44 ms·

Stripe can make automatic LLCs but a wire transfer from Citi nearly ended me

310 points by awinter-py 7y ago

lewsid 7y ago
I just feel compelled to share that this was a delight to read. This Abe dude can write. Especially enjoyed the bit about Chase gaslighting him.
- notyourday 7y ago
  I call B.S. on Chase gaslighting him. For a bank to do what he is describing is a one sure way for the OCC to get involved and there's not a single bank regulated by the OCC that wants folks from OCC poking their nose in it. Simply put - bank has zero upside backdating transactions and an enormous downside.
  - gamblor956 7y ago
    I don't think it's gaslighting so much as it is him not understanding how transactions work. There's the posting date, which is when the transaction appears on the statement. However, the details of the transaction, such as the amount or even whether the transaction should be cleared, have not been finalized, so they are still subject to change by the merchant. Paypal used to use this to authenticate bank accounts, and other merchants also use this to pre-authorize payment accounts (i.e., credit cards) or payments. Then there's the clearing date, which occurs after the merchant finalizes the transaction. Legally, this is when the money actually leaves your account. Generally, the amount at clearing is the same as the amount at posting, however for restaurants, the amounts are usually different because the final amount includes the tip, if any.
    - viraptor 7y ago
      There's unfortunately no standard on which date is shown in the UI. I've used banks showing either one of those and also some that show both. You can sometimes also see both when downloading the transaction in some more structured file format. It's useful to understand which one is being presented by default.
tempsy 7y ago
I completely disagree with this prediction. People have been betting against large banks for awhile with record investment in challenger banks, but both Citi and JP Morgan recorded their most profitable quarter in their entire history this morning. And most of the big banks have actually invested very heavily in their IT over the past decade. If you are complaining about their customer service, don't hold your breath when it comes to startup bank customer service. Chime, the largest funded neo bank in the US, had a 3 day outage in the fall when nothing worked (app, transactions, ATM) and could not handle the volume of calls or chat requests at all. People were literally stuck at the grocery store or gas station. That can't be the future of finance, either.
- jbverschoor 7y ago
  Startup banks (at least 4 of them) have a chat (which needs to work, otherwise tough luck). The chat is operated by unqualified, anonymous people, who's rotate even within the same conversation. They're complete shit. Esp. if your transfer does reach the counterparty...
- lol768 7y ago
  >but both Citi and JP Morgan recorded their most profitable quarter in their entire history this morning. Does this say anything about their ability to provide a decent user experience, or good customer support though? A few years ago, I had no choice but to use a bank like RBS for my business account. It was rife with unreasonable fees, a terrible website and a ridiculous sign-up process. They got my custom because there was no alternative. Monzo, Starling and e.g. Tide are doing pretty well here as a result of the poor show that other banks have been putting on for years. >If you are complaining about their customer service, don't hold your breath when it comes to startup bank customer service. Chime, the largest funded neo bank in the US, had a 3 day outage in the fall when nothing worked (app, transactions, ATM) and could not handle the volume of calls or chat requests at all. People were literally stuck at the grocery store or gas station. That can't be the future of finance, either. Not all challenger banks are like this, though. I've found Monzo to be much, much more reliable that the various incumbents in the UK (who don't operate a status page, don't inform customers properly when things are broken and _still_ schedule multiple-hour maintenance windows every year when BST begins/ends). Customer support can be variable, unfortunately, but I think this is a problem which has arisen mostly as the bank has grown. It's still better, for me at least, than a legacy bank.
mdorazio 7y ago
The author here seems to have a pretty shallow understanding of how banking infrastructure actually works (ex. ACH vs. wire vs. direct deposit), which is the root of a lot of these complaints. The other misconception is why banks continue to operate this way, which I personally believe comes down to prioritizing risk aversion and fraud resistance over other attributes. If you've never had to deal with large amounts of fraud as a business operator, a lot of things banks do (like require in-person verifications/transactions) probably won't make much sense or will seem really antiquated. Edit: also worth noting is that a significant portion of a large bank's customers are over middle age and still want high-touch in-person and phone interactions in a financial institution.
- crooked-v 7y ago
  Using a bank's services shouldn't require knowing how banking infrastructure works.
  - toomuchtodo 7y ago
    Knowing helps calibrate your expectations so they’re realistic. Stripe can perform magic because they’re a very small piece of the entire puzzle, the banking sector can’t because of the very same decrepit financial infra foundations. Disclaimer: I work in financial services. If you want the plumbing fixed, lean on the Fed and the banking industry as a whole through Congress. You’re delusional if you think you can fix this with a startup (see: BankSimple and Standard Treasury). The industry inertia is overwhelming.
    - rhizome 7y ago
      How do unrealistic expectations take root, could it be the gap between reality and advertising? That said, they weren't saying that the knowledge can't help.
      - avianlyric 7y ago
        Difference between only experiencing the 99% happy path, and experiencing the 1% extremely unhappy path.
hinkley 7y ago
That Twitter thread touched a nerve. My Credit Union does the same thing. The Fraud Dept calls me, and if I don't send them to voicemail they'll try to ask for PII. Like Citi, the number is also not posted on the website, and getting to them through the phone bank is harder than it should be. Belonging to the Fraud Department does not mean you're in charge of creating fraud. If they left "Prevention" out of the title that's because it's implied. Don't train your customers to fall for phishing attacks, geniuses.
- philipov 7y ago
  In fact, that's likely not your credit union's fraud department. It's probably the fraud department of the provider of your debit card, which is a different company.
  - hinkley 7y ago
    I'd be very surprised if you're wrong about that. I think maybe the smartest thing I've ever heard Michael Dell say was related to pulling the plug on a plan to outsource a tech support unit. They realized the perverse incentive: if you get paid by the call or incident, and some calls are cheaper than others, you "benefit" if there are more easy calls. Even though it's better for the company if you recommend fixing the root cause of those calls (eg, changing the packaging, documentation, or design of the product so that people don't have to pick up the phone). Outsourced Fraud seems like it would have some of the same moral hazards.
    - tal8d 7y ago
      Having worked in loss prevention for more than one company, I've only seen cuts to that budget occur in one of two ways: departments working themselves out of a job by solving the root cause, or vendors absorbing enough counter-party risk to make in-house anti-fraud programs a net negative. I can't imagine any decision-maker outsourcing LP without simultaneously outsourcing risk, because it would not only be a bad idea - but would be nearly pointless in even the best potential outcome.
elric 7y ago
Banks, especially big ones, are a special breed. I've recently had the misfortune of working with people who work for a large US bank ... boy was it eye-opening! I've worked in fintech for nearly a decade, most of our clients are in the EMEA region. And while banks generally don't seem to attract the biggest talent, and usually don't seem to be organized in a way that makes any sense to an outsider, at least they're somewhat functional. The US bank, on the other hand, is the single most dysfunctional organization I've ever dealt with. Every single person I've worked with borders on incompetent. There are so many useless layers of organizational abstraction that everyone is always on the phone trying to make sense of their own organization. And when things go wrong, Someone Has To Hang™, so when they're not trying to figure out whose job something is, they're trying to cover their own asses. Doesn't leave much time to get actual work done. As near as I can tell, the only reason many of these big old banks are still around, is because reality hasn't caught up with them yet. And, of course, because they're sitting on a pile of money.
- BlueTemplar 7y ago
