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Why is everyone a bank?

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Re: Why is everyone a bank?

#151

Post by kjs3 »

__MatrixMan__ wrote: post #45
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…

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…

Exactly.

I talk to several Fintech startups a month complaining about this sort of thing. Forgive me if I can't quite gin up any sympathy. It's a business with centuries of baggage, massive inertia, vast resources, but what I typically hear is "I'm gonna Uber/Tesla/Bird this financial industry thing in 6/12/18/24 months, ignore the rules because 'disruption' and find someone else to push all the risk, compliance and governance issues off onto. I'm going to pretend it's not a cost of doing business and hope no one catches on before we find an exit and get rich". And now you're finding those 'others' aren't the suckers you wanted them to be, and that complying with regulations, especially across the world, actually costs money. Tons of it.

And most of all...real disruption is incredibly hard, no matter the SV mythmaking. The Fintechs that are going to be unicorns aren't complaining that the people they tried to outsource the hard parts of the business to aren't making all the hard problems magically disappear.

Re: Why is everyone a bank?

#152

Post by Apocryphon »

jonas21 wrote: post #126
Apocryphon wrote: post #113

Earlier quoted context omitted.

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…

Guess I underestimated them based on their youth and company size. Didn’t know they had disrupted the market so quickly. If jumping into banking services is an industry convention, I suppose that goes to show that even a brokerage of Robinhood’s age and size must have the stability and temperament to provide reliable banking services that customers can trust despite their breakneck Silicon Valley startup ethos and lack of prior experience in checking.

Re: Why is everyone a bank?

#153

Post by dr_dshiv »

briandear wrote: post #141
dr_dshiv wrote: post #40

Earlier quoted context omitted.

You should see how easy it is to do these things in the Netherlands. No charge to wire money to an individual or business. No transaction cost for paying by card. Pay online with ideal for 0%, just scan qr code with bank app. Simple and easy.

There is no transaction cost to pay with a card in the US either. ACS transfers are free and, if you have the right account, wires can be free as well. I bet at that Netherlands bank a non-SEPA wire isn’t free. There are plenty of options for “good” bank accounts in the US, they just aren’t always obvious.

What do you mean, no transaction costs? What are ACS transfers?

Can you share a "good" bank account?

I've moved after 36 years in the states -- and was shocked at the quality of ING Bank.

Re: Why is everyone a bank?

#154

Post by rauchp »

kevindong wrote: post #124
_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

According to their site, they make the necessary money for that safety net by splitting the profit from the interchange fee they get from big banks. That statement reminds me of Martin Shkreli telling the media he was profiting by overcharging insurance companies. There's no way loudly telling the world how you're screwing over the big players doesn't result in you getting squished at some point. Sure, now I understand their business model. But if they ever get traction these big banks will put an end to their medical bill subsidy real quick.

Re: Why is everyone a bank?

#155

Post by larnmar »

mmanfrin wrote: post #135
ProAm wrote: post #32

Earlier quoted context omitted.

> 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. Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement.

> Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement. Absolutely. I say this as someone who is still angry with them over Reader. I don't trust Google, but I trust them a hell of a lot more than Wells Fargo, Bank of America, et al.

I trust Google much as I trust the sun. I believe it’ll keep doing its thing, and that this will probably overall be beneficial. I’m glad there’s a sun. But the problem with the sun is that it doesn’t give a crap about me. If I have a problem I’m going to have a helluva time contacting the sun’s customer support people, and they’re not going to be well incentivised to take care of my problem if I do.

Perhaps that analogy had got away from me a little, but the point is: I like having a bank with branches where I can go in and talk to a person if I ever really have a serious problem. I feel confident that the bank isn’t going to accidentally swallow all my money and then become uncontactable, whereas I tend to worry that about big tech companies.

Re: Why is everyone a bank?

#156

Post by dalyons »

otakucode wrote: post #53

It has never, at any point since the introduction of electronic transfers, made the slightest bit of sense for 'payment processing' services to charge a fee which scales based upon the amount being transacted. Yet, every means of transferring money has always come with a percentage-based fee. This isn't just a simple matter of rent-seeking on the part of the financial class. It's outright dangerous, and really should…

Fees and interchange are regulated / capped by the government

Re: Why is everyone a bank?

#157

Post by [deleted] »

vanniv wrote: post #138
sroussey wrote: post #106

Earlier quoted context omitted.

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!

That, though, is mostly about risk management -- and even if they close your account, you get the money back. (I also would never do business with Bank of America, because they're awful and they hate their customers even more than Wells does) But even BofA doesn't do things like read your Twitter posts and YouTube comments so they can blackhole your account if you have have the wrong politics. The tech giants, on the…

[deleted]

Re: Why is everyone a bank?

#158

Post by kaushikktiwari »

triceratops wrote: post #119
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.

Just in the past 4 days: https://news.ycombinator.com/item?id=21561725 https://news.ycombinator.com/item?id=21538460

^this is a real problem

Re: Why is everyone a bank?

#159

Post by kaushikktiwari »

jimbru wrote: post #107

It's easy (and fun) to complain about the bad (or just weird) product experiences that banks regularly churn out. Believe it or not, most banks are trying their best. But as other commenters have noted, banks aren't staffed by technologists, so their choices for how to solve these problems begin and end with buying one of the available off-the-shelf software products. Spoiler alert, these products generally are both…

huge fans of you guys! Dimitri has been such a great person for advice!

Re: Why is everyone a bank?

#160

Post by kaushikktiwari »

rauchp wrote: post #154
kevindong wrote: post #124

Earlier quoted context omitted.

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

According to their site, they make the necessary money for that safety net by splitting the profit from the interchange fee they get from big banks. That statement reminds me of Martin Shkreli telling the media he was profiting by overcharging insurance companies. There's no way loudly telling the world how you're screwing over the big players doesn't result in you getting squished at some point. Sure, now I understa…

We make money off interchange--its protected by regulation for small banks and we partner with those small banks in return for them getting to keep our deposits. No one is getting squished---there are regulations protecting banking from being monopolizes. Big banks win because of branch networks and that doesn't matter for online banks
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