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Eh. This is not a mystery. Banks have tremendous lock-in and inertia working for them. The only way to fix the industry is complete account portability. Anybody
by dnomad 8y ago
Eh. This is not a mystery. Banks have tremendous lock-in and inertia working for them. The only way to fix the industry is complete account portability. Anybody should be able to wander into any competitor to their existing bank and initiate a transfer of their account to that competitor. The transfer should freeze the account and take no more than 48 hours. Do this and let the free market work its magic. Just like American celluar providers used to suck until number portability kicked in, American bank providers will suck until account portability is a thing.
P.S. Banks should also be required by law to provide minimal services to every American citizen. It is absolutely beyond stupid that there are 10 million American households that don't have access to a bank account [1]. These households are then forced into dealing with the Check Cashing/Payday Loan businesses who are pure, unmitigated fucking evil. These firms charge outrageous fees that trap many people in poverty.
[1] https://www.fdic.gov/householdsurvey/ https://www.fdic.gov/householdsurvey/
- simias 8y agoI completely agree, I've been using the same bank for about 15 years now and I'm sure if I looked around I could find better deals but I simply can't be bothered to go through with it. It's not an American issue though, as far as I can tell the situation is nearly identical in Europe.
- stevekemp 8y agoIn the UK, at least, there are switching-services which aim to make it painless to change your bank. Your direct-debits, and bills get switched to the new provider, etc. I've never used such a service myself, but I have heard from friends that the process was pretty painless.
- simias 8y agoInteresting, I've never heard of a similar service in France but then again it's not like I've been searching.
- hocuspocus 8y agoThere is. The banking portability law is even called after your president :) Most banks offer it, or at least claim to. However there's still no penalty for banks that don't do their job properly. But it shouldn't stop you, transferring all your SEPA direct payments isn't that hard even if you do it yourself.
- simias 8y agoThank you for the tip, I'll be sure to look into that the next time my bank annoys me, which statistically shouldn't take too long.
- hocuspocus 8y agoGet a referral or wait for a promotional offer, the big players (Boursorama, Fortuneo, ...) regularly offer 130~150€ sign-up bonuses, which is a decent compensation for the time you'll invest switching banks.
- azeotropic 8y agoWhat exactly prevents people from cashing checks at the issuing bank, or walking into a bank or credit union with their paycheck and opening an account? Or cashing it at a Wal-mart or a 7-11, which have low fees? These people may trapped in poverty, but ultimately not by the check cashing/payday loan business.
- Retric 8y agoMany banks have a tiny number of branches so good luck finding one to cash a check. Low fees are rarely low when you're talking a minimum wage income. Walmart's 3$ fee for anything under 1000$ works out to 1/2 an hour of work. Picture spending 1/2 an hour of your salary every 2 weeks simply to get paid. Now make that worse by having 3 jobs...
- watmough 8y agoI had no idea this was the case. That's shocking. If I need cash, I walk into a Chase branch [Not my bank, but conveniently near a Thai Restaurant I like to visit] and just ask for cash advance against my VISA card. Done by a teller, there's no ATM fees.
- cslarson 8y agoAccount portability works exactly like this in the UK. I can't say that banks here provide a much better service than I received in the US.
- hocuspocus 8y agoI never lived in the UK but I've heard good things about Monzo and Starling. If you look into the fintech space, there's a stark difference between Europe and the North American market. We have several players entering retail banking every year in Europe, and that's partly thanks to regulations.
- jamiegreen 8y ago+1 for Monzo. Used it since it was in beta and now as my main account. Not quite ready to shut my other account yet...but maybe in a year or two
- pnutjam 8y agoYeah, and when did cell providers stop sucking...?
- Someone1234 8y ago> I can't say that banks here provide a much better service than I received in the US. Really? "ATM" withdraws are free in the UK, money transfers are instant, checks are dead, and account data easily downloadable as e.g. CSV. I've had US and UK accounts and it is night and day. Who were you banking with in the US who gave you as good of an experience as a UK bank because I'd love to move to them?
- lykr0n 8y agoAlly is Good. Schwab is another one. The problem is that you will be hard pressed to find a excellent bank that has a large physical presence. Get a local credit union and you should be more than happy.
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- hndamien 8y agoThe crypto dream is that you leave banks all together. It is happening slowly.
- distances 8y agoI've had bank accounts in three different EU countries. No bad experiences. Never paid any fees if salary went to the account. Free money transfers to anywhere within EU. Free credit card with no interest if paid back next month. True 2-factor authentication with physical one-time TAN list. Account insured against bank's bankruptcy up to 100k. I have zero interest in seeing blockchains enter any financial services I'm part of.
- hndamien 8y agoYou have a very narrow world view if you are your entire sample.