  Wasn't the 2009 crisis caused by big banks' biggest fintech talent believing their ~~astrology~~ math a bit too much ?
nemothekid 7y ago
I relate to the OP's frustration but it's clear why these Banks get away this - there doesn't seem to be any money in retail banking at all and as a result most banks do the absolute bare minimum unless you are very high net worth individual. With Stripe, you are the customer and treating you right is it their best interest. Retail Banks try their hardest to charge you $50/mo for the privilege of maintaining a database row. I would imagine for CitiGroup retail banking makes up a small percentage of their revenues. The engineers CitiGroup hires that would rival stripes aren't working on Retail Banking products - those products are probably fully outsourced.
- hello_marmalade 7y ago
  Reasons to use a credit union. People should be moving away from all these banks that essentially only abuse people on every level and move toward cooperative financial institutions. Alternatively, better banks like Aspiration, which is a B Corp, but I wouldn't put all my money on that.
  - reaperducer 7y ago
    Reasons to use a credit union Reasons to use some credit unions. Just as there are good banks and bad banks there are good credit unions and bad credit unions. When I wanted to buy my first house, I called the biggest local credit union to find out what the process would be like. Nobody would speak to me on the phone until I went to their web site and filled out a "pre-qualification" form that would then decide if I would be given a different phone number to call and speak to someone to set up an appointment to meet someone in person. No thanks. I took my real money to a real bank.
  - fossuser 7y ago
    Why not just have everything in Fidelity or Vanguard? Fidelity has free checks, debit withdrawals from any ATMs, easy ability to buy/sell stocks and index funds. Their software could be better, but it's okay enough. I'm not sure why anyone uses the other banks?
AndrewStephens 7y ago
Banking does have some strong regulations around it (with good reason, IMHO) but I can corroborate the author's intuition about established company's disdain for self-service customer interactions. I worked on a product a few years ago that would have turned our sales-led product into a turn-key hosted solution - just supply your credit-card and go. It was nearing deployment with 7 figures spent on development when the sales team got wind of it and immediately killed it. Although I believe that the product would have been successful and brought in more money to the company as a whole, it would have gutted the performance bonuses for the sales team by bypassing a whole department. This could not be allowed to go live. That is why real innovation tends to come from newer, smaller companies.
- swagasaurus-rex 7y ago
  This sort of behavior is why people hate the man.
  - shawnz 7y ago
    By "the man", do you mean any human with an established life and career that they are willing to defend in spite of what's best for their employer?
    - wayoutthere 7y ago
      Which is why collective bargaining and unions make life better for everyone in the long run.
      - barry-cotter 7y ago
        Those are two different things, with different effects. Unions don’t make things better for everyone except their members in the long run, or the short run. They make things better for their members. Unions are economically labour cartels. Like any other cartel they don’t make the economic pie bigger they make sure their members get more pie. Pie either goes to consumers in the form of lower prices, owners in higher profits or workers on higher wages. There’s no free lunch. Collective bargaining can actually make things better by reducing labor unrest and allowing for industry wide coordination such as greater investment in training or German style Kurzarbeit during periods of low demand, where more people keep their jobs but their hours are cut.
peterwwillis 7y ago
Incidentally, TIL that Citi Commercial Cards' password policy is ">=1 letter, >=1 number, 6-9 characters". Banks have zero incentive to modernize. They have a lot of customers that are never going to move their money, and they don't need to constantly release new products or compete for customers. All they have to do is not piss off their existing customers so much that they move elsewhere. And because that's usually a non-trivial (and potentially costly) process, they don't have much to worry about.
rolltiide 7y ago
A lot of misunderstanding on the author's part. Not only would the author not have felt they were being gaslighted, they also wouldn't have had a nervous breakdown dealing with it. Yeah, the user experience sucks, its an art to deal with though. So was Citi or Chase the brokerage firm, or was there a third brokerage firm like TD? Some people like the author's writing but some of the "who and what" is not clear, let alone the piss poor understanding of how the US banking system works.
chrono3d 7y ago
The gaslighting comment really resonates with me. It's one of the reasons why I find the push to paperless everything a little disquieting - sometimes I want to keep records in case my dispute is with the record holder! I had an issue with a credit card company a few years ago, in which I had to request a new card. Apparently, as part of the new card issuance, they also "helpfully" moved my payment due date -- which I found out about when I received a past-due notification via the mail. Had I not had a paper statement with the correct due date on it, I probably could have been convinced that I had just missed making a payment, especially as the initial customer service representative insisted there was no way a new card could change my payment due date. Only after escalating a couple of times were they able to figure out that I in fact hadn't requested my monthly cycle only be 18 days long. Now my wife makes fun of me because I still receive and file away paper statements, just in case. Edit: removing names since it's not relevant to the story.
- ryukafalz 7y ago
  I’m still a fan of email for this reason. Once someone sends me an email, the copy in my inbox is mine, and the sender can’t later hide it/take it back/etc.
  - michaelhoffman 7y ago
    If I could get banks to send me financial statements as PDFs in an email I would sign up in a second.
    - viraptor 7y ago
      If it's really important to you, you can use one of the companies which receive and scan your post into emails. Then change your bank correspondence address to them.
      - michaelhoffman 7y ago
        That's a good idea. Thanks.
therusskiy 7y ago
Russia is far from being the most developed country out there, but our banks are infinite times for progressive than in other parts of the world. I can do every single thing from their app or their site, never need to visit my bank (aside from getting from an ATM).
- muzika 7y ago
  American banks are targeted by fraud more than most banks based in other countries, so they have to have more protections against fraud.
  - wnoise 7y ago
    [citation needed]
- orthoxerox 7y ago
  You haven't hit the right (wrong?) use case yet. I had to wire some money to an overseas resort for my honeymoon. I hit the currency control restrictions. Except I only learned that because I work for the same bank I have my accounts in, so I went to the gal in charge of the payment processing system, she told me the status, then I called the right person in the currency control unit who told me I had to send a freeform message via the app with a copy of the invoice as an attachment. What did the app itself (or the web client) tell me? Nothing, "payment processing is in progress".
tribune 7y ago
Ok this is bad but maybe shitty customer service and slow processes are the price of a functioning financial system. Say what you will about the dated technology and opaque processes - legacy big banks work, your money is safe there, and there has not been a significant, system-wide technology error. Not that things should never change - pieces of this puzzle should be replaced, but very carefully. A major technology exploit or bug at a major bank would be apocalyptically bad. The stakes are too high to rapidly entrust financial infrastructure to whichever fintech startup comes knocking. Consider the recent case of Robinhood, a big-leaguer as far as fintechs go, accidentally offering infinite leverage. This was enough to convince me not to want fintechs near the bones of the banking system for quite some time.
- ForHackernews 7y ago
  For those who are unfamiliar with the Robinhood "infinite money cheat code": https://pennystocks.com/featured/2019/11/12/robinhood-left-unlimited-margin-glitch-unfixed-for-nearly-a-year/ https://pennystocks.com/featured/2019/11/12/robinhood-left-u...
- mixmastamyk 7y ago
  Europe and Australia/NZ solved this decade(s) ago.
stantaylor 7y ago
> I’ve never understood how branches can be profitable. My theory after this week is that some unknown force is sabotaging successful self-serve systems. If the Wells Fargo clusterfuck of several years ago is any indication, that "unknown" is very well known: upsell opportunities (or, in the case of WF, just surreptitiously adding services and hoping the customer doesn't read anything when they sign)
