5 ms·

Why autonomous finance apps are so important

16 points by onshm 7y ago

sytelus 7y ago
This is the one area so ready for disruption by a startup. Mint guys came, quickly cashed out and since then the space has been stagnant.
keenmaster 7y ago
Why not take it a step further and let the user opt-in to a “single-buyer” network of savers? This is how it would work: hundreds of customers would indicate that they will exclusively use a savings account for one year, but they don’t care which one as long as it’s SIPC-protected and offers certain features. Dozens of banking institutions will then “bid” for that bundle of customers with a yield rate. The company with the highest yield “wins” all the cash savings of all the customers in that bundle, and in return, those customers get a higher yield than they ever would have otherwise. Cash savings, the bread and butter of banks would be utterly and completely commoditized. If banks want less volatility for maturity transformation purposes, they would offer a higher yield rate for 5 and 10 year commitments.
- perl4ever 7y ago
  Is this meaningfully different from those customers using bankrate.com to find the highest yielding one year CD?
  - keenmaster 7y ago
    Yes, it’s quite different. Bankrate doesn’t aggregate customers and put them in a single-buyer bargaining pool. Customer aggregation would basically tell banks “if you show us your best possible rate, you will potentially gain hundreds customers instantaneously. Our customers have already pre-committed to whichever bank offers the highest rate.” That should result in rates going as high as a bank could possibly offer. Would you use such a service?
    - perl4ever 7y ago
      I don't know, it seems to me like a search engine does aggregate customers. Aggregate means to put together, and having an easy way to search for the highest rate focuses the people who want that on whoever is at the top. Since there is predictably a pool of people like that, having them come together in some more explicit way wouldn't seem to add any value. The highest rates are a lot higher than normal, (like 2%) and from banks that you wouldn't normally think of, so I don't understand where anything additional comes from. It seems like a projected free lunch from unspecified sources.
      - onshm 7y ago
        Search engines aggregate the intent, the app can actually move the funds. Big difference.
        perl4ever 7y ago
        If bundling the assets of a hundred or a thousand people made a difference, then entities with millions would be able to get the same deal already. But 1 year treasuries only pay like 1.5%, right? Who is getting >2% risk free? I don't see where the there is.
    - onshm 7y ago
      The aggregated of demand, ability to move funds effectively turn the underlying accounts into commodities that can compete based on that one feature (yield). The other difference is that this money is fluid unlike a CD. With enough data the app should be able to predict how much of the aggregate funds would remain static in the account over what periods of time though. So banks could offer rates based on that aggregate guidance.
      - perl4ever 7y ago
        If you can't get a higher rate with say a billion dollars belonging to one decision maker, how would people with much less improve their returns by coordinating? What you call the money being "fluid" would tend to make it less valuable than CD deposits.
cellular 7y ago
It might back fire: Currently, banks need to offer enough incentive to motivate a human to spend time to switch. This will benefit the lone deal seeker. OTOH, a never-ending bidding to get a customer's money might give a better result, on average, for everyone involved.
- onshm 7y ago
  The key here is that the app automates the movement of the funds. The app is the UX that: - Solves a pointed customer problem (ex: getting best yield, moving money at right time of month, etc...) - Removes the friction of moving accounts which turns an insured valid account into a commodity that is evaluated purely on the yield offered at that time.

16 points by onshm 7y ago

This is the one area so ready for disruption by a startup. Mint guys came, quickly cashed out and since then the space has been stagnant.

keenmaster 7y ago

Why not take it a step further and let the user opt-in to a “single-buyer” network of savers? This is how it would work: hundreds of customers would indicate that they will exclusively use a savings account for one year, but they don’t care which one as long as it’s SIPC-protected and offers certain features. Dozens of banking institutions will then “bid” for that bundle of customers with a yield rate. The company with the highest yield “wins” all the cash savings of all the customers in that bundle, and in return, those customers get a higher yield than they ever would have otherwise. Cash savings, the bread and butter of banks would be utterly and completely commoditized. If banks want less volatility for maturity transformation purposes, they would offer a higher yield rate for 5 and 10 year commitments.

perl4ever 7y ago
Is this meaningfully different from those customers using bankrate.com to find the highest yielding one year CD?
- keenmaster 7y ago
  Yes, it’s quite different. Bankrate doesn’t aggregate customers and put them in a single-buyer bargaining pool. Customer aggregation would basically tell banks “if you show us your best possible rate, you will potentially gain hundreds customers instantaneously. Our customers have already pre-committed to whichever bank offers the highest rate.” That should result in rates going as high as a bank could possibly offer. Would you use such a service?
  - perl4ever 7y ago
    I don't know, it seems to me like a search engine does aggregate customers. Aggregate means to put together, and having an easy way to search for the highest rate focuses the people who want that on whoever is at the top. Since there is predictably a pool of people like that, having them come together in some more explicit way wouldn't seem to add any value. The highest rates are a lot higher than normal, (like 2%) and from banks that you wouldn't normally think of, so I don't understand where anything additional comes from. It seems like a projected free lunch from unspecified sources.
    - onshm 7y ago
      Search engines aggregate the intent, the app can actually move the funds. Big difference.
      - perl4ever 7y ago
        If bundling the assets of a hundred or a thousand people made a difference, then entities with millions would be able to get the same deal already. But 1 year treasuries only pay like 1.5%, right? Who is getting >2% risk free? I don't see where the there is.
  - onshm 7y ago
    The aggregated of demand, ability to move funds effectively turn the underlying accounts into commodities that can compete based on that one feature (yield). The other difference is that this money is fluid unlike a CD. With enough data the app should be able to predict how much of the aggregate funds would remain static in the account over what periods of time though. So banks could offer rates based on that aggregate guidance.
    - perl4ever 7y ago
      If you can't get a higher rate with say a billion dollars belonging to one decision maker, how would people with much less improve their returns by coordinating? What you call the money being "fluid" would tend to make it less valuable than CD deposits.

cellular 7y ago

It might back fire: Currently, banks need to offer enough incentive to motivate a human to spend time to switch. This will benefit the lone deal seeker. OTOH, a never-ending bidding to get a customer's money might give a better result, on average, for everyone involved.

onshm 7y ago
The key here is that the app automates the movement of the funds. The app is the UX that: - Solves a pointed customer problem (ex: getting best yield, moving money at right time of month, etc...) - Removes the friction of moving accounts which turns an insured valid account into a commodity that is evaluated purely on the yield offered at that time.