Key points
- Jackie Reses says there was no systematic debanking of crypto, only banks exiting because clients or compliance economics did not justify it.
- Reses says Yahoo, which owned 40% of Alibaba, brought her onto the Alibaba board to repair a relationship that had stalled after a clash between Carol Bartz and Jack Ma.
- Reses says Lead Bank, which she founded by buying a Kansas City community bank for a charter, earns about $280m in revenue, mostly from client referrals.
Why a former Alibaba director built a bank for fintech
Jackie Reses built Lead Bank on the view that fintech and crypto companies need a bank designed as infrastructure, not a small legacy bank with few engineers. Her years on the Alibaba board, at Yahoo and at Square gave her deal structuring skills and regulator relationships. She says the debanking narrative is overstated and that crypto's hype will sort durable products from the rest.
Takeaways
- Crypto debanking was not systematic, Reses argues. With about 5,000 US banks, she says some exited crypto because they lacked enough clients to justify compliance teams, and some companies would not meet know your customer rules. Lead Bank is among the most active crypto banks, with over 100 clients.
- Lead Bank is already profitable fintech infrastructure. Last year it made about $280m of revenue and $31m of net income, almost all from referrals because clients act as its sales team. It raised $180m at a $1.5bn valuation. Ramp was first, followed by Stripe, Affirm and Revolut.
- She bought a bank to get a charter. Reses bought a community bank in Kansas City, Missouri because the legacy banks fintechs used were typically $1bn to $5bn in size with few engineers. Lead Bank built five API sets covering lending, money movement, issuing, accounts and stablecoins.
- Reses was put on Alibaba's board to repair trust. Yahoo owned 40% of Alibaba, and a fight between Carol Bartz and Jack Ma had halted talks. Reses travelled to China several times a month and executed an Alipay deal that pulled back tens of millions of dollars for Alibaba shareholders.
- Yahoo was a mess, and she recaptured tens of billions. Yahoo had several CEOs, an activist pushing to divest Alibaba, little mobile investment and a poor search deal, with search affiliates near a third of revenue. The Alibaba tax bill was expected to be among corporate history's largest.
- Square's Bitcoin product reflected Jack Dorsey's personality. Dorsey and three engineers coded the trading product from Thursday to Friday, for a January 2017 launch, despite accounting and SEC questions. Reses also took Square Capital, a Hack Week project, and built it into Square Lending and Square Banking.
- Crypto will split into durable products and the rest. Reses says products should be judged by real use cases and durable value. She places AI at one end of the hype spectrum and argues AI experts should advise government, since lawmakers lack the expertise.