Justsignedup 7y ago
To note, Taxi Medalions server a good purpose, but are also corrupt. There should be NO ABILITY TO TRANSFER a medallion AND requiring proof that it is actively being used. You shouldn't be able to sell it. Taxi medallions actually keep city streets clear of massive cabs, which is exactly the problem that happened in nyc once uber/lyft moved in.
markvdb 7y ago
I guess it's different in the US versus outside. Banks in the EU work relatively well. Recent progress includes much improved and cheaper SEPA payments thanks to EU legislation, and transparent "the customer owns his data" EU legislation pushing financial innovation.
- ab_testing 7y ago
  Banks in the US also work relatively well. The problems happen when somebody - anybody can find your name, date of birth and ssn from the internet. With these 3 pieces of information, they can call any bank and pretend to be you. That is why banks jump through hoops to verify your identity. That is where questions pop up like 1. What is your mother's maiden name that you gave us when you opened the account 2. What is the phone number listed on your account - so that we can verify that it is really you. And when all else fails. 3. Banks ask you to go to a local branch with your id before they will unlock your account. That is what happened with the author in this case. However he thinks that just because he is calling - the banks know that it is him when the bank can never be sure.
boh 7y ago
The author is comparing two different things, forming an LLC vs initiating/executing transfers. Banks are highly regulated with tight fraud/AML restrictions. The risks are severe enough to demand caution over client experience. I'm sure creating a banking infrastructure from scratch can be done in a more effective way, but regardless of the firm tasked with executing the transfer, they currently need to comply with the existing structure. If, as the author mentions, fintechs will purchase banks for pennies, then they'll be banks and you'll still have your transfer problem. There's a reason why tech firms are making very limited strides towards financial services.
chx 7y ago
Speaking of going to branches, in the beginning my branch manager was awesome. He set up everything for my small business, many of which I had no clue existed which is no surprise since I was a new immigrant to Canada. He left and handed my matters over to someone else who was also quite competent. And then the next contact answered my email with the subject "Issues / meeting tomorrow around 4pm?" with "Yes, I will assist you with all the issue, when is good time to meet tomorrow afternoon?"... things didn't improve from there (she prepared no paperwork for all the issues I detailed in my email and wasted an hour of my time) and only got slightly better when I escalated to the branch manager and got a different contact. You can't explain this sort of attitude with being conservative etc. Nope, banks these days just suck.
reaperducer 7y ago
On my way over, I noticed that there were a cluster of banks at the corner: TD, citi, chase, and like one or two others, all within a one block radius in a relatively high-rent district. Servicing customers is just an ancillary function of most American bank branches these days. If you go into one with a problem, in 90% of the branches, the person helping you can only pick up the phone and dial the same customer service number you would call on your own, and wait the same amount of time you would on hold. It's been a very long time since bank branches were allowed to handle anything but ordinary everyday functions. The larger reason those branches exist is advertising and branding. You see the brand everywhere you go in an average day and subconsciously put together, "$bank is everywhere I go in an average day." It's similar to how banks used to always be constructed to look like ancient Greek and Roman temples: To make you think of banks as solid, trustworthy, safe, and like they'll be around forever. Now that we all know that banks merge, split, are born, and die like herpes germs on an infected lip, they scatter branches all over the place to play the same architectural influence game.
- empath75 7y ago
  Capital one branches are basically coffee shops.
  - reaperducer 7y ago
    I've heard about those, but haven't seen one in the wild. When I lived in Chicago ING used to have a bank/coffee shop on Rush Street with pretty good coffee. It was free for a long time, and you could use the wifi as long as you liked, you just had to be surrounded by ING/Orange ads.
- jeffmould 7y ago
  This is completely the case with Chase. I had several accounts with them over the years and increasingly had issues (i.e. false positive fraud alerts, unexplained account locks, etc...). At one point the closest branch was an over an hour away from my home (I had moved since opening the account). When I would call the phone support they would tell me I needed to go to the branch. I would then make the drive to the branch only to have the branch manager call the same phone support I had. It's so bad that I once was locked out of online banking for over 6 months on one account and no one, both at the branch level and corporate level, seemed to know how to fix the issue. When I would go to the branch they would call support, support would tell them it is a branch level issue with needing to verify my identity, and the circle continued. I finally just gave up and closed all my accounts with them. On the other hand, I have an account at BB&T, and their in branch help is phenomenal. Most issues are resolved direct in bank without having to call outside support. Only time they have contacted outside support is when they don't know the answer to a question. On the other hand, if I call support they are quick to answer questions and provide detailed explanations. I have other accounts at another local bank and the same holds true. In branch support is where it is at. There is no question that as a bank grows in size and territory the level of support at the branch level and via phone support seems to degrade rapidly.
avmich 7y ago
> the yubikey is the possession that gives me the most delight. I savor the click when I plug it in. I take it out and look at it sometimes, tipping the gold USB contacts towards the light, muttering about how it was a birthday present. One day someone will win it from me in a riddle contest. Yeah, just don't try to follow the winner having gamer remorse. Rumors are Mordor Security Agency gets serious searching for used keys...
privateSFacct 7y ago
It's really not clear what happened here. Some misconceptions though I'm seeing. 1) Banks always pay ACH debit requests (that draw money from your account). No - you can sign up for ACH positive pay if you want. This generally gives you till 11AM PST to accept or reject an ACH request. You can set rules by originator -ie, always pay up to $X from originator ID $Y. You can also set a default to either pay unless rejected or reject unless approved. You can also put an ACH block on accounts that shouldn't have ACH activity. All this costs money. 2) Wire transfers Hard to rewind these, so lots of extra hoop jumping. New accounts may limit your ability to wire large amounts of money. 3) Fraud is real. Consider your parents and their retirement account. How would you feel if someone wired out or transferred out their entire brokerage balance? Think of how they authenticate with bank - could someone fake this? YES! Your parents re-use their passwords, write them on sticky notes, and their PII is everywhere. Many more (sad) examples here.
Symbiote 7y ago
> why didn’t ATMs reduce the number of bank branches At least in the UK, the number of branches has halved in 30 years: "Over the past three decades, the number of bank branches has fallen steadily. In 1986 there were 21,643 bank or building society branches in the UK. In 2014 there were 10,565. Over this period, the total number of bank and building society branches fell by 11,078 or 51%." Did this not happen in the USA? http://researchbriefings.files.parliament.uk/documents/CBP-8570/CBP-8570.pdf http://researchbriefings.files.parliament.uk/documents/CBP-8...
- kube-system 7y ago
  It hasn't. It looks like the US peaked in 2009 and has had a tiny (~5%) decline since then. https://www.fdic.gov/bank/analytical/quarterly/2015-vol9-1/fdic-4q2014-v9n1-brickandmortar.pdf https://www.fdic.gov/bank/analytical/quarterly/2015-vol9-1/f...
  - mixmastamyk 7y ago
    Still using paper checks here! Not far from where the internet was invented. Branches aren’t going anywhere until that is fixed.
    - Symbiote 7y ago
      How often do you go to a bank branch? For me, for the last 15 years, it's less than twice per year, possibly even less than once per year. I used to have cheques to pay in from my grandparents (birthday etc), although I think I usually posted them to the bank. Postage was free. Presumably the in-branch bank tellers have better things to do than process cheques. There were a few visits when I emigrated to close and open accounts. Much of this could be done by phone, but I had some old accounts from childhood which I'd never used online. It's not at all surprising to me that the nearest bank to where my parents live in England is only open three days a week, with the ones that used to be nearer long since closed.
