Why Shane Chanel pulled out of the banking licence process

Shane Chanel set out to build a digital bank. Yondr modelled its cost per customer at roughly a thirtieth of what an incumbent spends, on the theory that the phone in your hand had already replaced the branch and somebody was paying for the difference. He assembled a team who had built card products and run bank operations, and started the licensing process.

Then he pulled out. Yondr never became a bank, and Shane is clear he never wanted it to.

What stopped the licence

The blocker was cloud infrastructure. The regulator was not comfortable with a cloud-native core banking platform, and one of the questions put to Shane was where his physical server was, so it could be inspected. That is a difficult question to answer when your answer is an AWS region.

He is careful about how he frames this. His view is that it is a learning curve for everyone, regulators included, and that innovators are taking regulators along the journey as much as the other way around.

What he did instead

Partner with a bank that already holds the licence. The bank holds deposits, customer funds sit safeguarded in trust accounts, and you build the product experience around that.

The capability you need is regulated. That does not mean the entity holding it has to be you.

The licence is a cost, not a prize

Shane's position is that being a bank brings a level of oversight and red tape that works against innovation. And the thing most Founders miss is that the incumbents are not as vertically integrated as they look. Banks do not own their core infrastructure either. They license it from providers like SAP, Oracle or Temenos, then build their CRM, marketing workflows and finance capability on top.

So the difference between you and a bank is smaller than the licence makes it appear.

What this means if you are building

The useful question is not whether you could get licensed. It is which regulated capability your product actually depends on, and who already holds it.

Shane also makes a point worth hearing if you are building here: Australia's regulatory bar is high enough that clearing it becomes a selling point in other markets. The structures you are forced to put in place around risk and business continuity travel well.