum amount on a subsidized student loan, there's nothing like just paying it off and being done with it, forever.
Answering both you and GP I belong to the “some people” group you described in your post. It’s not that I don’t understand the math, it’s just that I don’t have the mental capacity and time in my life to take advantage of this arbitrage.
To illustrate - I have an acquaintance who transfers money between credit cards to take advantage of points, and sign-up offers etc. Were I to engage in such activity myself - assuming I know anything about myself at all, it is that I will 100% forget some detail or date and end up getting charged all of the delayed interest making me worse off than if I didn’t engage in such a scheme at all.
So it’s like that. Rather than chasing some optimization in a half-ass manner, I’d rather just pay off the debt and pay less of my money to the bank.
There's no other thing to do, however, other than what you're already doing with your otherwise unused savings (hopefully index funds). Put your money in that instead of paying the mortgage early, and you'll end up with more money at the end of the mortgage. It's about the simplest optimization possible.
You have a rather sophisticated analysis here, yet, you left out the most important factor: risk. Something that every sophisticated investor must take into account. And in the case of your personal residence, you have to take into account not only investment risk, market risk and interest rate risk (which you alluded to re: refinancing, but you left out the fact that you are not guaranteed to be able to refinance and even when you do, there are fees associated), but you also have the risk of losing your home and being homeless. For many people, the latter risk is assigned a very high rate, so I don't think it is as simple (or complicated) as you make it out to be.
If they're banking cash they would have otherwise put into their mortgage, then that extra liquidity is going to be a good thing should it come to foreclosure.
If you are banking the cash, rather than investing it, then the whole plan goes out the window because your cash is losing value while you also pay interest.
You can buy Series I bonds as was mentioned but those are variable interest and have only been worth buying the last year or so. They have been low interest for the last 30 plus years. Also, you can only buy up to $10k in series I bonds per year.
This is a form of leverage, but how do you use it in a low-risk way? Fixed income investments seem to be near zero, and maybe people don’t want to invest more in stock.
If the alternative is cash sitting in a bank account, paying off the loan looks better.
Edit: I looked at Series I, and it's variable rate with a 3-month interest penalty for early withdrawal, so you're not going to get 7% in the end. It seems worth doing a more detailed calculation.
I am able to add additional premium payments to my payment, or as a separate payment, via my online mortgage payment site.
It sounds like the bank/site your loan is under is actively hostile towards such payments. I don't know enough about mortgages to know how to help you solve your side, though.
The most sad part is, while I'm not OP, I had a bank that supported bi-weekly payments, my mortgage was sold, and the new bank doesn't. What a kick in the pants!
Yeah, that’s the rub, isn’t it. I would have asked the person you are replying to “what is that fabled institution?” (I still want to know though) - but the problem is two-fold: first, it’s not like I can just take my mortgage with me and change banks, and second, the banks seem to change hands, or they sell mortgages to other banks. So even if you do your due-diligence, (which I did I assure you, there was a reason I went with that bank, since it had a relationship with my employer and offered preferential rates), over last X years the bank went under new management and situation changed dramatically :(
I assume you mean because the extra money that I'm putting into my house could make more money in the market so instead of a 13th payment, get gains in the market?
Well, as long as your (interest minus interest tax credit) rate is below inflation, youre better off putting that money in a 0% interest savings account than paying down the debt faster. Or consider 7% from a Series I bond, or investing it in something else.
At the bank I worked at, any payments made on the account that were above the due payment were applied directly on the account. But then you had people complain when they missed a payment because they put more money in the account to not miss the payment. You can't please everyone.
Banking is hard because everyone is doing it differently, and everyone is doing it. So you have to please older people that are used to calling or speaking to a bank teller and also please the younger generation who want to do everything online and not deal with humans.
The easiest way is to call when you want to do something the system is not expecting, because we had to manually adjust the final date of the loan, the amount due, and things like that. Terrible system and way more highly susceptible to human errors (trust me, I've seen a lot).
There were also a lot of silos (different departments) to do specific tasks, so you would get transferred a lot until somebody knew exactly who could handle your case. Most people were new recruits from University working part time, so they didn't know enough to answer most questions and when they did they usually had their degree so they switched jobs.
