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.
I have a number of friends working in finance. Lovely people. Absolutely arrogant, though, when it comes to the question of whether their industry will face non-trivial disuption.
Maybe Google and other current tech giants will not be the ones, but someone is going to come along, take a chunk out of financial services, and start the ball rolling on a non-trivial amount of disruption in that space.
I often see people questioning why others would want a new finance/banking system. Yes, the traditional one has some negatives, but how could you want something almost completely new?
I think this line of questioning misses the phenomenon underway. The banking system works for well for me, so it can seem counterintuitive to see people pushing for quite major changes. But, clearly enough people are fed up that things are starting to move in that direction. At what point do I just say, "does it matter whether these people can provide a litany of reasons?"
Either traditional players sack up and satisfy current and potential customers, or someone else will.
Local transportation violations aren't enforced in quite the same way.
It’s hard to visualize how much money these big tech cos are actually taking in investment. If you have a $B you can lose $10mm a year for one hundred years.
I am not certain that it serves a smaller segment of society than ever, I suspect it's always served a small segment of society. Would want to see some data.
So your friends are right, for now.
For the rest of us, I agree with your view.
Google's new checking account isn't really Google. They don't currently have the licenses needed to act as a bank. It's basically a Google branded checking account from Stanford Federal Credit Union.
From what I've read, Google's checking account will be similar to Uber's credit card in that you will sign up and get some benefits through Google/Uber, but pretty much all maintenance will be handled by the issuing bank.
Source: https://www.fool.com/investing/2019/11/17/why-is-google-abou...
I’ve often thought of launching a credit card company solely for access to people’s transaction data. That provides tremendous insight into many companies turnovers allowing to anticipate earnings.
Shockingly enough, people don't care enough to shred all their credit cards! Even people who tend to get outraged on the internet about these sorts of things still have, and use at least one.
(And before someone brings up that EU is not heavy on credit cards - the function of European debit cards in this space is not one whit different from that of a credit card.)
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.
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.
Not that they would ever do such a thing.
With Google, it's up to Google whether the answer is 'screw you' (unless you're spending tens of millions, it is).
Like you say, the banks ignore the regulators, shortcut the recourse and the alternatives, really, are all equally awful.
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 compliant on our behalf.
The waste is incredible. It's all promises of "we'll handle that" but never any actual contact with somebody who can code and you know... handle it. I'm beginning to think it's just parasites all the way down. And if that's how it's gonna be, why not cut out the middlemen and be the only parasite in the loop?
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.
I work in finanance and a huge chunk of my work is generating reports for regulators. Specifically in derivatives (swaps and such), which was fairly wild west before the financial crisis.
There's a lot of catching up and a lot of interest into the trades by regulators, which were basically off-exchange and which are a big part of structured products. Those are financial products, which Warren Buffet deigned "Financial Products of Mass Destruction"
And you know what? I agree with those regulations despite the fact that it can be a real pain.
And if anybody really believes such regulation is crap and just there to support entrenched market players. Well; essentially banks self regulated before the financial crisis.
And what could ever go wrong with that?
I am sure there are exceptions, but my point is if you talk to someone who understand what is going on in a bank, you would be extremely lucky that this person also can code.
This is slowly changing as I see an increasing number of junior bankers who are also interested in picking up coding skills. They won’t be developers per se but will certainly become technically literate interlocutors. But it will take some time.
There are lots of things wrong with technology in large banks but the business knowledge of developers is pretty low on the list.
I left banking a few months ago, so I am no apologist for the sector.
There's several reasons for this, but at the end of the day people don't take kindly for your making them redundent and there's a lot of fiefdoms going around.
Why would any developer who wants a deeper look stick around?
But if you say:
> we want to encrypt this field with your public key before sending it to you
and they respond:
> yeah, we can handle that
and then contracts with deadlines and penalties are signed... Wouldn't you expect there to be somebody on the other end that is willing/capable to generate a GPG keypair?
At what point is it worth holding their hand through the technical bits, and at which point would it be better to replace them?
It once started out with someone asking the exact same question and evolved into this.
Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.
We spend a lot of time trying to achieve consensus with our neighbor parasites about the status of a transaction (slice the pie n ways, perhaps your database says that m of those n got paid, but mine says that m-1 got paid...), but if it were on a public blockchain there would be nothing to dispute.
except for a handful of giant server farms in china
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 I was able to get it sorted out, but until then, I was literally "without any money" for about 60 days. That, to put it mildly, if you don't have a reason or a recovery time-line (hard to tell your friends: trust me - I'll pay you in 15 days) if you literally don't know.
EDIT: It was /u/callmeed below. I can't say 'no' to his/her experience - but while I still work with Chase - I feel "on edge" all the time because I never know what they are going to do to me without notice.
Hours on the phone with no resolution. They told us we had to get the insurance company to contact them and verify that the check was valid. Like wtf is that. That’s not how checks work. And we’re not talking about a large sum of money. I think it was around $4k. Not particularly abnormal.