      - mixmastamyk 7y ago
nisten 7y ago
From a UX perspective there's one great service that the banks provide and that is identity managament. In my opinion this is the main reason why things like cryptocurrencies have not taken off, and that is because their identity & fraud management truly sucks. There's no person to talk to when you loose your access keys or forget a pin/password. It's extremely hard to automate all that purely in software, and the very few that have succeeded in managing it(i.e. apple & google) have leveraged their hardware infrastructure plus partnerships with telecom providers and all their physical braches. Yes old-school banks are inconvenient, can be hell to deal with, however it's very hard to scale fraud when you need to physically show up in person at a branch and I feel like this factor is very underappreciated.
- Waterluvian 7y ago
  For me it's that they're CDIC insured and government regulated. The Government of Canada would have to collapse in some apocalyptic event for me to lose the money in my accounts. They're also very stable (the regulated Canadian ones at least).
- BlueTemplar 7y ago
  Cryptocurrencies (or at least Bitcoin) has this major flaw/feature that if you fuck up (mistake or get hacked), which happens to everyone, eventually, there are no reversing/chargebacks possible...
Keverw 7y ago
> The chase operators told me a few times that ‘something is weird about these payments’ but couldn’t be more specific Wonder if it got flagged as suspicious? Some banks aren't even legally allowed to tell you some things about your own account. But it does seem banks are still brick and mortar. There's a bank that won't let you reset your pin online or over the phone, so have to psychically show up and show your ID to someone who presses something in their computer and tells you to type a pin into the USB key pad facing you on the other side of the desk. I guess it's just a small annoyance if you live near by, but the same bank doesn't have branches all over the place so if you end up moving across the country probably should get a new bank anyways. I guess tech wise could be done online as they could let you scan your ID and do a quick picture or video chat or something to make sure it's really you maybe. Plus some of the online only banks seem to pay higher interest too but not sure if people really care about interest as not sure if it really makes a big difference to some people. The local bank doesn't even pay 1% and hides the interest rate in the fine print somewhere while some of the online banks pay 1% and openly advertise such.
therealmarv 7y ago
In Europe we have really innovative Fintechs which build awesome apps like e.g. Revolut (which are also in beta in USA) or N26. But guess what: Also fintechs have to comply with regulation and need to comply with AML (Anti Money Laundering) with their software and you also can get in trouble there. When you have problems there then sh*t hits the fan too: You don't have a branch were you could go, not even a telephone number, only chat in the app and maybe twitter. It's like Google for finances. Ideal would be a combination of both worlds I guess.
- fogetti 7y ago
  Exactly, this is a recurring theme regarding Revolut which hits the media headlines frequently, how Revolut also sucks when the shit hits the fan. I guess there are also similar stories in case of Stripe too.
novok 7y ago
Out of all the large banks, citi has the most obtuse, sensitive and brain dead 'anti-fraud' systems out there. I opened a credit card with them and had such a bad experience with the anti fraud (which involved waiting for a letter for 2 weeks to be able to use the card again) that I won't open an account with them again. Chase, schwab, capital one, discover and amex I've never any issues with like I did with citi. Even BoA was better. I think my experience is a reflection of systemic issues at Citi, which is reflected in how they are doing fairly bad compared to the other big banks.
yellow_lead 7y ago
This post seems to have all the qualities of a highly popular HN post * Anti-incumbents in large industry * Poor customer experience / hit piece * The new tech company does it much better * Doesn't try to understand the intracacies of the industry being criticized (wire vs. ACH???) I know very little about banking and even I know (roughly) the difference between ACH and wire. My point is not that the author lacks intelligence, just that they should, as other commenters point out, try to learn about banking before you're so quick to criticize. I think us programmers suffer from thinking "this is all too complicated, it could easily be done simpler and better." That's not always the case and it can help us to understand how the current system came to be before making these judgements.
- et2o 7y ago
  Agree. This is a prime example of a blowhard programmer making a bunch of naive and half-true accusations. I see things like this in healthcare constantly.
  - commandar 7y ago
    >I see things like this in healthcare constantly. Cosign. I worked in healthcare for the better part of a decade and spent just over five years of that doing data interchange (mostly HL7). It's always somewhat amusing when threads about it pop up on HN because it almost invariably winds up with smart programmers insisting that these have to be simple problems that would be easily solved if only we were using the right API, while having zero understanding of the business and regulatory requirements that, in reality, make many of the things attached to it very difficult to get right in a field where you literally have the potential of killing somebody with a severe enough mistake.
    - RockIslandLine 7y ago
      "it almost invariably winds up with smart programmers insisting that these have to be simple problems that would be easily solved if only we were using the right API" Because they are. Make the common case fast. There is no reason to expose all possible complexity to every transaction.
0xff00ffee 7y ago
I don't follow Abe Winter's logic: he had a good experience with an online service and a bad experience with a bank, and the bad experience required significant time to correct. Therefore: banks are bad. To make an accurate comparison, he would need to document a fraud alert on his Stripe side. Otherwise this comparison is meaningless. Anecdote: I had a massive issue with PayPal payments being held up due to a changing my business to a different state. It took literally 2 months of losing 80% of my online purchasing revenue (paypal vs. CC). I had a very difficult time getting in touch with a human, let alone a human with authority. I felt like I was never making progress. So from my perspective, talking to a chatbot or sending emails to anonymous mailboxes is equally fraught as OP's experience and I could enumerate a similar list of gripes. Bottom line: complex systems fail spectacularly when you encounter a new bug, regardless if it is some <10year old online startup or >100 year old banking system.
- coredog64 7y ago
  I swore off PayPal for ~5 years for something similar. I was part of a group buy of something, and PayPal got overzealous in recognizing fraud. They locked the target account for months, preventing the buy from completing. But they also decided that they couldn’t refund the money either. In the end it took a heroic effort by the guy doing the buy. TBH, I think he had fronted the money for the buy, and so had to do the work to recover it.
  - chipperyman573 7y ago
    FWIW he probably did eventually get the money, paypal has a policy that they'll release your money in a maximum of 180 days from when they freeze it. But it's very likely he had to wait the full 180 days to withdraw it. Source: Happened to me a few years ago as well
anonymoushn 7y ago
I'd like to use this version of Stripe's product. The one I used makes you wait a month or so until you give up and use LegalZoom.
jijji 7y ago
automation of an LLC seems like a pretty dangerous thing considering you are trying to automate dealing with 1) secretary of state and 2) irs and 3) creation of a business bank account.... does this really need to be automated? it seems like a solution looking for a problem. It also seems like a minefield from an automation perspective because there are too many errors that can happen through automation at each step in this process. Its mostly an information gathering process for step one and step two, step three is information gathering and verification of what you submitted... it takes a few hours to this by yourself online and in person at the bank, and when it fails, you will need various humans in each step to figure out what went wrong. For example, IRS.gov will block on SS4 filings for various reasons, i.e. only one filing per day.. Seems too error prone to try and automate, and I bet they are using screen scrape tools to do it and so its probably going to break when the endpoint changes any form variables too..
kevindong 7y ago