This got a lot harder with the rise of the Internet because what was fairly well-known became completely well-known so loaners started creating poison pill clauses to try to stop it. And then once they moved to electronic billing a lot of them came up with the hostile options you mention. The couple of times I have refinanced mortgages, I explicitly checked this when choosing between offers.
An interesting thing I heard is that is not so convenient to pay off the mortgage earlier. Mortgages are debt with 1-3% per year.
You could take the money you already have and put it in an ETF covering the whole market which kept for a long time (10 years) in average will return you 5-8% per year.
I also had the instinct of paying off the mortgage faster if I could until they explained me that. Never had chance to do it.
I'm interested in hearing some expert opinion about it!
It's a personal decision and can go either way, and depends on your cash flow and risk tolerance, and goals.
There are many ways to look at it, and the financial aspects aren't always the most important ones. If you have higher debt (credit card, etc) you probably want to pay those off first.
You may want to have ready cash available (stocks, ETFs, etc can be sold) - but once you put money back into your mortgage it can be hard to get it back out (HELOCs can affect this).
You may find you're not good with savings, and paying extra "forces" you to save (people do this with taxes all the time, preferring to get a large refund as a "windfall" vs having some amount of money extra each paycheck).
And it can all change AGAIN from a cash flow perspective - if you have a few years left on a ten year mortgage paying it down faster gets you to the point where you have no mortgage payment faster - that may not matter to you as much if you're 29 years left on a 30 year mortgage.
Also paying down debt is a certainty, but ETF returns could do anything (we have had ten year periods of negative returns in the past). Conversely, inflation makes your debt load lesser, assuming your income inflates at some point.
Your comment, though sarcastic, underlines some points I thought about myself and I would like to discuss it!
We are both well aware that there is no risk-free investment.
Governments bonds that are considered less risky that ETFs usually return 1-2% per year.
The ETF I'm talking about maps a market index covering a big chunk of the US market or several stable international markets.
They are still a risk, your house is also an asset and is also a risk.
I think if you only have your mortgage as an asset then probably buying some ETFs would help diversify your assets.
But if you already have a lot ETFs then maybe would be better to finish up earlier the mortgage...
Sorry if I came across that way, I wasn't being sarcastic at all. Series I bonds are essentially risk-free unless you think the US government plans to default within the next 1 year (which is basically the lock-up period). Series I bonds pay a coupon equal to CPI. The current Series I interest rate is 7.11%. It is variable, however, and capped at $10,000 in contributions per year (online). [1]
It really isn't if the interest rate is below inflation. If it's below inflation, the mortgage is yielding real-dollar value. That's an asset in my eyes.
It's a calendar spread. Last year, you were buying 2021 dollars for a fixed rate (2.675% APR in my case), but you different vintage dollars over time. You owe 2022 dollars in 2022, and 2031 dollars in 2031. A 2051 dollar is almost certainly going to be worth significantly less than a 2021 dollar.
So you're buying 1 2021 vintage USD, but at the extreme, you're paying it back with 2.2 2050 dollars. If we expect inflation to be an average of say, 3% over that period, each 2021 vintage USD should be worth at least 2.42 2021 vintage dollars. So in this example, you're earning real dollars over this period.
> It really isn't if the coupon rate is below inflation
It's a liability in the amount of the balance. I suppose you could consider the present value of the “income” stream of the difference between inflation and interest over the life of the loan as an asset, but unless it's a very unusual loan, any income stream of that kind is likely to be a transitory effect, and interest is likely to be be a real as well as nominal expense considered over the life of the loan.
Indeed, you are of course correct! I'm just hoping folks look at mortgages not as a strictly bad thing, but as a tool in their financial arsenal. They can be good! I think most folks are stuck in nominal dollar mode, and it can really help to look at things in real dollar terms.
Bi-weekly payments isn't much different from making one extra payment each year, either by double-paying one month or paying 1/12 extra each month.
I've had more than my share of mortgages and every one of them has had the equivalent of an "extra principal payment" line on both the on-line and off-line payment systems.
On a related note - it appears to me that credit unions are no longer what the conventional wisdom said they are either - a small community and customer-minded institution.
In practice - I frequently see them being bought up or transferring management and resembling the national chains in how they operate more and more. Not sure what the difference is to be honest.
Credit unions "legally" have to be owned by the customers, but this doesn't guarantee they'll be any good.
