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No one is disrupting banks – at least not the big ones

popularfintech.com

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Re: No one is disrupting banks – at least not the big ones

#211

The products being pointed out in this article as an attempt to disrupt banks seem to be basically the same product for a different price. Like, a high-yield savings account is just a savings account with a better price, right? How do you disrupt an industry by selling the same products? The advantage of startups is that they're more nimble, can pivot to fit the market better, and can adapt to customer requests faste…

One datapoint: On /r/PersonalFinanceCanada a very common advice is to save money in WealthSimple or Questrade type of online financial institutions. And people seem to be very happy with doing this. Any financial institution that makes the act of investing money simple and legible will win some market share. I have some savings accounts in RBC Canada, and the UX seems to be designed by monkeys throwing around crayons…

Glad you're not the only one to point out Canada's comparatively stodgy financial industry. https://news.ycombinator.com/item?id=42838063

The account management interfaces of Canadian banks are pretty universally terrible. Even the neo-banks like Tangerine.

Re: No one is disrupting banks – at least not the big ones

#212

Earlier quoted context omitted.

One datapoint: On /r/PersonalFinanceCanada a very common advice is to save money in WealthSimple or Questrade type of online financial institutions. And people seem to be very happy with doing this. Any financial institution that makes the act of investing money simple and legible will win some market share. I have some savings accounts in RBC Canada, and the UX seems to be designed by monkeys throwing around crayons…

Wealthsimple is a subsidiary of Power Corporation, a gigantic financial services company that has existed for 100 years. Its success is more an example of insider innovation rather than outsider disruption.

As I understand it, Wealthsimple was founded independently but then quickly bought by Power Corporation.

It is indeed quite interesting that its innovation and competitive pricing (https://news.ycombinator.com/item?id=42838063) in the last couple years has happened under old, established Power Corp.

Any educating theories about why this is happening now?

Re: No one is disrupting banks – at least not the big ones

#213
post #206

Having worked in banking for many years (no longer), I can say with confidence, the big banks have a giant moat: regulation. They want to be heavily regulated so that new upstart competitors will not come in and spoil their cozy space. And it’s easy to justify because terrorism, money laundering, insider trading, etc etc. And many of these regulations are largely ineffective and easily worked around, whilst costing b…

> many of these regulations are largely ineffective ...

Maybe in the US or some other parts of the world, but the Reserve Bank of India (RBI), the indian banking regulator, does a pretty decent job, as is evident from the public payment infrastructure they have fostered (see https://en.wikipedia.org/wiki/National_Payments_Corporation_... ) . They also create a competitive market by allowing small players to enter the market (e.g. https://byjus.com/free-ias-prep/payment-banks/). Many of their regulations also do a decent job of protecting consumer rights (e.g. https://timesofindia.indiatimes.com/business/india-business/... ).

Re: No one is disrupting banks – at least not the big ones

#214

The products being pointed out in this article as an attempt to disrupt banks seem to be basically the same product for a different price. Like, a high-yield savings account is just a savings account with a better price, right? How do you disrupt an industry by selling the same products? The advantage of startups is that they're more nimble, can pivot to fit the market better, and can adapt to customer requests faste…

I can tell you right now what I want from a "bank" as a consumer: Putting the consumer first, not seventeenth or whatever I typically experience with retail banks.

As a random example, I had $3,600 stolen from one of my accounts by transactions labelled "Microsoft Online Services" or something like that. The bank reversed most, but not all of the transactions, and then had the nerve to lecture me -- an IT professional more than a bit knowledgeable about security -- about how somehow this was all my fault.

Turns out that banking security and reliability from a customer's perspective is absolutely insane. It's totally ass-backwards. It's the opposite of the Apple experience that made that particular company the biggest in the world.

1) Every field in a credit card transaction is attacker-controlled. They can put down whatever business name they want, whatever text they want, etc...

2) Every field in a transaction history is either an alias ("operating as xyz pty ltd"), an abbreviation, or just outright confusing.

3) Transaction histories and "you paid $ to X" notifications often turn up hours or days later. There's no geo-location or any other strong identifier linking these to the actual business because of (1) and (2).

4) There's no receipt details in the transaction history. "XYZ pulled $123 from your account... for reasons. It's a mystery!"

5) You can't see who's got recurring subscriptions on your account. You can't trivially cancel or block someone from pulling money from your account.

