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Hello reader,
Although I write about tech for a living, I can be a bit old-school at times.
One thing I’m a little old-fashioned with is my money. When it comes to investing, I’m fond of using wealth management platforms due to their ease. However, I also like saving a decent amount of cash in a traditional bank.
I’m aware that some wealth management platforms also offer options to store cash, but part of me is always paranoid. Perhaps it’s from watching so many major crypto investment platforms go kaput in the last few years. I know it’s not the same thing, but I don’t care, even if you call me kiasu or afraid of losing.
For this newsletter’s featured story, we dig deeper into the use of fintech platforms and traditional banks – not for individuals but for startups to manage their finances. Is one truly better than the other?
Today we look at:
- The tension between traditional banks and fintech platforms in managing startup finances
- An Indian auto platform cutting losses by 35%
- Other newsy highlights such as US lawmakers proposing to ban DeepSeek on government devices and SoftBank potentially acquiring chip designer Ampere Computing
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Old vs. new school
Image credit: Timmy Loen
On paper, the fast-paced nature of startups might make them more suited to using fintech platforms than traditional banks. However, this might not always be the case, as discussed in today’s featured story.
- Constant struggle: Banks follow lengthy onboarding processes, use clunky user interfaces, and require manual workflows. Founders turning to these institutions are stuck with these issues, so they end up spending time that could have been used to scale their operations.
- Uncertainties abound: Fintech platforms, on the other hand, offer speed and ease of use. However, their lack of maturity and, in some cases, banking licenses of their own, means that they might be a little riskier than banks.
- Opening the toolbox: That said, startups might benefit from a hybrid approach to financial management. On top of safeguarding most of their funds in banks, they could explore a few fintech solutions like virtual cards, budgeting and tracking tools, and systems that automate workflow approvals and facilitate seamless integration with accounting software.
Read more: In startup finance, fintech is in, but banks aren’t out
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