Many of them decided "going online" was too hard, and outsourced all that stuff to providers. It can take some research to find a good local credit union that actually works well, and sometimes you have to accept the way they do things vs how you want to do things.
Our local credit onion services AND holds 10 year mortgages, everything else they resell and service for awhile, but the servicing may get sold off, too. This can mean that even if you find a perfect bank to borrow from that changes shortly after you sign.
Or you can switch some stuff to the massive brokerage houses, which all have associated banks and pretty decent staff/cost/features.
Sounds like you have had the misfortune of using terrible banks. I have never had this issue with home mortgages or car loans, it was always easy to make extra payments directly to the principal.
I use a regional bank and they have always been a bit behind when it comes to tech. But even a decade ago, I could make my payment online and there was a simple checkbox to send extra payments toward the principal.
It all depends on who services your mortgage. In my case, the credit onion asked what to do with overpayments (because they also asked if I wanted to round up the payment to make it a whole dollar amount).
Some banks aren't setup to handle this correctly, and do weird things with a bimonthly payment. They get a payment on the 1st, but it's not the full amount due, so they apply the entire payment to principle. Then they get another payment on the 15th, and since it's not the full amount due, they apply it to principle again, and then they complain that you didn't pay your mortgage, you point out they're dumb, and they have someone go torture the computer until the late fee is gone.
And then this happens every single time and so the bank gives up and just applies all payments to "amounts due".
Older banks are quite susceptible to this. You can solve this because the "lot quicker" isn't really because of early payments, it's because there are 12 months in a year but 26 biweekly payments, which means you make a 13th mortgage payment; so just do one principle payment or increase your monthly payment by 10% or so.
Right now I have an account now where I can deposit USDC and spend via tap to pay/debit card. Basically just a debit card linked crypto account, rewards are $$$ (4%) and adjusting balances is fast and easy. Also programmable so I can replace what is spent without having to manually transfer. This helps tremendously with managing the families access/budgeting of funds.
Would also be nice to have an account where legacy payments (ACH) can be made that also has an interface to deposit USDC. Right now I need to ACH deposit to my bank account (from crypto), and then ACH withdraw to pay the bill. Eventually you could just get rid of the ACH part and convince the accounts receivable to accept USDC (and profit?).
Bringing both these services under one roof so it is a bit easier to manage would be the holy grail of legacy and future financial products.
Wow, this is such an impressive launch/reveal in so many ways... landing pages, documentation, philosophy, sheer scope. Congrats to everyone on the team for the quality of execution!
This is a cool idea for sure...as a dev I'll definitely take a look at the API docs.
That said, are you a tad worried about the future of "fintech apps"? It seems like a lot of the revenue growth in this space was heavily related to ZIRP and/or super low rates in the preceding few years, which made these apps more attractive to consumers. So, is there an existential worry that the success of the apps that will build on top of your bank is too closely tied to potentially unrealistic Fed policy?
Engineer at Column here! The difference between us and ALL banking as a service companies (Stripe Treasury, Unit, etc) is that we are the actual underlying bank in the transaction. BaaS companies usually wrap one or several banks (like us) to provide their API's.
But what is the practical difference to the API user? This seems like caring that about how the API is implemented, which is usually not a concern for a SaaS consumer.
Yup. You can sign up today for sandbox access, and then contact us once you are ready to go live and move real money.
Truth is, we probably aren't great as a personal checking account, and thats not really the intended use case. But you are welcome to try us out and see what you can build!
Is use case only to build products on top of your platform or could it be used for personal finances and, as a developer, add automations and such over the API?
Very interesting. How are you dealing with KYC regulations? Do you provide that, or is it the responsibility of developers calling your API to have already done KYC.
We let developers bring their own KYC providers. There are so many great solutions out there I don't think the world needs another one :)
In general our approach is to focus on building things that 'only a bank can do' and if there are great existing solutions (ie: fraud, kyc, issuing processors) we let developers bring those solutions. We play nicely with all of them.
Would be nice to have a side-by-side comparison with the steps to starting and operating a bank to get a full picture of what Column abstracts away and what founders must still DIY. Currently you have to dig deep into the use case docs to determine some of these details.
Will you bank businesses related to cannabis but that don't touch cannabis?
Also, your 'Verify' email still has a bunch of default template text in it.
