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There’s a catch 22 problem here I think. As least for me, a large part of the reason I’m not willing to commit to any of these banks as a primary account is pre

There’s a catch 22 problem here I think. As least for me, a large part of the reason I’m not willing to commit to any of these banks as a primary account is precisely because they are unprofitable. Most people know what happened to banks when they ran out of money to fund their losses in 2008/9 and how that worked out for their customers (took months for people to get their money back). It’s not like eg Uber where I take very little financial risk as a customer because I only pay them once the transaction is complete so as a consumer I don’t need to care about whether they’re sustainable as a business. Add in their treatment of web and telephone as second class citizens at best (I don’t need a branch but I do need the website to be capable of being used as a primary access method and I do need decent telephone support), and I’m not surprised that most people won’t trust them.

bobthepanda 7y ago
Does the UK or EU not have deposit insurance? In the US, as long as the FDIC insures it I wouldn‘t blink an eye. (They cover $250K at a single institution.) (It‘s also why Robinhood in the US initially got in trouble for its checking & savings account, because as an investment broker it is not subject to the FDIC but the SIPC, which does not have the same exact guarantees.)
- tomatocracy 7y ago
  It does but (i) I’m not sure how many people actually trust it, (ii) it’s limited to GBP100k per customer per institution I think, assuming they are UK regulated banks, so they may struggle to get big deposits and (iii) the time and administrative hassle of getting your money back may be a problem. The experience during the crisis was that it took months for some people to regain access to their money in some instances, even though it was covered by one scheme or another. That is supposed to have been improved upon since, but it hasn’t been tested with a large scale bank failure and it’s not clear if a mass migration of accounts could even be done seamlessly. Eg see the catastrophe of TSB trying to change their own backend in an operation which had been planned for years. In the mean time, people might miss mortgage and other critical payments for example, and for most people I suspect it just isn’t worth the risk. I certainly wouldn’t risk it with my own money.

bobthepanda 7y ago

Does the UK or EU not have deposit insurance? In the US, as long as the FDIC insures it I wouldn‘t blink an eye. (They cover $250K at a single institution.) (It‘s also why Robinhood in the US initially got in trouble for its checking & savings account, because as an investment broker it is not subject to the FDIC but the SIPC, which does not have the same exact guarantees.)

tomatocracy 7y ago
It does but (i) I’m not sure how many people actually trust it, (ii) it’s limited to GBP100k per customer per institution I think, assuming they are UK regulated banks, so they may struggle to get big deposits and (iii) the time and administrative hassle of getting your money back may be a problem. The experience during the crisis was that it took months for some people to regain access to their money in some instances, even though it was covered by one scheme or another. That is supposed to have been improved upon since, but it hasn’t been tested with a large scale bank failure and it’s not clear if a mass migration of accounts could even be done seamlessly. Eg see the catastrophe of TSB trying to change their own backend in an operation which had been planned for years. In the mean time, people might miss mortgage and other critical payments for example, and for most people I suspect it just isn’t worth the risk. I certainly wouldn’t risk it with my own money.