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Recently, I’ve come across a number of founders and startups that have zero knowledge when it comes to technology and their startup. More concerning is many don’t seem to care, their attitude is “we’ll just outsource that stuff.” That just does not fly. Imagine you are opening a restaurant and you have the chef and menu all in place. For the venue/location you don’t really care because that is not your domain since the food is the star attraction of the new restaurant. If the infrastructure of the restaurant is crap most people will not care how awesome the food tastes. There is the random “hole in the wall” that can get away with it but that’s the exception and not the rule.

I’m not expecting founders to start coding in Python overnight, but you need at least some basic understanding if you want to even approach an outsourced vendor. Hence, the above slide deck. It provides non-technical founders an idea of what technology is available and some of the lingo that goes with it. Without, some basic knowledge you are going to be taken for a ride and your precious angel investors will not be happy.

Money – it’s been around for 1000′s of years and drives most people to do things, good or bad. When you have money, you also need banks to provide a safe place for people to deposit their money. These banks then turn around and lend this money to others. This simple business model is how banks have operated for 1000′s of years and thrived on the difference of what interest they gave to depositors and what interest they received on outstanding loans. Over time, banks started to offer more and more products to generate more and more revenues. Many of these products were not that simple and in the process were given a fancy name – structured products, which just means they are customized for each customer based on their specific needs. Then BOOM, the financial markets collapsed and many of the banks faced near bankruptcy because of their loosing lending practices and their structured products which started to come undone. In the aftermath of this financial carnage a new group of “banks” are emerging in the US to get back to basics in banking.

The four that have emerged include – Bluebird, GoBank, Moven and Simple. All are pretty similar in that they have low fees, no physical locations, heavy use of technology but a couple are not actual banks. To be called a bank you need to be a member of the Federal Deposit Insurance Corporation (FDIC) which means the deposits are insured by the US Government for up to USD 250,000.

Bluebird - Bluebird is a partnership between American Express & Walmart, the distribution strength of Walmart and the credit card experience of American Express (AmEx) is what makes this offering interesting. The product is a no-fee checking account that has a debit card. The target audience is low-income shoppers who have a tough time getting a regular credit card. Bluebird is a bank since at the height of the financial crisis AmEx was turned into a bank holding company so it could accept money from the Federal Reserve.

GoBank - Green Dot first made it big with it’s prepaid cards it offered to low-income consumers, then it forayed into other parts of the banking sector. Green Dot acquired Bonneville Bank, an FDIC member bank, and renamed it to Green Dot Bank. GoBank is brand of the Green Dot Bank. The offering is similar to Bluebird in that it offers an online checking account, debit card and access to most ATM’s in the US.

Moven - Moven started out as Movenbank then changed its name because it’s not a bank. It has partnered with an unnamed FDIC member bank. Moven offers the usual banking products but really shines around the money management tools it offers. MoneyPulse is one of their tools which tells you where you are spending your money. Moven was started by Brett King who has authored several books on the future of banking, his latest book is called Bank 3.0.

Simple - Simple also started out with a different name, it was first known as BankSimple. But it also is not a bank and has partnered with The Bancorp Bank, a member FDIC bank. Early on Simple attracted a lot of attention as one of it’s early founders Alex Payne was an early employee at Twitter. Alex left Twitter to startup Simple which was seen as a stamp of approval for Simple in that it solves a real world problem. Alex has since left the company. I signed up for the service but I really don’t use it much since I don’t live in the US and most of my transactions are Rupee denominated, however the overall interface has definitely got some great eye candy.

Bottom line – Most of these new age banks are offering a convenient mobile platform via iOS and Android devices to allow consumers to interact with their bank information. In addition, most of them have spent a large amount of time and resources on the UI of their website and mobile apps. However, I still believe it’s early days with these banks and feel they need to also address the investment portfolio part as well. By adding the investment piece, it creates an end to end solution which many consumers are still looking for.

Back in November 2011, Ron Johnson head of retail at Apple moved over to JC Penney as it’s CEO. Ron had already been at Apple for 11 years and made bank as he watched the stock zoom from around $25 in January 2000 to over $375 in November 2011. It was time for him to move on and JC Penney is where he decided to work his magic and transform it into “the Apple of department store chains”. His resume reads like a Fortune 500 baller – Stanford University, Harvard Business School, Target (struck the deal with Michael Graves), Apple (created the Genius Bar concept)…jeez, JC Penney had found their savior.

Based on his past work experience it seemed like it was a slam dunk that JC Penney was going to crush all the other department store chains like Sears, Dillard’s and Kohl’s. However, after a brief 17 month stint Ron Johnson was fired this past week from JC Penney and the board reinstated Mike Ullman as it’s CEO. It ended so quickly before it even got started, but revenues fell over 20% and institutional investors headed for the exit – the stock is down over 50% since Ron was made CEO. So what really happened?

Simple, the board felt that one guy could rejuvenate the company’s fortunes because it worked before for Ron. The board failed to realize it’s about the overall team and also the right market sentiment sometimes called timing or luck which most people tend to negate. Remember Jon Corzine? Goldman Sachs CEO whiz turned Senator, who became the CEO of MF Global and within a short period bankrupted the company. His strategy was to implement the same trading style he employed at Goldman Sachs, the difference is that Goldman Sachs had a risk management team in place whereas MF Global only had a single dude with an Excel sheet to manage the risk.

