Legacy banking was a vertically integrated monolith. The user interface (the branch), the business logic (the core ledger), and the regulatory permission (the charter) were a single entity. Banking-as-a-Service (BaaS) weakened this constraint by exposing banking capabilities through APIs layered…
Getting into a neo-bank is a frictionless, three-second experience. Staying in one is entirely different. In the previous article, we explored KYC—the digital bouncer that verifies your identity at the front door. But once you are inside and your shadow…
You download a neo-bank app. To open an account, you are asked to type in your name, date of birth, and Social Security Number. Then, you are prompted to hold your phone up to your face and take a quick…
In a traditional bank, a payment card is a physical artifact tied to a pre-allocated ledger state. You apply for a card. The bank’s underwriting system reviews your credit, allocates a $5,000 credit limit on your account row, orders a…
In the previous article, we established that when you open a neo-bank account, your money does not actually live at the neo-bank. In many cases, it lives in a giant, pooled omnibus account (FBO) at a traditional sponsor bank, mixed…
You download a modern application with a minimalist interface. You pass your phone camera over your driver’s license, type in your identification details, and seconds later, you have a checking account. You are issued a routing number and an account…
It is late afternoon on a Tuesday. Through the multilateral netting bathtubs and real-time gross settlements we analyzed previously, Bank A has processed millions of customer payment instructions. But Bank A’s automated treasury systems project a critical state: by the…
Imagine a normal Tuesday in the US financial system. Millions of people wake up, pay electric bills, receive paychecks via direct deposit, and send money to friends. On the surface, it appears to be a chaotic volume of individual payment…
If you were to look at the underlying database architecture of a traditional core banking system processing a $5 coffee purchase, the customer-facing account state ultimately resolves to something conceptually similar to this SQL operation: UPDATE customer_accounts SET balance =…
