I got quite a few comments on Friday’s post about starting a disruptive bank that questioned how such a bank could make money without lending, especially given that many bank accounts advertise that they are “free." The answer has to do with the fact that there is no such thing as a "free” account, there are just accounts with hidden fees, which come in three guises: first, being grossly overcharged for certain activities (like automatically moving some money between accounts to cover a payme...

I got quite a few comments on Friday’s post about starting a disruptive bank that questioned how such a bank could make money without lending, especially given that many bank accounts advertise that they are “free." The answer has to do with the fact that there is no such thing as a "free” account, there are just accounts with hidden fees, which come in three guises: first, being grossly overcharged for certain activities (like automatically moving some money between accounts to cover a payme...

The WSJ recently ran a story titled “It’s a Great Time to Start a Bank” which talked about a couple of recent local banking startups. It’s definitely true that when the existing players are on their backs it’s a good time for innovators. But it was disappointing to see the WSJ article focus about bank startups that look pretty much exactly like the banks we have had for the last hundreds of years: you take deposits from some people and make loans to others. What it is really a good time for i...

The WSJ recently ran a story titled “It’s a Great Time to Start a Bank” which talked about a couple of recent local banking startups. It’s definitely true that when the existing players are on their backs it’s a good time for innovators. But it was disappointing to see the WSJ article focus about bank startups that look pretty much exactly like the banks we have had for the last hundreds of years: you take deposits from some people and make loans to others. What it is really a good time for i...