Citi is notorious for having some of the worst tech in banking. It's bad by even banking standards. Anecdotally, I opened up a consumer Citi checking account. The account has two distinct web UIs for transferring money via ACH. One looked modern but outright didn't work (as I recall, I couldn't get any of the dropdowns to populate with my account info so I couldn't use any of the web forms). The other was clearly ripped straight out of the late 90s/early 00s, but it did indeed work. The new version was the easily findable version, the older version could be hunted down with enough effort. Additionally, it was actually impossible for me to find my routing number initially. I had to actually start a live chat with a customer service representative to get it.
- stevula 7y ago
  I just got one of their retail credit cards and it is the only card I own at this point that doesn’t work with Apple Pay. Even my local credit union has figured this out. I can believe Citi has some bad tech debt.
aj7 7y ago
Walked into a Chase branch with a $43,000 Wells Fargo insurance claim check. Informed there’d be a 10-day hold. I exploded. (I didn’t need the $ immediately. It was the principal of the thing.) Went back to the car and drove 1000 feet over to the WF branch. Same crap. 10 days. Even if I opened a WF account with a WF CHECK! Went back to Chase, giving up. Silver lining. I manage all my cash better today. It’s hand to hand combat, so you get good at it.
- bullfightonmars 7y ago
  This is most likely relates to the Bank Secrecy Act and IRS regulations for deposits over 10k. https://en.m.wikipedia.org/wiki/Bank_Secrecy_Act https://en.m.wikipedia.org/wiki/Bank_Secrecy_Act
aj7 7y ago
There’s a tremendous amount of “analysis” below on just how the convoluted payment systems work. Keep in mind that their first design principle is to maximize profit by limiting customer liquidity. At a certain point, as a consumer, I do not care about the problems within a system designed to reduce my utility to increase your profits.
- bagacrap 7y ago
  I've heard this claim before and I think it's plainly false. They're mostly worried about fraud, which is far more rampant that anyone who believes in crypto currency likely realizes.
xvilka 7y ago
I like the approach of Chinese banks here - almost everything can be done from the mobile application, way more than in US or EU banks apps (apart a few exceptions). There is another problem though - they are riddled with advertisement on every screen. I wish more innovation in that sphere. It applies to both personal and corporate experience.
twothamendment 7y ago
When I was 18 I had saved about $10k. I noticed on my statement it said I was being taxed. What? I went into the branch to ask about it and they couldn't tell me why tax was being taken out or when it would stop. I asked for a cashier's check for the full balance so I could close my account. The teller's jaw hit the desk. What did they expect? A bank that can't explain their own statement to me is no bank of mine.
juskrey 7y ago
US banks are simply not suitable for remote problem solving. I once have run US company remotely, which was completely blocked for three weeks after one typo in outgoing transfer. Never remotely again. I thought Stripe Atlas have solved this problem.. Turns out not..
nottorp 7y ago
Hmm yes we know. US banks suck. However, I'd tone down the Stripe praise a bit. I bet that if you had a need that isn't covered by their script you'll be in even more trouble than with a traditional bank.
immad 7y ago
I am the cofounder of Mercury.co. We built a modern bank to support US businesses. I am somewhat surprised by the negativity on HN to this post. I think the author is on target with issues he identifies at incumbent banks. The future is going to be customer centric, technology driven banks and the incumbents are going to have a very hard time adapting to that change.
miki123211 7y ago
I feel like European banking is so much better than the U.S. You can do so much on line, and everything is way more secure.
- nraynaud 7y ago
  It really is, because the regulation is strong, faster and cheaper transfers, common account numbering system, nobody bats an eye if your money crosses the border (it was a nightmare in the US, BoA would reject my client's wires all the time without explanation), etc.
  - BlueTemplar 7y ago
    "Crosses the border", how exactly? (Countries = States, Schengen = Federal)
    - nraynaud 7y ago
      I have no issues sending money from the continent to the UK or the US if that's your intellectual model. But I don't think you're on the correct track. edit: this sentence is weird, on the US, the money is blocked on the American side according to the EU bank.
      - BlueTemplar 7y ago
        mental model : USA as one gathering of states, EU (Schengen) as another.
orf 7y ago
It seems that without regulation and legislation, if left to its own devices, the banking industry settles in a terrible equilibrium where you end up using cheques and signing for card transactions in 2020. This extends deeper into the technology that underpins the banks. The USA has a _ridiculous_ amount of banking fraud compared to Europe, more than an order of magnitude higher for some types. So, say what you want about government overreach but Europe has legislated lower fraud rates, better technology and even a banking API for interoperability. Not to mention fostering a lot of new fintech startups and challenger banks.
- nerdkid93 7y ago
  Do you have a source for this "_ridiculous_ amount of banking fraud"? I have seen stats around credit cards that show higher fraud now compared to Europe, but that's because we were late to the chipped credit card game. To be fair, until France switched to chipped credit cards, they had higher levels of fraud. Source: https://youtu.be/2IksSNiEo2g https://youtu.be/2IksSNiEo2g
  - orf 7y ago
    The one that comes to mind is the federal reserve report. https://www.federalreserve.gov/publications/files/changes-in-us-payments-fraud-from-2012-to-2016-20181016.pdf https://www.federalreserve.gov/publications/files/changes-in... Tl;dr For reference, according to the last ECB report in the EU the total value of fraudulent transactions from cards issued by SEPA countries was 0.041% of the total value of transactions (€1.8 billion - That's over 5x less fraud). Only 19% of that was point of sale fraud $3.6 billion card fraud in the US is point of sale - 10x more than the €342 million point of sale EU fraud. Overall there is $2.62 billion of counterfeit card fraud, $3.46 billion of "Fraudulent use of account number" (whatever that is), $810 million "lost or stolen card" fraud (not an issue with chip and pin), and $360 million "fraudulent application" fraud.
vonseel 7y ago
This is a fun article, and I’m still reading it, but my immediate thoughts are that 1) self-serve is a relatively new thing enabled by tech. 2) even in 2020 there are still clusters of people who aren’t great at using computers, smart-phones, and apps and prefer doing things in person or on the phone; yeah, you have some older people in there, but there are young people who still do things the old way, because they never had an interest in technology or just don’t know about other options. 3) Health-care and banking aren’t the only industries that don’t have slick self-service portals like Stripe. I’d argue the opposite; only companies built after the advent of recent web tech usually offer that, many of them, in fact, are tech companies. Think about United Health, this company employs some 300,000 persons. CEOs at both United and Aetna are paid around $20M annual comp. Why does an insurance company need 300k employees? Google itself apparently has around 100k - and they do much more than just pushing paper. Why are these guys paid so much? To resist change perhaps, embrace too big to fail culture, and keep their 300,000 employees employed? If private industry can seem this wasteful and inefficient, I don’t even want to know about the dark corners of government where people are paid to sit at desks and make photocopies on 30 year old Xerox machines everyday.
- BlueTemplar 7y ago
  Not to mention that self-serve can suck, and in-person interaction can be great. In both cases it's about effort (money) put into it. And into maintaining it once it's not "shiny-new" any more...
BlueTemplar 7y ago
Why is this guy still not using an online-only bank in 2020 ?!?
- mrep 7y ago
  What's better about an online-only bank? From what I have seen, I could get some interest on my checking account but that wouldn't be much as I only keep enough in there to autopay my rent and credit cards. Other than that, my checking account is free, they have ATMs everywhere, and there are tons of banks I can go to if I need to.
  - BlueTemplar 7y ago
    Well, I don't know, I'm still using a traditional credit union (?) bank, but this guy certainly seems like it should have been an early customer of those ?
jotakami 7y ago
I just read The Phoenix Project so I feel like they just need more DevOps lol. But seriously, banking is a sales-and-marketing-driven industry and those are the least likely to understand and embrace the process improvement revolution that transformed manufacturing and is currently transforming IT. I think the author’s comment about the lack of technical expertise in management explains it most succinctly.

