Standard Treasury (YC S13) Wants to Bring Banks into the 21st Century

Core processing obviously needs innovative competition and we hope to get there if it's necessary (I've heard Palantir is considering getting in to that business as well).

SOAP interfaces are exactly what we're trying to get rid of. ISO8583 is likely here to stay though, despite it's problems.

The banking industry in general is not averse to automation (and has been for the past 55 years - see http://en.wikipedia.org/wiki/Magnetic_ink_character_recognit...), but there are cases where transactions are complex without being _needlessly_ complex.

Is closely related to

"backwards, slow, and politically motivated decision making"

Enough outsourcing and experimentation has been done that they already know how they'll get burned, making the sale hard.

I worked at a financial services company which spun off a megacorp-ABC and later got purchased by megacorp-XYZ. In between they tried to sell their services to everyone, but a major source of pushback was "Thats nice but you guys are megacorp-ABC and we are not" at the start, and at the end "OMG megacorp-XYZ is our biggest competitor".

Another huge problem is commoditization. There's not much difference between entities; that's a good thing for almost everyone involved, although it makes empire builders make ridiculous internal claims about their secret sauce. "Our secret sauce, the ONLY thing that makes us distinct from our competitors, is our TPS report headers". That's not exactly going to help outsourced TPS report generator startups.

So my startup advice would be to pitch that you're not trying to get bought out by their biggest competitor (but then, whats the point of a startup?) and that you're doing something "really new" not taking over a commodity companies secret sauce.

Stripe, Braintree, Balanced Payments and several others already use APIs to enable online payments. But companies transact with banks in a number of other ways, and often in high volume. When done manually, such transactions can be tedious and time consuming.

Standard Treasury thinks there’s a better way. To that end, the Y Combinator-backed startup has created a menu of APIs that will enable banks to give developers access to a range of transaction types, including electronic checks (ACH), foreign exchanges, and rate-quoting.

For an idea of how Standard Treasury’s platform might work, imagine companies like Uber or Airbnb who regularly send out electronic payments to a lot of different people. Such companies could potentially benefit from one of Standard Treasury’s REST APIs to easily send electronic checks from their bank accounts via their own backend systems.

Another example might be U.S. company with an international subsidiary. Everyday the company turns Euros into dollars and sweeps those into a central bank account. Normally a treasury analyst or other staff member would have to manually log into the company’s, sometimes several times a day, to complete the process. Standard Treasury APIs and webhooks would automate that process.

Standard Treasury cofounders Dan Kimerling and Zac Townsend both hail from the tech financial community. Kimerling is the former COO of Giftling and Townsend worked at Stripe. Before launching their own venture, the two spoke to heads of more than 100 tech companies in Silicon Valley and NYC to get a better understanding of what firms needed from banks.

What the pair learned was that much of what went on in the financial back office in terms of treasury management and commercial banking was a painful and laborious process. Even something as simple as opening up a new account could turn into a multi-day affair.

Kimerling thinks the timing is right for what Standard Treasury aims to do. He explained:

“Banks are more comfortable now in building tools for developers than they were a few years ago, but they don’t have the in-house engineering capability to build the beautiful APIs that developers have come to demand and expect. That is where we come in and say, we have this platform as a service. You pay a monthly fee and we’ll do the backend integration work and hosting.”

Standard Treasury charges anywhere from $100,000 to $500,000 per month for its service under a two-year contract. Although unable to name names yet, Kimmerling said Standard Treasury hopes to close between two to four deals before the end of the year, two of those being with major top-10 banks.

“The sales cycles are long,” he said, “but I am optimistic.”