We finally walked into a branch with our 4 month old daughter, plopped ourselves in the manager’s office and told him we weren’t leaving until it was resolved. A few hours later we were told that the account was permanently closed and could not be reopened. But that we would receive a check in the mail for the funds that they quite literally stole from us.
As soon as that check cleared we closed all our accounts with Chase. Fuck them.
When I called to figure out what was going on I was advised the account was closed and that a check would be mailed with remaining funds within 60-90 days. I asked about the other accounts and they are all fine and open. BUT, because the fraud closure was related to an online banking transaction I would no longer have access to online banking. Pretty much rendered the remaining accounts useless at this point. So while they didn't close all my accounts themselves, they pretty much forced my hand to close my remaining accounts.
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?
Google is not a bank. If they start to offer banking services it will be through a partnership with an actual bank. Your money will not be “with Google”, unless they enter the multi year, very expensive process of applying for a banking license which they’re not doing.
Not that I don’t disagree with your point, in general. But google can’t just take your money like that. At least not in the US
Best case scenario for me with Google's bank would be an 8-hour drive to Germany, just to run into not only a language barrier, but a buerocratic one as my ID would not mean shit to them and their regulatory bodies would not even consider hearing me out without going through the EU first (== more buerocracy). All of this I would of course have to accomplish while not having access to my bank account.
Banks are one of the few decentralized services that have survived the modern economy and while I would switch banks immediately to have access to even something as simple as a balance check API, I would rather continue to fight the reverse-engineering arms race with my current bank than hand over my finances to a faceless, poorly regulated, foreign corporation and risk any one of a million possible small mistakes leave me penniless.
If the upside is taking a chunk of Mastercard/Visa's 600bn market-cap, the $0.01bn effort of a "very expensive" banking licence is peanuts.
It’s a huge undertaking to do. You have to prove to the US government that you’re capable of handling people’s money safely and that you’re providing a benefit to your customers. Years of internal systems audits with nebulous requirements. How do you do that without handling people’s money? You partner with a bank. It’s easy and relatively cheap.
But regardless of your ignorance on the subject, the original point still stands that Google is not gonna just “take your money”. Your money will always be in the custody of an actual bank.
Regulators state that they want more competition but in reality they don’t. Those regulations create massive barriers to entry. And regulators are wary about smaller players who will not have the scale to be financially robust, will be more likely to be a dodgy operation, and not to have all the established procedures of a large player.
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.
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...
Any illegal activity requires a financial crime at some point to launder the spoils. Therefore, financial institutions are the perfect place for law enforcement to hook into to try to crack down on the more widespread and organized forms of crime. The financial system is so much of a force multiplier for criminal activity that LE can't really ignore it.
To hook in, they need you to do KYC, they need you to check with OFAC, they need you to do you to do SAR's and report any attempts to structure financial activity. Basically, actors in the financial services industry, as a prereq to being able to do so, have to agree to act as a modern day Stasi.
Thank the criminals and reactionary Congressfolk of the last fifty or so years.
I guess regulation and the technology being fairly hard to iterate on since a lot of systems are running the same software as they were 20-30 years ago when everything was moved over.
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.
(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 other hand, will seize your stuff in a heartbeat if you step out of Silicon Valley's definition of acceptable beliefs and opinions.
My credit card works at any merchant -- and the fees are the same. I don't get hit with a temporary ban if I buy a Chick-fil-A sandwich, for example.
Yet.
I am vastly in favor of states rights and the 10th Amendment, however states seem to only care about those things when it supports what they want to do.
Back in 2016 I wrote a blog post about accounting being still a strangely manual process: https://bjoernkw.com/2016/04/03/accounting-in-2016/
Ultimately, I came to the conclusion that in order to solve these problems I would have to start my own bank.
Unfortunately, not much has changed since then. At least I now use this useful tool for converting CSV exports of my account statements to MT940 files: https://github.com/msc01/soacsv2mt940
It’s still a semi-automatic and somewhat error-prone process, though.
If your business has a high turnover month-to-month, that money used to pay your bills can accumulate interest.
If interest rate mattered to folks, more would move to providers offering higher rates (you see this sprouting up with Credit Karma, Personal Capital, and other fintech startups offering cash management accounts because they're making a fee for getting deposits to underlying banks hungry for them). But that doesn't seem to be the case. Which is unfortunate, because it should be not too difficult to offer a checking account with check access, ATM access, unlimited transactions, P2P payments, mobile deposits, and interest bearing (brokerages do it living off the float [1]).
Sidenote: This focuses on personal accounts. Brex's Cash Management account seems to be a great biz banking option for those who qualify. No affiliation. Banking infra in the US sucks, which is why everyone has to be a bank.
[1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
Financial services users should be able to have access to and be able to move their funds through financial plumbing inexpensively and rapidly. Fix the plumbing, raise the bar with regulations on financial services providers to commodify the offerings.
That you have to go into your specific physical branch to do certain things is ridiculous. I can go into any Chase in the US and do anything I could do at my normal “home” branch.