310 points by awinter-py 7y ago

I just feel compelled to share that this was a delight to read. This Abe dude can write. Especially enjoyed the bit about Chase gaslighting him.

notyourday 7y ago
I call B.S. on Chase gaslighting him. For a bank to do what he is describing is a one sure way for the OCC to get involved and there's not a single bank regulated by the OCC that wants folks from OCC poking their nose in it. Simply put - bank has zero upside backdating transactions and an enormous downside.
- gamblor956 7y ago
  I don't think it's gaslighting so much as it is him not understanding how transactions work. There's the posting date, which is when the transaction appears on the statement. However, the details of the transaction, such as the amount or even whether the transaction should be cleared, have not been finalized, so they are still subject to change by the merchant. Paypal used to use this to authenticate bank accounts, and other merchants also use this to pre-authorize payment accounts (i.e., credit cards) or payments. Then there's the clearing date, which occurs after the merchant finalizes the transaction. Legally, this is when the money actually leaves your account. Generally, the amount at clearing is the same as the amount at posting, however for restaurants, the amounts are usually different because the final amount includes the tip, if any.
  - viraptor 7y ago
    There's unfortunately no standard on which date is shown in the UI. I've used banks showing either one of those and also some that show both. You can sometimes also see both when downloading the transaction in some more structured file format. It's useful to understand which one is being presented by default.

