The points make well enough sense, but the author is also the professed founder of this: https://betterbank.app/
does that make the points less valid? I felt it added to the credibility of the piece? Looking forward to your criticism on that
Why is everyone a bank?
11–20 of 258 posts
Re: Why is everyone a bank?
#12I work at a bank -- it wants to be a tech company. In fact a lot of banks aspire to be a tech company merely selling financial products.
Re: Why is everyone a bank?
#13Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…
Another reason is the horrible interest rates. Wealthfront and Robinhood are offering "bank" accounts that have 1.8% APY that is FDIC insured.
If your business has a high turnover month-to-month, that money used to pay your bills can accumulate interest.
Re: Why is everyone a bank?
#14Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if…
Another reason is the horrible interest rates. Wealthfront and Robinhood are offering "bank" accounts that have 1.8% APY that is FDIC insured. If your business has a high turnover month-to-month, that money used to pay your bills can accumulate interest.
I bank with a shitty national bank (long story, need access to Zelle/P2P transfers). My emergency fund is 6 months expenses, low 5 figures. 150-200 basis points of interest annually is trivial when 1 or 2 wire fees ($20) to get access to those funds same day blows away all of interest gains over 6-12 months.
If interest rate mattered to folks, more would move to providers offering higher rates (you see this sprouting up with Credit Karma, Personal Capital, and other fintech startups offering cash management accounts because they're making a fee for getting deposits to underlying banks hungry for them). But that doesn't seem to be the case. Which is unfortunate, because it should be not too difficult to offer a checking account with check access, ATM access, unlimited transactions, P2P payments, mobile deposits, and interest bearing (brokerages do it living off the float [1]).
Sidenote: This focuses on personal accounts. Brex's Cash Management account seems to be a great biz banking option for those who qualify. No affiliation. Banking infra in the US sucks, which is why everyone has to be a bank.
[1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
Re: Why is everyone a bank?
#15“It’s the dominant payment method when it comes to everyday expenses — think milk and diapers at the supermarket or a quick bite at the corner deli.”
For financial ninkompoops.
Re: Why is everyone a bank?
#16The points make well enough sense, but the author is also the professed founder of this: https://betterbank.app/
does that make the points less valid? I felt it added to the credibility of the piece? Looking forward to your criticism on that
No, it does not make your points less valid, if they are valid. But it is reasonable to assume that the arguments of this piece form the foundational assumptions of the product you are selling. People will want to take this into account when considering your arguments.
Re: Why is everyone a bank?
#17Because there is so much free cash it's easy to build one just to pass your cash to your grandkids?
Ironically, fiat coins and banks are going to become so virtual , that bitcoin will look real in comparison.
also ironically, the author makes another bank
Re: Why is everyone a bank?
#18“It’s the dominant payment method when it comes to everyday expenses — think milk and diapers at the supermarket or a quick bite at the corner deli.” For financial ninkompoops.
too harsh brother, I agree it makes way more sense to use a credit card and pay it off immediately. It's just not that easy for a lot of people.
Re: Why is everyone a bank?
#19Earlier quoted context omitted.
does that make the points less valid? I felt it added to the credibility of the piece? Looking forward to your criticism on that
No, it does not make your points less valid, if they are valid. But it is reasonable to assume that the arguments of this piece form the foundational assumptions of the product you are selling. People will want to take this into account when considering your arguments.
You are right! This one is more of a general overview of the space. I will write one about the assumptions we are making wrt to betterbank.app
Re: Why is everyone a bank?
#20There are only two uses cases left for money center banks.
(1) You might be able to get a branch safe deposit box.
(2) Same day payment on credit cards, that bank.
Fidelity, and perhaps other zero fee brokerage accounts handle everything else.