""This is preheader text. Some clients will show this text as a preview.""
-- Root/Entity & Beneficial Owner form has some ambigious error messages; doesn't show where what is wrong (eg: which of the three addresses was bad?) -- and the message disappears before it can be acted on.
In the US (and most countries) in order to get access to the central bank (in the US the fed) and do 'banking things' like holding money, moving money, and lending money you have to have a banking charter. We have a national charter (issued by the OCC) but you can also have some other more bespoke charters as well!
I believe they're looking to imply here that they own their own charter, rather than renting someone else's, which is how almost all U.S. fintech companies operate (look in the website footer of, say, Unit and you'll see: "Banking services are provided by Unit's partner banks who are Member FDIC.")
this is an important point. There are other providers who offer programatic creation of bank accounts, payments, etc. But all existing solutions wrap a bank, who then wrap middleware providers and core systems. When you work with Column, you're working with only Column. This has implications for cost (fewer people taking a slice of the pie), performance/usability/experience (modern, tightly integrated systems), and development velocity (fewer players in the game of Telephone). Column collapses the layers of the financial services stack and exposes this functionality via API.
I’m sure costs is part of the equation but I’d imagine the control is far more important. Reselling legacy bank services means you’re limited to what they can do, which is usually not much. Most finance technology is heavily limited by what they can do… because of their partners, and that’s why they’re usually just nicer interfaces to the same old services. Hence banks like Monzo in the UK building their own infrastructure from the ground up too. The less you’re dependent on legacy technology, the more you can do.
This looks nice, I've been wanting to make a whitelist-enabled card for ages now. It would ask me if I want to trust the merchant before every charge, so anything unrecognized would just be rejected. I could also set limits by month/day/year per merchant and anything above that wouldn't go through.
Very minor nuanced criticism. The company is marketing itself to be developer-first, API first infrastructure, but then the all testimonials I came across are from the CEOs and co-CEOs and not developers.
It would be quite powerful and impactful if you have developer testimonials too.
Long ago I was part of a team (but not the first core team) that built a pension and investment system from scratch , because there were no banking APIs available from anyone, we convinced a bank to let’s us connect to them as an ATM
This looks so damn interesting and cool, but I'm still trying to wrap my head around the concept of a "bank for developers". I get payment processors, like Stripe, but this is a level or two below that, right?
Could you share more on the legal entities that underlie Column? In particular, what’s actually chartered at OCC and a member of FDIC? I can’t find you, but maybe you just have a different name (for now?)
I am one of the Engineers at Unit.co - we are also building a platform that allows developers to embed financial features into their product
Congratulations on the launch! the market is huge and competition is welcome :)
Column took a very interesting route, while we have Bank Partners that we develop with them, Column is also the bank , curies to know why they decided to take this route.
Clearly the team has a lot of experience in fintech but I was wondering what the major regulatory hoops someone would have to jump through to build something like this -- especially if someone wanted to make a similar product in Canada/LatAm/Europe/etc. Any insights?
This looks fantastic. Any plans to open international transfers? (swift). There is a real need for a good api driven cheap solution to move money across countries which is at the moment filled by 3rd parties that are not stable or scalable.
Great landing page but I'm just going to point out that the code sample is curling a WIRE of $40,000 and the top entry in the "Transfers" is a WIRE for $4,000 and its driving me nuts :)
Solid Financial Technologies pretty much does this and has a number of companies as customers. Here's the API for enrolling Persons, Businesses, doing KYC/KYB, creating bank accounts, issuing virtual/physical credit cards, letting customers use credit cards, do ACH / wire transfers, ... accounts in US$ or ETHER or DOGE or other crypto ... everything a startup or established company needs for providing financial experiences to their customers: https://www.solidfi.com/docs/introduction?&_ga=2.45803424.50...
That is, just looking at the site, my guess is that building everything from the ground up (core banking stack, acquiring the chartered bank, then all the APIs and tech on top of that) must have taken many years and many, many millions of dollars. And kudos, because the first thing that struck out at me is the documentation looks excellent. Overall, it looks like something where the the team had all the luxury to "do things right from the ground floor", instead of scrambling and making shortcuts before their runway ran out. I just think it would have been very hard to find a VC willing to be patient enough to wait that long with no revenue or customer feedback ("where's your MVP???")