tempsy 7y ago

I completely disagree with this prediction. People have been betting against large banks for awhile with record investment in challenger banks, but both Citi and JP Morgan recorded their most profitable quarter in their entire history this morning. And most of the big banks have actually invested very heavily in their IT over the past decade. If you are complaining about their customer service, don't hold your breath when it comes to startup bank customer service. Chime, the largest funded neo bank in the US, had a 3 day outage in the fall when nothing worked (app, transactions, ATM) and could not handle the volume of calls or chat requests at all. People were literally stuck at the grocery store or gas station. That can't be the future of finance, either.

jbverschoor 7y ago
Startup banks (at least 4 of them) have a chat (which needs to work, otherwise tough luck). The chat is operated by unqualified, anonymous people, who's rotate even within the same conversation. They're complete shit. Esp. if your transfer does reach the counterparty...
lol768 7y ago
>but both Citi and JP Morgan recorded their most profitable quarter in their entire history this morning. Does this say anything about their ability to provide a decent user experience, or good customer support though? A few years ago, I had no choice but to use a bank like RBS for my business account. It was rife with unreasonable fees, a terrible website and a ridiculous sign-up process. They got my custom because there was no alternative. Monzo, Starling and e.g. Tide are doing pretty well here as a result of the poor show that other banks have been putting on for years. >If you are complaining about their customer service, don't hold your breath when it comes to startup bank customer service. Chime, the largest funded neo bank in the US, had a 3 day outage in the fall when nothing worked (app, transactions, ATM) and could not handle the volume of calls or chat requests at all. People were literally stuck at the grocery store or gas station. That can't be the future of finance, either. Not all challenger banks are like this, though. I've found Monzo to be much, much more reliable that the various incumbents in the UK (who don't operate a status page, don't inform customers properly when things are broken and _still_ schedule multiple-hour maintenance windows every year when BST begins/ends). Customer support can be variable, unfortunately, but I think this is a problem which has arisen mostly as the bank has grown. It's still better, for me at least, than a legacy bank.

mdorazio 7y ago

The author here seems to have a pretty shallow understanding of how banking infrastructure actually works (ex. ACH vs. wire vs. direct deposit), which is the root of a lot of these complaints. The other misconception is why banks continue to operate this way, which I personally believe comes down to prioritizing risk aversion and fraud resistance over other attributes. If you've never had to deal with large amounts of fraud as a business operator, a lot of things banks do (like require in-person verifications/transactions) probably won't make much sense or will seem really antiquated. Edit: also worth noting is that a significant portion of a large bank's customers are over middle age and still want high-touch in-person and phone interactions in a financial institution.

crooked-v 7y ago
Using a bank's services shouldn't require knowing how banking infrastructure works.
- toomuchtodo 7y ago
  Knowing helps calibrate your expectations so they’re realistic. Stripe can perform magic because they’re a very small piece of the entire puzzle, the banking sector can’t because of the very same decrepit financial infra foundations. Disclaimer: I work in financial services. If you want the plumbing fixed, lean on the Fed and the banking industry as a whole through Congress. You’re delusional if you think you can fix this with a startup (see: BankSimple and Standard Treasury). The industry inertia is overwhelming.
  - rhizome 7y ago
    How do unrealistic expectations take root, could it be the gap between reality and advertising? That said, they weren't saying that the knowledge can't help.
    - avianlyric 7y ago
      Difference between only experiencing the 99% happy path, and experiencing the 1% extremely unhappy path.

hinkley 7y ago

That Twitter thread touched a nerve. My Credit Union does the same thing. The Fraud Dept calls me, and if I don't send them to voicemail they'll try to ask for PII. Like Citi, the number is also not posted on the website, and getting to them through the phone bank is harder than it should be. Belonging to the Fraud Department does not mean you're in charge of creating fraud. If they left "Prevention" out of the title that's because it's implied. Don't train your customers to fall for phishing attacks, geniuses.

philipov 7y ago
In fact, that's likely not your credit union's fraud department. It's probably the fraud department of the provider of your debit card, which is a different company.
- hinkley 7y ago
  I'd be very surprised if you're wrong about that. I think maybe the smartest thing I've ever heard Michael Dell say was related to pulling the plug on a plan to outsource a tech support unit. They realized the perverse incentive: if you get paid by the call or incident, and some calls are cheaper than others, you "benefit" if there are more easy calls. Even though it's better for the company if you recommend fixing the root cause of those calls (eg, changing the packaging, documentation, or design of the product so that people don't have to pick up the phone). Outsourced Fraud seems like it would have some of the same moral hazards.
  - tal8d 7y ago
    Having worked in loss prevention for more than one company, I've only seen cuts to that budget occur in one of two ways: departments working themselves out of a job by solving the root cause, or vendors absorbing enough counter-party risk to make in-house anti-fraud programs a net negative. I can't imagine any decision-maker outsourcing LP without simultaneously outsourcing risk, because it would not only be a bad idea - but would be nearly pointless in even the best potential outcome.

elric 7y ago

Banks, especially big ones, are a special breed. I've recently had the misfortune of working with people who work for a large US bank ... boy was it eye-opening! I've worked in fintech for nearly a decade, most of our clients are in the EMEA region. And while banks generally don't seem to attract the biggest talent, and usually don't seem to be organized in a way that makes any sense to an outsider, at least they're somewhat functional. The US bank, on the other hand, is the single most dysfunctional organization I've ever dealt with. Every single person I've worked with borders on incompetent. There are so many useless layers of organizational abstraction that everyone is always on the phone trying to make sense of their own organization. And when things go wrong, Someone Has To Hang™, so when they're not trying to figure out whose job something is, they're trying to cover their own asses. Doesn't leave much time to get actual work done. As near as I can tell, the only reason many of these big old banks are still around, is because reality hasn't caught up with them yet. And, of course, because they're sitting on a pile of money.