6) Some banks now show categorised graphs of what you're spending your money on, but they're guessing. They don't actually have the info of where the money went, so this is useless. You can't figure this out yourself either because of the tiny amount of info available to you.

7) You can't use your transaction history for warranty purposes, or any similar thing. You have to keep tiny pieces of paper that fade rapidly... which is I'm suuuure is just a coincidence, right? Right?

8) My bank claims I get notified if a transaction occurs on my account. This is a lie, they only notify me of some types of transactions, and not reliably either.

9) Trivial impossible-travel protections are not put in place. If my phone is used for a payment in a "physical store" while the GPS says it's in a different continent, pop up an "Approve Y/N?" prompt at a minimum!

10) You can't generally limit a vendor's access to your account if they have your credit card details. You can't restrict them to a single transaction, a fixed amount, or no-sneaky-subscriptions.

11) With shared accounts, you can't generally tell who made a transaction, even if they have individual cards and/or mobile devices. (You can sometimes, depending on the bank and the type of account, but it's not consistent. This is what happened to us: Both of us assumed the other partner set up a valid subscription.)

Etc, etc, etc....

I could go on for hours.

Unfortunately, like many people of said, the inertia of the incumbents and their moat of regulation makes this kind of thing nigh impossible with backwards compatibility.

Some org like Apple or Meta with very wide reach might be able to force vendors to jump through their hoops, which then will drag the traditional banks kicking and screaming into the future.

I'm not holding my breath.

Re: No one is disrupting banks – at least not the big ones

#215

Earlier quoted context omitted.

What are you talking about? We can wear gold, make weapons out of iron, cups out of copper… coins have both a fiat face value and real tangible value (the “floor”). Bitcoin has no intrinsic value. It’s entirely belief. That’s not a bad thing. MLMs can be very profitable, some turn into multi-generational institutions of faith. I own bitcoin because it’s like buying a share of the Mormon church early on. Absolutely, d…

Bitcoin physical value is that, one way or the other, billions of humans got atoms in their brains, arrange in such a way that they recognize bitcoins, and have a certain understanding of it's setup... this is a lot of atoms, and is no small fit.

You're describing the belief value.

Re: No one is disrupting banks – at least not the big ones

#216
In developing countries (Africa, South Asia, South America) many of the banks were disrupted by mobile payments providers. Granted, it was more that they missed servicing the 80% of their markets that were unserviced but still needed to do things we all take for granted. Some of these are now the default payments systems.

Re: No one is disrupting banks – at least not the big ones

#218

Earlier quoted context omitted.

That’s the thing I can’t ever come to understand about crypto. It’s purely about perception of value. At least with some precious metal, it has a floor value as a function of its practical uses and abundance. Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.

> At least with some precious metal, it has a floor value as a function of its practical uses and abundance. I don't really give this argument much credence any more. If the value of, say, gold or diamonds were to drop their practical-use-floor-value, they'd be valued at probably less than 1% (maybe much less) of current value. I mean, how much gold is actually consumed by industry? And we even have industrial diamon…

Diamond value went through the window already (as it should), if gold came down to use value, we'd see it used more for electronics and electrochemistry.

Re: No one is disrupting banks – at least not the big ones

#219

Earlier quoted context omitted.

That’s the thing I can’t ever come to understand about crypto. It’s purely about perception of value. At least with some precious metal, it has a floor value as a function of its practical uses and abundance. Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.

> At least with some precious metal, it has a floor value as a function of its practical uses and abundance. I don't really give this argument much credence any more. If the value of, say, gold or diamonds were to drop their practical-use-floor-value, they'd be valued at probably less than 1% (maybe much less) of current value. I mean, how much gold is actually consumed by industry? And we even have industrial diamon…

It's of course not the criminal use of crypto that has caused the price to increase so much lately, but the use of it for criminal activity is one of its main real use cases (apart from speculation which is not a real use case).

Re: No one is disrupting banks – at least not the big ones

#220
post #92

Well, there was an attempt at it. There was a startup run by one of the best startup guys I've ever seen, Dave Wright, called Reserve Trust, which managed to actually get a fed account. I think some people in power caught wind of it, and it ended up with congressional testimonies and a lot of other problems before it basically got shut down.

seems like there was a conflict of interest where a fed high up helped them get a fed master account while also serving in the company’s board

https://www.bankingdive.com/news/kc-fed-has-revoked-reserve-...

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