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Why is everyone a bank?

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Re: Why is everyone a bank?

#91

Post by TrackerFF »

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 should also be mentioned we have some of the most creditor-friendly laws / system in the world. It's almost impossible to get rid of debt, because there's an automated pipeline from banks to debt-collectors to government instances that will do the final debt collection via wage and welfare garnishments.

These banks will foreclose your house, repo your car, and whatnot on defaulted / outstanding debt as little as equivalent to $10 (but of course, by the time many have noticed this, that measly $10 has grown in to thousands, through a battery of fees and compounding interest of said fees).

I've been calling it for some time now: Our next global recession will come from consumer debt and credit cards. Banks are handing out credit to anyone with a pulse

Re: Why is everyone a bank?

#92

Post by rootsudo »

Apocryphon wrote: post #74
delfinom wrote: post #55

Earlier quoted context omitted.

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.

I'm not exactly claiming that Robinhood checking accounts or the Apple Card will blow up Goldman Sachs and kick off the next recession, but it does feel like that if we're at the point where companies unrelated to finance are jumping into it just because it's easy to, we're in a time of irrational exuberance. Extravagantly so.

The barrier to entry has been reduced and now we're seeing a buffet .

Re: Why is everyone a bank?

#93

Post by rco8786 »

callmeed wrote: post #77
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…

Don't agree and I love Chase bank. I have multiple Chase accounts and transfers between them are instant. Transfers to/from external places like my TDA brokerage account, Venmo, etc. are there the next day. They also have Zelle/QuickPay (though I don't use it). My paycheck is direct deposited the day its supposed to be or earlier. I've had my debit card skimmed at gas stations twice and my wife has been defrauded by…

What you’ve just described is 100% table stakes for a bank account. Literally every major provider does all that.

Re: Why is everyone a bank?

#94

Post by derp_dee_derp »

Apocryphon wrote: post #74
delfinom wrote: post #55

Earlier quoted context omitted.

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.

I'm not exactly claiming that Robinhood checking accounts or the Apple Card will blow up Goldman Sachs and kick off the next recession, but it does feel like that if we're at the point where companies unrelated to finance are jumping into it just because it's easy to, we're in a time of irrational exuberance. Extravagantly so.

Can you explain why you think Robinhood is unrelated to finance and is jumping into it just because it's easy to?

Re: Why is everyone a bank?

#95

Post by beatgammit »

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…

I wanted to build a product based on moving money around, and it seemed like it would be easier to start my own than to get what I wanted at a reasonable price. The financial industry is needlessly complicated and I don't know why it's so hard to just move money around.

I can write checks easily and even manually set up recurring ACH transfers, so why can't I automate that with an API? There are a couple companies that do it, but it's too expensive for doing lots of small transactions, yet it's free through ACH and writing checks...

Re: Why is everyone a bank?

#96

Post by Apocryphon »

derp_dee_derp wrote: post #94
Apocryphon wrote: post #74

Earlier quoted context omitted.

I'm not exactly claiming that Robinhood checking accounts or the Apple Card will blow up Goldman Sachs and kick off the next recession, but it does feel like that if we're at the point where companies unrelated to finance are jumping into it just because it's easy to, we're in a time of irrational exuberance. Extravagantly so.

Can you explain why you think Robinhood is unrelated to finance and is jumping into it just because it's easy to?

Not the best example, perhaps, but a stock brokerage app getting into banking (especially with shady marketing [0]) feels like feature creep.

[0] https://news.ycombinator.com/item?id=18699995

Re: Why is everyone a bank?

#97

Post by OJFord »

dr_dshiv wrote: post #40
toomuchtodo wrote: post #29

Earlier quoted context omitted.

I have had to come up with a dollar amount worth several months of expenses on very short notice (same day, life is unpredictable). YMMV, but there's no reason I shouldn't be able to get those funds within seconds (if I'm adequately authenticated). With a wire, I can get it same day (if executed by ~3pm eastern). I shouldn't need to pay for a wire, or talk to a human unless a fraud signal was detected. I'm not a hedg…

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.

All of Europe, afaict. It's often so baffling to read about finance/payments in North America, ahead in other ways of course somehow that sector has just completely stagnated, from a consumer perspective anyway.

Re: Why is everyone a bank?

#98

Post by IggleSniggle »

cstoner wrote: post #59
toomuchtodo wrote: post #42

Earlier quoted context omitted.

Two examples: Auto purchase where there was an issue with the banking partner of the vehicle manufacturer. Another is a real estate transaction. Bailing friends out of jail is always cheap (~$500), but not everyone takes credit cards (no chance for the first two scenarios). 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 fin…

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…

Just bought a brand new car this week from a dealership (US) and the seller refused to accept a check.

Re: Why is everyone a bank?

#99

Post by OJFord »

pkaye wrote: post #83
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.

So curious how he banks there make money?

With the pile of cash they hold for clients.

I'm sure they do in North America too, and make orders of magnitude more from it than for charging monthly or transaction fees. But if everyone else charges those, why not make that bit extra too?

It just needs some 'disruptor' to do it for free and drive the rest of them down, as is happening both there and here in Europe with trading accounts (where most money is made from order flow, but traditionally, why not make a bit extra from commission too?).

Re: Why is everyone a bank?

#100

Post by PeterisP »

pkaye wrote: post #83
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.

So curious how he banks there make money?

For individual mass market the big driver is loan margins, both for home mortgages and various short-term loans.

But the improvement in payments was mostly driven by legislation (e.g. the Payment Services Directive from 2007 with most of implementation at 2012) without which banks were quite happy to offer payments as slow and expensive as they could as it was too profitable for the industry to voluntarily agree to disrupt this, especially since most payments are cross-bank and so a single "defecting" institution can't simply offer cheap&fast payments if others don't want to play ball.

So I don't think that there's any way how USA financial industry might get to a similar point if gov't doesn't decide to force them (which might be taboo for many USA politicians) - I'm certainly convinced that European financial institutions would not have reached this point currently if they weren't forced to do so despite all the lobbying.

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