The traditional banking system is about 150 years old by now. Increasingly, it seems to serve a smaller segment of society, regardless of its half-hearted attempts at innovation.

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.

I'm pretty sure that whoever disrupts banking will do it the Uber way, by disregarding all the laws that they are required to follow and trying to claim not to be what they actually are, with the same eventual success this route has had for Uber.

Financial crime is something that is heavily enforced on an (inter)national scale.

Local transportation violations aren't enforced in quite the same way.

Yeah, but it's generally enforced by freezing your funds until you show up in court. If you've come up with an alternative, maybe just leave out the government-facing API that lets them freeze funds.

This will just mean that they get to write their "amazing journey" post from prison.

This is now how the banking sector works. Most of the newcomers like N26 and Revolut are pretty much just an average bank with modern technology. The reality however is that they don't have a sustainable business model. They offer bank accounts for free and keep bleeding cash because no one wants their premium accounts, presumably because people don't use them as their primary bank account and just as a middle man for easy access to Google or Apple Pay.

Uber is succeeding? Its finances don't think so.

It's really amazing how a company can run for so long on so much loss. IIRC Twitter has never turned a profit either, and yet there it stands

Twitter has made profit now. But didn’t for a while. I worked there until 2015 and the consensus was that they had enough money to continue operating at the then current loss levels for like 50 years.

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.

In English if you say "their lack of morality will lead them to have the eventual success of Al Capone" one is generally assumed to mean that the person under discussion will end up in Federal Prison, although also with the chance of running a highly lucrative criminal enterprise first.

Branch banking as we know it was effectively invented by AP Giannini in the 1920's - arguably modern banking didn't exist till the computer and ATM networks arrived in the 1970's.

> Increasingly, it seems to serve a smaller segment of society,

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.

No one can disrupt the traditional banking system without getting enabling federal legislation passed first. This isn't an industry where startups can just disregard the laws. The government literally seizes assets and puts violators in prison.

So your friends are right, for now.

It seems like they're making the point that this will be better for Google and for things like Google Pay/Wallet which can now operate at a bank level rather than at a customer of a bank level.

For the rest of us, I agree with your view.

> Do you think Google is going to do any better at this?

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...

And this is intentional. Google definitely doesn’t want to be regulated as a bank. It just wants your financial data, so it can send better targeted ads.

Isn’t access to that financial data extremely well regulated?

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.

Not regulated well enough, imo, MasterCard is already willing to sell data to these same actors: https://www.theverge.com/2018/8/30/17801880/google-mastercar...

Half of Visa's, and MasterCard's business model is selling payment flow. This isn't some novel development for these processors - they've been doing it for decades.

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.)

Live too live in a debt based society!

Well pointed out, Mister Gotcha.

Or you could just open a checking account with a credit union that doesn't sell your data to Google.

> 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.

Really? Wells Fargo isn't mining my search history using a black-box algorithm to decide without transparency whether to close my account or decline a transaction because I might have become a risk of some sort.

Not that they would ever do such a thing.

You literally just described fraud protection, which is something most banks nowadays use. It might be opt-out (or even opt-in) but that's very much a thing that banks do, and they get plenty of false positives with it.

I'd rather have my bank abruptly close my account for opaque reasons than fraudulently open additional accounts in my name.

Why not both? With Wells Fargo you can have it all!

Well...latter is illegal and the former isn't (usually) so I think there's a bit of apples-to-oranges, but yeah you got me, as we've seen being a regulated institution isn't a guarantee of good behavior. I still think the incentive, opportunity and the inclination of Google to not act in my interest is pretty high.

I think Google can be awful and still fare better than most regular banks.

I work for a bank. As bad as we can be, there's always a recourse of some sort (not always useful, but sometimes). There's always a regulator (not always activist, but sometimes). There's always an alternative (not always equivalent, but sometimes).

With Google, it's up to Google whether the answer is 'screw you' (unless you're spending tens of millions, it is).

If Google does banking, it has to obey to banking regulations.

Like you say, the banks ignore the regulators, shortcut the recourse and the alternatives, really, are all equally awful.

I will bet, without any specific inside knowledge, that the reason that Google hasn't already gone into banking is that they are looking at how to construct a "financial service company" that does bank-like things without being subject to the full force of OCC oversight.