- distances 8y agoI was trying to imply that blockchain is not the only way of fixing the broken US banking system, and moving to blockchain could perhaps limit your options of interoperating with other parts of the world that have managed to build a user-friendly banking system. It's possible that blockchain could form a basis of a financial system for a limited group of people, but hoping it to be a foundation for a widely accepted system is from my perspective a misguided attempt to apply a technical solution to something that doesn't need one.
- hndamien 8y agoI was making the point that bad experiences are commonplace throughout the world. I have worked with people that can't afford bank accounts in the Phillipines and I have had my own bank accounts frozen and had assets stolen by my banking institution, and I live in a first world country and am a law abiding citizen. This is not even to speak of central banks and the encroachment of surveillance and impingement of economic liberties that I believe to be self evident. I stand by my statement that you should widen your view point since you have not experienced the things that make Bitcoin valuable.
- repolfx 8y agoThat'd make US law contradictory. The reason the number of unbanked keeps going up is that post-9/11 the USA kept tightening anti-money laundering requirements. These require banks to refuse to bank with clients who they suspect might be criminals, on pain of the banker becoming a criminal themselves. That means once people fall out of the banking system for whatever reason and have to live in the cash economy for a while, they cannot prove where their income came from and are thus presumed guilty by default. To fix that you'd need to make US AML laws much less punitive. No political appetite exists to do that.
- nradov 8y agoYou can prove where your income comes from by just showing a couple months worth of pay stubs. The actual reason that people are most commonly denied new bank accounts is due to bouncing multiple checks on a previous account. https://www.nerdwallet.com/blog/banking/blacklisted-by-chexsystems-what-to-know/ https://www.nerdwallet.com/blog/banking/blacklisted-by-chexs...
- gonzo41 8y agoGod cheques are an anachronism. I can't believe they persist in this day.
- linsomniac 8y agoIt feels like checks are barely hanging on. I started using Simple 4 years ago when I switched jobs, partly because it seemed like more and more places were posting signs that they didn't take checks. Since Simple doesn't really have checks, except ones you have them send by using the website, that seemed ok. In the 4 years since, I've had a few instances where I needed checks. I have a plumber I like, but he isn't really a businessman, and so he wants cash or a check when he's done with work. The only tradesman I've dealt with that wasn't happy with me sending a check from Simple. He does good work though. I have some bills I pay via check, like the yearly pool membership, that I can just use Simple to send out. I've been pretty happy to not have a check book. Especially after I had a $45 check I sent someone that got stolen from their mailbox and cashed for around $2,000 each, twice at different branches of my bank. Thankfully, I noticed within a day or two, and it was only a big hassle.
- dsr_ 8y agoMinimal banking services to every American? Postal banking. http://www.campaignforpostalbanking.org/know-the-facts/ http://www.campaignforpostalbanking.org/know-the-facts/
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- Nursie 8y agoThis is how it works in Europe, or at least the EU. Very few people ever switch an account anyway. Something loke 0.4% of the market have evere done it. PSD2 is supposed to make it even easier but I guess we'll see.
- 1ste 8y agoWhere could I find more information about that stat?
- Nursie 8y agoI think it was 0.42%... If you look into why the EU came up with PSD2 you should find out some more about it. Honestly can't find it now. It may just have been something I heard around the office (I am currently consulting with Open Banking in the UK but do not speak for them here or anywhere else)
- 1ste 8y agoCool, I'll try find it. I'm looking into PSD2-related things for my company at the moment.
- marcosdumay 8y agoThe inter-banking transfer systems are a major source of oligopolization. And the barriers to entry imposed by the government are huge. You won't get a competitive market if you don't solve those two. But it's not even clear if it would be benefic to lower the barriers to entry.
- neffy 8y agoWell, they have had that in the UK for sometime now. The system there was already far more efficient than the US one when this was introduced - which is not surprising, it´s mainly a technology issue. The only thing it really changed was that deposit accounts received a slightly higher interest rate up to a certain limit, provided that you pay your salary into them. So based on that, Account portability is not whatever it is that is stopping the US banks providing a service to the entire population.
- fjsolwmv 8y agoThere's no need to switch "accounts". All you need is account number portability, so you can switch over your direct deposit and autobillpay. If you have a low balance, you need a way to fallback, so the number can draw from both accounts, that's the hard part. There's no need to do it in 2 days -- take as long as needed for securr setup, then use both accounts for a month.
- bobwaycott 8y agoWouldn’t that be relatively difficult to accomplish when routing numbers are tied to account numbers, as well? My admittedly naive understanding tells me account number portability would require routing + account numbers to smoothly change things. I’ve never setup an EFT/ACH transfer without being required to provide both.