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I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not

I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). To make a checking account capture the spending market in the USA, it needs to feel premium and focused - like the Amex app. The spending analysis needs to be great, the card needs easy control in the mobile app, and it needs to inspire confidence. It also needs to feel like a trusted, approachable brand. Schwab makes most of their money on investments. I don't foresee them trying to give mass-market appeal to their checking account, separate from the investment account. A case study in this field is Marcus, a savings app from Goldman Sachs. If Schwab spun out their checking account into a separate sub-brand with branding that appeals to millennials and had a spending-focused mobile app, I could see them doing really well: https://www.marcus.com/us/en/savings https://www.marcus.com/us/en/savings

soupsranjan 8y ago
> The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). I think the converse is true. Card issuers earn 1 percent points higher interchange rates on credit cards (2.60%) than debit cards (1.60%).
- alexhutcheson 8y ago
  Once the bank has more than $10 billion in assets, they legally have to reduce their debit card swipe fees to 0.05%.
kevindong 8y ago
> I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. Isn't that the wrong perspective on a financial product? I agree that good design is important, to a degree. Once a certain level is hit, you're not going to gain/lose very many customers based upon the UI. I don't think anyone should favor one bank over another for emotional reasons Also, I'm not sure design differences qualifies as "emotional"; I think a better word would be "design" or "aesthetic". If Bank A offers you a 4% interest rate on a loan and Bank B offers you a 4.1% interest rate on a loan, I think most people would pick Bank A over Bank B (assuming fee structures and customer service is more or less equal). Even if Bank B has a beautiful UI as opposed to Bank A's equally functional but okay looking UI.
- bojo 8y ago
  By "emotional" vs. "rational" the parent is probably referring to the type of investor/trader that would use a Schwab account, meaning someone who understands the risks they are taking on and won't flinch when the market goes sideways. Nothing to do with UI or product design.
- cco 8y ago
  A coworker looked over my shoulder as I was signing up for Robinhood checking today, saw the American flag debit card and literally yelled, "I NEED THAT CARD!". He signed up using my referral code, you have to learn that you're not the normal consumer.
- Marsymars 8y ago
  > Even if Bank B has a beautiful UI as opposed to Bank A's equally functional but okay looking UI. If only those were the options. I'm considering dropping one of my banks after their mobile-first aesthetic redesign that made their website drastically less functional. (Less information density, more clicks to accomplish anything, extreme non-obviousness of how to access various features.) It's been a year or two, and functionality remains significantly degraded compared to their old website.
cbdumas 8y ago
What incentive would I have to use a well branded debit card over a credit card that gives cash back?
- hakfoo 8y ago
  I could see an effective marketing campaign making debit a social signal. Being able to make a large purchase on debit means you can afford it right now-- just as dropping a stack of $100 notes would signal. In contrast, paying with credit can be a pose-- you look like you can afford the $1000 purchase, but it hides the dark secret that you'll be paying for it well into the next decade.
  - philip1209 8y ago
    I think it's also about control and understanding your spending.

soupsranjan 8y ago

> The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). I think the converse is true. Card issuers earn 1 percent points higher interchange rates on credit cards (2.60%) than debit cards (1.60%).

alexhutcheson 8y ago
Once the bank has more than $10 billion in assets, they legally have to reduce their debit card swipe fees to 0.05%.

kevindong 8y ago

> I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. Isn't that the wrong perspective on a financial product? I agree that good design is important, to a degree. Once a certain level is hit, you're not going to gain/lose very many customers based upon the UI. I don't think anyone should favor one bank over another for emotional reasons Also, I'm not sure design differences qualifies as "emotional"; I think a better word would be "design" or "aesthetic". If Bank A offers you a 4% interest rate on a loan and Bank B offers you a 4.1% interest rate on a loan, I think most people would pick Bank A over Bank B (assuming fee structures and customer service is more or less equal). Even if Bank B has a beautiful UI as opposed to Bank A's equally functional but okay looking UI.

bojo 8y ago
By "emotional" vs. "rational" the parent is probably referring to the type of investor/trader that would use a Schwab account, meaning someone who understands the risks they are taking on and won't flinch when the market goes sideways. Nothing to do with UI or product design.
cco 8y ago
A coworker looked over my shoulder as I was signing up for Robinhood checking today, saw the American flag debit card and literally yelled, "I NEED THAT CARD!". He signed up using my referral code, you have to learn that you're not the normal consumer.
Marsymars 8y ago
> Even if Bank B has a beautiful UI as opposed to Bank A's equally functional but okay looking UI. If only those were the options. I'm considering dropping one of my banks after their mobile-first aesthetic redesign that made their website drastically less functional. (Less information density, more clicks to accomplish anything, extreme non-obviousness of how to access various features.) It's been a year or two, and functionality remains significantly degraded compared to their old website.

cbdumas 8y ago

What incentive would I have to use a well branded debit card over a credit card that gives cash back?

hakfoo 8y ago
I could see an effective marketing campaign making debit a social signal. Being able to make a large purchase on debit means you can afford it right now-- just as dropping a stack of $100 notes would signal. In contrast, paying with credit can be a pose-- you look like you can afford the $1000 purchase, but it hides the dark secret that you'll be paying for it well into the next decade.
- philip1209 8y ago
  I think it's also about control and understanding your spending.