Ron was probably a rock star at Apple because of Steve Jobs’s unrelenting focus on products and simplicity. Even Jobs was not a one man show, he needed a designer like Jony Ive on his team to help dream up the amazing products that Apple would sell through their retail stores. When I moved to India in 2005, I was part of an algorithmic trading fund that launched a product in 2006 and we collected over Rs. 200 crores (USD 50 million) in a matter of months. I still get pitched by other algo traders wondering how we got so much money in a short period and honestly it was just timing. It was early 2006 and the Indian equity markets were headed for the moon and several private banks had started their retail banking operations. We went through the due diligence process for the banks and got some private investors to invest in the fund. Then one day we get a call from one of the banks and our algo product was approved for distribution to their clients. BOOM, that opened up the flood gates and the money just poured into the fund.

Would it work today? No, the regulatory environment is very different. Back then banks were getting 2% commissions which today is no longer allowed. In addition, retail investors are more risk averse today then they were back in 2006. Just because it worked back then does not mean it will work again.  It’s similar to the statement all mutual fund companies makes in their marketing – “past performance is not a indicator of future performance”…so, so true.

Sometimes you know the truth but don’t want to think about it, because it hurts or goes against everything you believe in. I’ve always had a keen interest with the financial markets, whether reading The Wall Street Journal, Forbes, Fortune or watching CNBC. But, one area I always thought was a bit murky was the area of giving personal finance advice.

Many of the magazines such as Kiplinger’s Personal Finance would scream “10 stocks to help you retire” or “make your 401(k) work harder for you” to attract readers. But, when you would read the articles you realize it’s pretty worthless information. And yet every time I would read an article along the same genre and expect different results…stupid I guess. I knew the advice was mostly wrong but I didn’t want to believe it.

My eyes were opened when I was watching the Daily Show with Jon Stewart and he had Helaine Olen on as a guest. After the show, I downloaded her book “Pound Foolish” where she slams the entire personal finance industry for providing worthless information. It’s pretty clear she’s not looking to make friends and is just speaking the truth.

The whole “Rich Dad, Poor Dad” line of books – apparently the Rich Dad never existed. Wow, is all I can say. If you really did follow his advice and took on massive debt to buy houses all over the US, then welcome to the great housing bust of 2008. Feels good don’t it! Even Robert Kiyosaki the author of “Rich Dad, Poor Dad” got hit by the housing bust, one of his companies filed for chapter 7 bankruptcy in late 2012.

The book goes on to mention almost every personal finance guru - David Bach, Suze Orman, Dave Ramsey and many others. Bach was the guy that talked about skipping that cafe latte at Starbucks and instead saving the money. Overnight, he was on every morning talk show speaking about the “Latte Factor”. Honestly, if you are that hard pressed for $4.00 a day you got bigger issues and listening to some joker on TV for financial advice is the least of your concerns.

After reading the book you realize people are looking for quick and simple answers. However, many financial products sold are complex for a simple reason – to hide the fee structure. I’ll never understand why people work 40-80 hours a week for a paycheck and then take zero time to understand their personal finance well being. Stop the madness and start small, take one hour a week and start to understand your money situation and investments. Nobody gives a damn about your money more than you.

Large payments, micro payments, online payments, credit card payments…payments in general are what makes the world go around. In most mature markets the issuance of new physical credit cards has reached a saturation point. Instead consumers are looking towards newer technologies such as near field communications (NFC) to allow their mobile phone to transact a payment at a retailer. It’s pretty clear that the smart phone will become your wallet and it completely makes sense. If you lose your physical wallet you have to go through the hassle of calling all your banks and canceling your credit cards. However, if your smart phone has a password on it, then your biggest worry is which new awesome sauce phone you will buy to replace the lost one.

In emerging markets like India, the use of a credit cards never really took off because of various reasons – no credit rating system, slow legal process to go after defaulters and a large percentage of people that are not “economically viable” for credit card companies. However, it’s becoming clear that as more people open bank accounts they will want to transact and most will opt for their smart phone and not a credit card to make payments..sorry Visa and MasterCard.

Before we continue let’s run through the various payment systems available in India today:

1. Real Time Gross Settlement (RTGS) is run by the Reserve Bank of India (RBI). It deals in high value and high volume, most widely used in India.

2. National Electronic Funds Transfer (NEFT) is also run by the RBI. NEFT is more retail in nature and includes large volume but not in value. It’s a batch system and thus not real-time.

3. Immediate Payment Service (IMPS) was created by the National Payments Corporation of India (NPCI). It’s a mobile phone payment service.

4. RuPay was created by NPCI and is similar to other cards networks like Visa and MasterCard. It’s India’s own cost effective credit/debit card network.

5. Aadhaar Enabled Payment System (AEPS) was developed by NPCI in association with the UIDAI, who is in charge of the Aadhaar national identity program. It will allow for payments between Aadhaar members.

There is a lot of activity in the payment space and it’s clear by looking at the above list. Personally, I think IMPS will end up dying since setting it up is a major pain in the ass and thus most retail customers will opt for NEFT. For India to implement RuPay would be a huge win and it would bring down the transaction costs for credit cards which are currently around 3%. However, I can see Visa and MasterCard doing everything in their power to make sure RuPay never becomes commercially viable. China has their own credit card called UnionPay and it is the largest credit card issuer in the world. China has the will and ability to implement large scale projects and I believe that is where India may stumble and give in to Visa and MasterCard.

But most interesting is AEPS, as more of the population gets an Aadhaar number (India’s equivalent of a social security number) it will allow 100′s of millions of people to make payments. Remember many of these people getting an Aadhaar card never had a bank account and now are becoming part of the banking system. Teamed up with a smart phone they can now transact via their phone whereas before all their payments were made in person. The perfect storm of – low cost payment systems, national identity card and smart phones will create a whole new market for many startups and allow commerce to flow easier in India.