N26 (a German bank) was vastly superior but even that had limitations, especially with moving money around internationally.
The grass is always greener on the other side.
The only downside is that you don't have a physical branch you can go into but you can do basically anything online without ever interacting with anyone, or at worst you can always call them. Those are real banks btw, not pseudo-bank fintech companies.
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.
They sell insurance and offer consumer investment accounts -- which are not permitted for us citizens!
Current 3m euribor is -0.4% so 1.6% interest rate means 2% margin. Assuming that your initial costs of selling/assessing/processing the mortgage are covered with fees, something like 0.5% would be enough to cover the main (non-systemic) risks and expenses for decent quality mortgages, so you get 1.5% of pure profit; for every billion in your portfolio you'd get 15 million profit each year; Dutch banks have 500B of housing loans so that's a capacity of something like 7-8 billion of profit per year from housing loans alone.
And various short-term loans have lower volumes, but much higher interest rates and room for profitability.
Looking at the stats in https://www.statista.com/topics/3442/the-banking-sector-in-t... it's clear that the net interest income dominates, it's something like 5x the fee income.
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?).
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.
That seems like a perfect use case for using a credit card to cover the expense and then pay yourself back when your money moves out of the savings account.
I have trouble imagining a case outside of a hostage situation where you would need access to your emergency fund same day.
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.
> 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 checking account.
If the settlement isn’t rapid, you can’t guarantee the funds will actually settle (checks). Lots of situations where someone wants the same guarantee as cash or a wire.
Back in the 90s, I tried to pay for a computer with a certified check and CompUSA treated it as a likely counterfeit.
Writing a check is instantaneous, but you obviously don't mean that.
If you're talking about wires and the like, then what you're really paying for is the sending institution taking on liability if there turns out to be a cascading problem.
http://www.classic-carauction.com/featured-cars?auctionid=10...
Personally, if I'm expecting to make a large cash purchase I have more than a few days notice.
Much more within reach to bid on a regular used car at the common auctions that regular used car dealers buy from.
Or you could purchase more leisurely from the dealer on his terms.
Either way their offices will often display a tattered old sign: _Cash Talks and BS Walks_.
Another thing is that these neobanks have withdrawal amount limits and ATM limits, and so they aren't a great choice for storing emergency funds.
Every French bank has these limits. I once had a French bank account that limited my debit card to €2500 in purchases in a month — for no good reason other than trying to limit access to my own money. Cash purchases over €1000 are also illegal in France. For the most ridiculous banking rules and limits, France is the place. My chase account in the other hand, I could withdrawal $100k in cash if I wanted. Still have a (high) debit card limit, but I can call them and immediately get it lifted for a specific transaction (such as buying a car.)
Isn't one of the requirements for being a "bank" that you can't do stuff like that?
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. Sometimes you even have to go to a branch to unfreeze it.
Chase, specifically, is really bad when you're trying to transfer to/from new accounts
https://www.doctorofcredit.com/psa-dont-use-ach-pull-for-cha...
I open (and close) a lot of bank accounts to collect those signup bonuses. If you read forums dedicated to this then you hear stories of people getting their bank accounts terminated suddenly for opaque reasons all the time.
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
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.
I've had my debit card skimmed at gas stations twice and my wife has been defrauded by shady online merchants a couple times. Chase always handles it well and reverses the charges.
I have Private Client status which (granted requires a certain level of deposits) gets you a real human on the phone instantly.
I couldn't imagine getting that from Google or Robinhood.
America has the downsides of being the first-mover and of being dominant. A lot of our system was built before modern computerization and then retrofitted for the bank's convenience (not the customer's), and because the U.S. economy & military is so dominant, the rest of the world has to deal with the U.S. financial system as it exists now. That means that there's very little pressure on existing U.S. retail financial institutions to improve, and a lot of regulations and institutional inertia keeping out new entrants.
It's much the same situation with Internet access (where our consumer Internet speeds are often 2 orders of magnitude slower than in much of the rest of the world) and in health care (where we spend the most but have one of the worst life expectancies of developed nations).
Moving to the US is like stepping back into the 70's, and then discovering that everyone around you think that everything is fine, their banks are fine, that US banks are somehow modern and cool.
Anecdote: I wired some money from my Chase bank account to my Swedish bank account, in USD. I made the transfer through the internet bank, but since it was "after hours" New York time, it was scheduled to transfer the next morning.
Early next morning I checked my Swedish bank account, they had received the money, exchanged it to SEK at a decent rate, and the money was immediately available for me to spend there.
A couple of hours later I receive an email from Chase, where they're telling me that they've now sent the money, and that I should expect to see the money in my Swedish bank account about three days later.
American banks suck.
I need to call my bank to temporarily unlock it if I ever go to the US. Payments with PIN code are allowed by default though even in the US. So the problems seem to be with the swipe system.
This happens more often with "bank" startups than with old, boring, regular ones.
So if you're doing something involving moving a lot of money around, you may need to be your own bank to make the whole system work well.