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Why is everyone a bank?

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Re: Why is everyone a bank?

#241

Post by nradov »

Animats wrote: post #147
tlb wrote: post #4

Another 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…

Paypal is generally considered to be worse than banks. They will "freeze" your funds for months. You have very weak rights there. With real banks, if that happens, you raise hell with the bank regulators and something happens.

PayPal is actually a bank in some countries.

Re: Why is everyone a bank?

#242

Post by rchaud »

mrb wrote: post #168
__MatrixMan__ wrote: post #45

Earlier quoted context omitted.

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few). It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being co…

« why not cut out the middlemen and be the only parasite in the loop? » Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.

But the biggest actors in crypto are the exchanges, literally the middlemen between buyers and sellers. The volume of trade with crypto as a medium of exchange is dwarfed by the amounts changing hands via the exchanges.

Re: Why is everyone a bank?

#243

Post by __MatrixMan__ »

cm2187 wrote: post #193
__MatrixMan__ wrote: post #45

Earlier quoted context omitted.

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few). It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being co…

I don’t know if it is specific to banks but there is a common pattern I have seen among internal developers: not only a complete lack of curiosity to understand finance, the underlying business, but an active resistance to any attempt to explain them. They want the numbers to be data, and don’t want to have to know anything about this data, and be told exactly what to do with it and they will code it up. I am sure th…

I've seen that pattern too, and perhaps I'm a little guilty of it.

But if you say:

> we want to encrypt this field with your public key before sending it to you

and they respond:

> yeah, we can handle that

and then contracts with deadlines and penalties are signed... Wouldn't you expect there to be somebody on the other end that is willing/capable to generate a GPG keypair?

At what point is it worth holding their hand through the technical bits, and at which point would it be better to replace them?

Re: Why is everyone a bank?

#244

Post by rchaud »

henrikschroder wrote: post #79
nostrademons wrote: post #64

Earlier quoted context omitted.

Yes, the American banking system is just ridiculously bad. I remember studying abroad in New Zealand (in 2004!) and marveling at how EFTPOS was universal, everything was chip & pin, and funds transfers could easily be done online (and often clear the same day!). The cashiers would look at me strangely with my American credit card, and they would always check the signature. (Which, it may astound foreigners to learn,…

I think the biggest tragedy is that most American consumers have no idea how bad American banks are compared to banks in other countries. Moving to the US is like stepping back into the 70's, and then discovering that everyone around you think that everything is fine, their banks are fine, that US banks are somehow modern and cool. Anecdote: I wired some money from my Chase bank account to my Swedish bank account, in…

That may just be Chase. A person I know uses a credit union for federal staff in Washington, DC and their wire transfers can be done in the currency of your choice, completely online. She recently did an international transfer in a non-USD currency and the email confirmation was immediate. The money was available in the foreign acct within 48 hours.

Re: Why is everyone a bank?

#245

Post by __MatrixMan__ »

mrb wrote: post #168
__MatrixMan__ wrote: post #45

Earlier quoted context omitted.

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few). It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being co…

« why not cut out the middlemen and be the only parasite in the loop? » Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.

I've made this observation too.

We spend a lot of time trying to achieve consensus with our neighbor parasites about the status of a transaction (slice the pie n ways, perhaps your database says that m of those n got paid, but mine says that m-1 got paid...), but if it were on a public blockchain there would be nothing to dispute.

Re: Why is everyone a bank?

#246

Post by __MatrixMan__ »

oarsinsync wrote: post #197
bryanrasmussen wrote: post #180

Earlier quoted context omitted.

I'm pretty sure that whoever disrupts banking will do it the Uber way, by disregarding all the laws that they are required to follow and trying to claim not to be what they actually are, with the same eventual success this route has had for Uber.

Financial crime is something that is heavily enforced on an (inter)national scale. Local transportation violations aren't enforced in quite the same way.

Yeah, but it's generally enforced by freezing your funds until you show up in court. If you've come up with an alternative, maybe just leave out the government-facing API that lets them freeze funds.

Re: Why is everyone a bank?

