271–280 of 452 posts
Today, if I pay my credit card from an account with a different bank, the payment is reflected immediately in my Visa account, but takes 3-5 days to reflect in my main checking account. It's completely bonkers that a 100% electronic transaction takes days to fulfill.
Earlier quoted context omitted.
Take the next step. What happens when the borrower spends the money and the place they spend it banks with different bank? What's amazing is that more people don't think this through. They just take the "thin air" story and that's it.
Alice gets a 400k mortgage at bank A, so she gets 400k in credit at her (new?) account at the bank. Alice then pays to Bob for the house by transfering the 400k to Bob's account at bank B. No real money or gold is moved. Alice owes bank A 400k with money slave interest rate (e.g. 7%), bank A owes bank B 400k + interbank interest rate (e.g. 4%), and bank B owes Bob 400k (but they phrase it as "he has credit"). Both Al…
There is no magic in banking. If you describe something and it sounds magical, a piece is missing. If you were running bank B, you'd never agree to what you described. You'd want the assets, or you'd want some kind of collateral even if you were willing to do an interbank credit, you'd limit it, you'd do all kinds of credit analysis on your bank counterparties... And what I just described is how trading of securities tends to work between banks. But even then, it's not how payments are solved...
They do take deposits but the major source of consumer loans, mortgages, are outsourced to Fannie and Freddie. Some big banks have lending arms in the form of credit card issuance, but short term loans like that aren’t really what people tend to mean and they aren’t why we chartered banks as a society historically. Small business loans are both vanishingly rare and governmentally backed.
The real disruption in banking going on right now is in large business lending. Commercial real estate, bonds, etc. Those are also no longer showing up on bank balance sheets. Capital regulations have made that too expensive, so the big banks are outsourcing that function to private non—bank companies. They just aren’t fintechs.
So disruption is absolutely happening it’s just on the finance side, not the consumer marketing side of the house.
Earlier quoted context omitted.
What type of transactions do you need to make outside of business hours that you can’t do electronically? And who actually deals with physical checks? Even the various contractors I used when preparing my home for sell took some form of electronic payment
if i transfer money from one bank's account to another, it takes minimum of 48 hours if I make the request before 3pm cutoff time. Day 1, the transfer request is made at 1pm. Day 2, the money is no longer available in the sending account yet not in the receiving account. Day 3, the money is available in the receiving account. If I do it after 3pm, the request is not placed until Day 2. Why? WTF does a computer have a…
In the bulk of the free world these transfers are instant 24/7 - if I stay within the single banking brand I can do that internationally.
No one is disrupting banks because the mega banks have the sole power of creating credit out of thin air, and no upstart fintech company has this power. To gain this power requires the creation of a bank, which as you can imagine, is probably the most gate-kept activity on earth. Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat…
Getting a banking license in the US at least is totally doable and lots of banks are created de novo every year. As another commenter noted, anyone can create "money out of thin air". Come to my corner store and buy an apple on credit. Poof! Credit was the original money, made out of thin air, and can be by anyone.
I'd be thrilled if US banks figured out how to do "instant" money exchanges. Today, if I pay my credit card from an account with a different bank, the payment is reflected immediately in my Visa account, but takes 3-5 days to reflect in my main checking account. It's completely bonkers that a 100% electronic transaction takes days to fulfill.
No one is disrupting banks because the mega banks have the sole power of creating credit out of thin air, and no upstart fintech company has this power. To gain this power requires the creation of a bank, which as you can imagine, is probably the most gate-kept activity on earth. Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat…
What the banks have (now, due to long history) is a regularly regime where we expect the government to fix that credit when the bank gets those credit decisions wrong. In trade for that extraordinary treatment governments demand banks comply with a variety of regulations.
I’ve worked for a long time in the banking and credit space, no one I know in that industry thinks Andreeson did a credible job explaining modern banking. To knowledgeable people he came off as either fundamentally ignorant or extremely deceptive depending on your cynicism levels.
Earlier quoted context omitted.
I think it could also be cultural. In my country people are perfectly happy to have a video chat with a bank employee about mortgages but in other country's you still need to go into a branch office for that kind of thing.
Just curious, why do you need a video chat? Can't you just have a phone call? I don't get the need to see someone's face
In many cases the start-ups that disrupted entrenched big players did so by skirting the existing law and regulations the big players have to abide by and gaining market share before regulators could catch up to them. Maybe I simply lack vision but I don't think this behavior maps well into the fundamental day-to-day livelihoods of every day people. Certainly I am not willing to risk my finances for marginally increa…
This. Regulation has been set so high on banks that it makes it extremely difficult for new players to compete. The reasons given for regulation are: - protection from failure because of inability to not bail them out (and it has done a good job of this by and large, with some obvious risk oversights - e.g. silicon valley bank) - money laundering regulations The real corruption/monopoly in financial services that nee…
The filthy anti capitalist socialists in Europe have already done that.
EU Interchange cap as follows: 0.2% of the transaction value for Visa and Mastercard consumer debit cards. 0.3% of the transaction value for Visa and Mastercard consumer credit cards.
Seems to work fine.
Earlier quoted context omitted.
Getting a banking license in the US at least is totally doable and lots of banks are created de novo every year. As another commenter noted, anyone can create "money out of thin air". Come to my corner store and buy an apple on credit. Poof! Credit was the original money, made out of thin air, and can be by anyone.
Buying an iPhone on credit is not making money out of thin air. Unless you can fractional-reserve create iPhones.
Consider how much business can be done on credit, and what constrains it. Infinite, and nothing. My corner store is not required to hold reserves against it's receivable. Apple (or a telco) is not required to hold reserves against it's receivable for a phone on credit. Their suppliers aren't required to hold reserves against credit on them. And so on all the way back to the folks digging stuff out of the ground.