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Comment by phil21 | Hacker News Reader

Because working with "legacy" institutions is anywhere from a monumental pain in the ass to literally impossible depending on your business.

AML/KYC/etc. has utterly destroyed the ability to do anything that isn't "industry standard" and super boring. Do anything whatsoever just a tiny bit interesting and you will find your banking access cut off or severely restricted.

After dealing with that mess, I can absolutely see why founders avoid it. They are there to build a business, not dick around with compliance officers all day.

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HSBC did quite a few interesting and innovative things with certain organizations in Mexico, in fact more so then any 'fintech' challenger bank I've heard of, and I'm sure lots of banks would take on a similar level of risk for more legitimate enterprises in the Bay Area.

You just need to have billions moving around every month, with very high fees, to make it worth the time to take on that risk.

In the case of HSBC,

> So rampant was the practice, prosecutors said, that on some days drug traffickers deposited hundreds of thousands of dollars at HSBC Mexico accounts. To speed things along, the criminals even designed “specially shaped boxes” that fit the size of teller windows at HSBC branches, according to the documents.

https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M2...

Now that's financial innovation!

So, again something VC backed start-ups cannot be bothered with, after taxes and general compliance we have the pains of traditional banking. Something every fast food truck or small retail store manages on a daily basis.

And this refusal to follow existing rules and practices of how businesses are generally run, opens up an opportunity for all kinds of shady, borderline grifters. Sorry, I meant disruptive start-ups. But hey, it's not my money after all.

what the hell are you even talking about? what is an "interesting" banking function. I have been a banking client as a regular person and with big banks and sell side brokerages and they were all focused on facilitating our business. if you want stability and not to have your shit taken by cartels when you get big enough to be noticed, you have to operate in a jurisdiction with law and order and rules. there are no "interesting" startups in places with no rules.

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