Business banking is outdated, with one-size-fits-all services, creaky technology and cumbersome processes. That’s the argument of two mobile-banking veterans who announced their platform for business banking services this week, according to Finextra.
Seed’s founders, CEO Brian Merritt and Ryan Hildebrand, are both veterans of mobile bank Simple — Merritt as VP of engineering and Hildebrand as VP of finance — and they’re careful to avoid calling Seed a bank, which would put it directly in regulatory crosshairs. Instead, they describe it as a banking services company. Business customers will connect with Seed either by way of apps that Seed will roll out within the next six months, or by writing their own connection with Seed through a programming interface.
Seed also won’t actually provide the nuts-and-bolts banking functions. Instead, on the back end Seed’s systems will communicate with a marketplace of providers that offer competitive lending, credit, and insurance products.
That puts Seed in a position to be able to do things that conventional community banks — the clear target of Seed, according to the founders’ blog-post announcement — would require lots of paperwork to create, such as $50 million in FDIC insurance instead of the standard $250,000. (The trick is creating 200 separate accounts under different legal ownership, the magic or which would happen on the back end with Seed.)
“We’re taking a [software-as-a-service] pricing model, where we’ll have flat fees in most cases, for most customers, instead of transaction-based fees,” Merritt told TechCrunch. “The bottom line is that we’re dedicated to making it as easy as possible to start and manage a business. Existing banks make it unnecessarily difficult, with bad fee structures, bad technology and poor service, and we want to use design, technology and service to save time and money and help business owners just manage their businesses more easily.”
That pitch echoes a January report from BBVA, which argues that banks need a whole new digital approach to avoid being overtaken by digitally savvy non-banks. BBVA bought Simple in 2014 for $117 million.
As for Seed, the San Francisco-based startup (which is backed by Y Combinator) will also offer free domestic wire transfers, free ACH transactions and free check sending, along with low-cost international payments. But aside from those traditional banking services, the fact that businesses will be able to connect directly to Seed’s systems means they should be able to customize how they handle a wide variety of business accounts and payments.
For the moment, the company is in invitation-only beta-test mode, and has released the programming interface that larger companies will be able to use for creating their direct connections to Seed.