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Why is everyone a bank?

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Re: Why is everyone a bank?

#121

Post by jonas21 »

amelius wrote: post #57
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…

> They can terminate your account suddenly for opaque reasons. Isn't one of the requirements for being a "bank" that you can't do stuff like that?

On the contrary, doing this is practically a requirement for being a bank.

US law requires banks to file a suspicious activity report if they see unusual activity in your account that may be associated with money laundering or criminal activity. What qualifies as suspicious activity is not well-defined, but can be as simple as large unexpected transfers into or out of the account.

The law also requires banks not to tell you about it. They don't necessarily have to close your account, but most will, especially after several reports, because of the risk of failing to comply in the future. And since they're not allowed to tell you why they closed the account, you end up with opaque reasons.

Re: Why is everyone a bank?

#123

Post by juped »

vanniv wrote: post #103
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…

Honestly, I wouldn't trust Google (or any other tech giant) to be my bank. My bank doesn't have a history of locking people's accounts when they post "the wrong" political opinions online. My bank doesn't have a plan to monetize access to my account, or to limit use of the account to only those activities of which the bank's army of woke employees approve. I think I'll stick with a real bank, thanks.

Google "reputational risk"

Re: Why is everyone a bank?

#124

Post by kevindong »

_bxg1 wrote: post #9

The points make well enough sense, but the author is also the professed founder of this: https://betterbank.app/

I'm genuinely curious to see how they could possibly make money given this FAQ question [0]:

> What is the safety net? What does it cover?

> Our community safety net is an in-built accident insurance policy that will provide upto $5000 directly in your betterbank account in case of an accident or medical emergency.

[0]: https://betterbank.app/faq

Re: Why is everyone a bank?

#125

Post by hash872 »

astura wrote: post #67
amelius wrote: post #57

Earlier quoted context omitted.

> They can terminate your account suddenly for opaque reasons. Isn't one of the requirements for being a "bank" that you can't do stuff like that?

No, not at all, banks do that too. https://money.cnn.com/2014/05/07/pf/bank-account-closing/ I once had a bank account closed for "suspicious behavior." The suspicious behavior was making too many transfers to one of my other bank accounts. If you open a new bank account and deposit a lot of money, say over $10,000, then they almost certainly will freeze your account and you'll have to call up to unfreeze it. Sometim…

> If you open a new bank account and deposit a lot of money, say over $10,000, then they almost certainly will freeze your account

I have done this multiple times with zero issues whatsoever. With larger sums than $10k, and with global-sized banks. Sorry to hear about your issues but you're over-extrapolating.

> I open (and close) a lot of bank accounts to collect those signup bonuses

This, I think, may be your issue. For one thing, as the recent NYT piece on customer scores shows, these companies do exchange information on their customers- you may come up flagged or even blacklisted specifically because of this

Re: Why is everyone a bank?

#126

Post by jonas21 »

Apocryphon wrote: post #113
jonas21 wrote: post #111

Earlier quoted context omitted.

Really? I'm struggling to think of any major stock brokerage that doesn't offer banking services.

One wouldn’t normally consider an app-based brokerage, six years old and less than 500 employees, to be considered a major brokerage. Is it common for boutique brokerages to offer banking?

I'm not sure why you consider Robinhood to be a boutique brokerage or what having an app (as opposed to... physical locations?) has to do with anything.

They have over 6 million accounts, which is more than E*TRADE and within a factor of 2 of Charles Schwab or TD Ameritrade. And these brokerages apparently felt enough of a competitive threat that they all adopted Robinhood's commission-free model.

Regardless, even if you don't consider Robinhood to be a major brokerage, they clearly aspire to be one, so offering banking services makes perfect sense.

Re: Why is everyone a bank?

#127

Post by perl4ever »

sroussey wrote: post #106
vanniv wrote: post #103

Earlier quoted context omitted.

Honestly, I wouldn't trust Google (or any other tech giant) to be my bank. My bank doesn't have a history of locking people's accounts when they post "the wrong" political opinions online. My bank doesn't have a plan to monetize access to my account, or to limit use of the account to only those activities of which the bank's army of woke employees approve. I think I'll stick with a real bank, thanks.

Oh, so not true. Banks often close accounts of types of people or businesses they don’t like at the moment. Just ask a PE/VC with a BofA account!

I think people willfully conflate accounts being closed with your money actually disappearing.

Re: Why is everyone a bank?

#128

Post by adrr »

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…

If someone sent you money via an ACH push, they shouldn't hold money for 90 days. If you have pulled the money in via ACH pull. The bank you have pulled from has 90 days to contest that money transfer. Fintech banks will also do holds and have low amount thresholds to mitigate risk. One of the large fintech banks actively advertises $1 million in FDIC insurance but you can only move $50k a day with no way to remove the fraud controls for your account.

Also none of these fintechs are actually banks. They just partnered with a small bank(s) and are still beholden to these banks compliance team. There are strict rules about monitoring bank transfers and reporting suspicious transfers. If your funneling cash through your fintech bank, you'll probably get shutdown with no explanation.

Re: Why is everyone a bank?

#129

Post by perl4ever »

rco8786 wrote: post #87
ci5er wrote: post #84

Earlier quoted context omitted.

> They can terminate your account suddenly for opaque reasons. I generally am 'ok' with modern (US) banks and global, partly because I know their rules and set my expectations accordingly, but unlike what one of the sub-commenters said: "Chase" completely fucked up my world with no recompense for a while. No rhyme. No reason. Ultimately it was because I had connections to executives of the bank at the CEO level that…

Same thing happened to my wife earlier this year. She deposited a check (from an insurance company), Chase apparently deemed it fraudulent (it was not) and with absolutely zero notice simply closed her account. She pulled open the app one day and noticed that the account was just missing, with all the money that was in it. Hours on the phone with no resolution. They told us we had to get the insurance company to cont…

Sure, don't do business with Chase. But this points to why people use banks, you take for granted that your money won't disappear permanently with no recourse. So you go ballistic when it seems like it might happen. Nobody in their right mind wants to use anything where it really does happen.

If Google had money that belonged to me, I have no idea where to even begin trying to get it back. Do they have offices that you can stage a sit-in in?

Re: Why is everyone a bank?

#130

Post by perl4ever »

tlb wrote: post #66
cstoner wrote: post #59

Earlier quoted context omitted.

Your examples seem like cases that can easily be handled by a checking account. > Fundamentally, I should not have to explain why I would desire immediate access to my own cash reserves at a moment's notice to excuse broken financial infrastructure. Yes, if you are investing in less-liquid assets to get a better RoI then you absolutely do. If you don't like the terms then you are free to keep your cash in your checki…

Most people are reluctant to accept large personal checks for one-shot transactions. Most people selling cars on Craigslist won't just take a personal check, for instance. It depends a bit on how reputable you look. You can't write one as bail, or to get your car out of the impound lot.

Most people are reluctant to accept large certified checks or money orders, going back to at least the 90s, because of counterfeits.
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