#247

Post by Keverw »

TrackerFF wrote: post #91
v4dok wrote: post #37

Another asnswer: Because the people making the business decisions in these companies is the only thing they can do. When you have no vision as a company or no visionary in your team, you get served by the countless consultants and ex-bankers who went to big-tech because of its the new Wallstreet. Of course, they have no idea what Tech does and is and of course no clue how to provide something of significant value. In…

Also: Debt is cheap these days, and regular people are in desperate need of cash - so it's a sellers market. Where I'm from (Norway), we've seen an explosion in these offshoot banks - i.e consumer loans / credit card providers. Airlines, big box electronic stores, etc. Ans surprise, surprise, many of these banks are raking in cash. And triple surprise, defaults in credit cards / consumer loans have also exploded. It…

Yeah the whole credit thing is nice, but I wonder how many people are pay check to paycheck with less than 1K in savings driving brand new cars, living in a large house with a brand new iPhone and flat screen. Then when people are closed to paying off their mortgage, they refinance or take out a second mortgage.

However there is someone who says if you need a new car, only pay cash so if you only have 500 bucks, get one off of Craigslist to get to point A to point B but in a way I feel like that's bad advice as wouldn't be reliable and you'd end up spending a bunch on repairs.

So I feel like credit is good, but in a way people use it for too much instead of saving. My favorite idea is to just use credit cards no differently than a debit card, don't spend anything you know you won't be able to pay off. Then instead of paying banks, they pay you! Sounds like cashback is worthless with interest. So I guess a different mindset than the majority of people, but the credit card companies are probably hoping you slip up at some point.

Then as for credit in business, I feel like the best way to use credit is to scale up something that is already working out for you... Maybe you need more inventory because you are selling fast but still waiting on your supplies to pay you, so throwing in a bit of credit you know you can for sure pay back would help keep up with the demand.

I know some people hate credit, but having a good score might help you when you get a job, auto insurance premiums, apartment but laws vary by states too in what companies can use your score for. For example I know California doesn't allow them to use it for auto insurance, and I think credit checks for job applicants is limited too but Ohio doesn't care really what companies use your credit score for.

So if you are 18, get a credit card just to treat yourself to some McDonalds once a month, then pay it off fully when you get your statement you'd be better off credit wise than someone who didn't have any credit at all. A lot of stuff they don't teach in school, you can get a better financial education on YouTube.

Re: Why is everyone a bank?

#248

Post by kjs3 »

plorkyeran wrote: post #169
kjs3 wrote: post #145

Earlier quoted context omitted.

Really? Wells Fargo isn't mining my search history using a black-box algorithm to decide without transparency whether to close my account or decline a transaction because I might have become a risk of some sort. Not that they would ever do such a thing.

I'd rather have my bank abruptly close my account for opaque reasons than fraudulently open additional accounts in my name.

Well...latter is illegal and the former isn't (usually) so I think there's a bit of apples-to-oranges, but yeah you got me, as we've seen being a regulated institution isn't a guarantee of good behavior. I still think the incentive, opportunity and the inclination of Google to not act in my interest is pretty high.

Re: Why is everyone a bank?

#249

Post by hcarvalhoalves »

delfinom wrote: post #55
Apocryphon wrote: post #49

Is this going to be the sort of phenomenon that we will eventually look back as a signifier of the dumb money economic bubble we're in, similar to past trends like the wild access to credit in the Roaring Twenties, the run up to the S&L crisis in the '80s, the worthless tech IPOs of the Dot-Com Bubble, the liar's loans of the 2000s, and another examples of rampant finacialization? If the environment is one in which n…

The tech companies aren't even underwriting the accounts. They are just resellers of accounts from actual banks, throwing on a fancy web interface and then data mining your transactions.

Not all fintechs though. I currently work at one that has an actual banking license, does its own risk models, customer support, and so on - it's essentially a bank, just invests a lot on technology. "Fintech" is a big umbrella term, I believe it won't last much longer - the same way everybody used "DotCom" in the past.

Re: Why is everyone a bank?

#250

Post by kjs3 »

Iv wrote: post #239
kjs3 wrote: post #148

Earlier quoted context omitted.

I work for a bank. As bad as we can be, there's always a recourse of some sort (not always useful, but sometimes). There's always a regulator (not always activist, but sometimes). There's always an alternative (not always equivalent, but sometimes). With Google, it's up to Google whether the answer is 'screw you' (unless you're spending tens of millions, it is).

If Google does banking, it has to obey to banking regulations. Like you say, the banks ignore the regulators, shortcut the recourse and the alternatives, really, are all equally awful.

I will bet, without any specific inside knowledge, that the reason that Google hasn't already gone into banking is that they are looking at how to construct a "financial service company" that does bank-like things without being subject to the full force of OCC oversight.
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