BlueTemplar 7y ago
Wasn't the 2009 crisis caused by big banks' biggest fintech talent believing their ~~astrology~~ math a bit too much ?

nemothekid 7y ago

I relate to the OP's frustration but it's clear why these Banks get away this - there doesn't seem to be any money in retail banking at all and as a result most banks do the absolute bare minimum unless you are very high net worth individual. With Stripe, you are the customer and treating you right is it their best interest. Retail Banks try their hardest to charge you $50/mo for the privilege of maintaining a database row. I would imagine for CitiGroup retail banking makes up a small percentage of their revenues. The engineers CitiGroup hires that would rival stripes aren't working on Retail Banking products - those products are probably fully outsourced.

hello_marmalade 7y ago
Reasons to use a credit union. People should be moving away from all these banks that essentially only abuse people on every level and move toward cooperative financial institutions. Alternatively, better banks like Aspiration, which is a B Corp, but I wouldn't put all my money on that.
- reaperducer 7y ago
  Reasons to use a credit union Reasons to use some credit unions. Just as there are good banks and bad banks there are good credit unions and bad credit unions. When I wanted to buy my first house, I called the biggest local credit union to find out what the process would be like. Nobody would speak to me on the phone until I went to their web site and filled out a "pre-qualification" form that would then decide if I would be given a different phone number to call and speak to someone to set up an appointment to meet someone in person. No thanks. I took my real money to a real bank.
- fossuser 7y ago
  Why not just have everything in Fidelity or Vanguard? Fidelity has free checks, debit withdrawals from any ATMs, easy ability to buy/sell stocks and index funds. Their software could be better, but it's okay enough. I'm not sure why anyone uses the other banks?

AndrewStephens 7y ago

Banking does have some strong regulations around it (with good reason, IMHO) but I can corroborate the author's intuition about established company's disdain for self-service customer interactions. I worked on a product a few years ago that would have turned our sales-led product into a turn-key hosted solution - just supply your credit-card and go. It was nearing deployment with 7 figures spent on development when the sales team got wind of it and immediately killed it. Although I believe that the product would have been successful and brought in more money to the company as a whole, it would have gutted the performance bonuses for the sales team by bypassing a whole department. This could not be allowed to go live. That is why real innovation tends to come from newer, smaller companies.

swagasaurus-rex 7y ago
This sort of behavior is why people hate the man.
- shawnz 7y ago
  By "the man", do you mean any human with an established life and career that they are willing to defend in spite of what's best for their employer?
  - wayoutthere 7y ago
    Which is why collective bargaining and unions make life better for everyone in the long run.
    - barry-cotter 7y ago
      Those are two different things, with different effects. Unions don’t make things better for everyone except their members in the long run, or the short run. They make things better for their members. Unions are economically labour cartels. Like any other cartel they don’t make the economic pie bigger they make sure their members get more pie. Pie either goes to consumers in the form of lower prices, owners in higher profits or workers on higher wages. There’s no free lunch. Collective bargaining can actually make things better by reducing labor unrest and allowing for industry wide coordination such as greater investment in training or German style Kurzarbeit during periods of low demand, where more people keep their jobs but their hours are cut.

peterwwillis 7y ago

Incidentally, TIL that Citi Commercial Cards' password policy is ">=1 letter, >=1 number, 6-9 characters". Banks have zero incentive to modernize. They have a lot of customers that are never going to move their money, and they don't need to constantly release new products or compete for customers. All they have to do is not piss off their existing customers so much that they move elsewhere. And because that's usually a non-trivial (and potentially costly) process, they don't have much to worry about.

rolltiide 7y ago

A lot of misunderstanding on the author's part. Not only would the author not have felt they were being gaslighted, they also wouldn't have had a nervous breakdown dealing with it. Yeah, the user experience sucks, its an art to deal with though. So was Citi or Chase the brokerage firm, or was there a third brokerage firm like TD? Some people like the author's writing but some of the "who and what" is not clear, let alone the piss poor understanding of how the US banking system works.

chrono3d 7y ago

The gaslighting comment really resonates with me. It's one of the reasons why I find the push to paperless everything a little disquieting - sometimes I want to keep records in case my dispute is with the record holder! I had an issue with a credit card company a few years ago, in which I had to request a new card. Apparently, as part of the new card issuance, they also "helpfully" moved my payment due date -- which I found out about when I received a past-due notification via the mail. Had I not had a paper statement with the correct due date on it, I probably could have been convinced that I had just missed making a payment, especially as the initial customer service representative insisted there was no way a new card could change my payment due date. Only after escalating a couple of times were they able to figure out that I in fact hadn't requested my monthly cycle only be 18 days long. Now my wife makes fun of me because I still receive and file away paper statements, just in case. Edit: removing names since it's not relevant to the story.

ryukafalz 7y ago
I’m still a fan of email for this reason. Once someone sends me an email, the copy in my inbox is mine, and the sender can’t later hide it/take it back/etc.
- michaelhoffman 7y ago
  If I could get banks to send me financial statements as PDFs in an email I would sign up in a second.
  - viraptor 7y ago
    If it's really important to you, you can use one of the companies which receive and scan your post into emails. Then change your bank correspondence address to them.
    - michaelhoffman 7y ago
      That's a good idea. Thanks.

therusskiy 7y ago

Russia is far from being the most developed country out there, but our banks are infinite times for progressive than in other parts of the world. I can do every single thing from their app or their site, never need to visit my bank (aside from getting from an ATM).

muzika 7y ago
American banks are targeted by fraud more than most banks based in other countries, so they have to have more protections against fraud.
- wnoise 7y ago
  [citation needed]
orthoxerox 7y ago
You haven't hit the right (wrong?) use case yet. I had to wire some money to an overseas resort for my honeymoon. I hit the currency control restrictions. Except I only learned that because I work for the same bank I have my accounts in, so I went to the gal in charge of the payment processing system, she told me the status, then I called the right person in the currency control unit who told me I had to send a freeform message via the app with a copy of the invoice as an attachment. What did the app itself (or the web client) tell me? Nothing, "payment processing is in progress".

tribune 7y ago

Ok this is bad but maybe shitty customer service and slow processes are the price of a functioning financial system. Say what you will about the dated technology and opaque processes - legacy big banks work, your money is safe there, and there has not been a significant, system-wide technology error. Not that things should never change - pieces of this puzzle should be replaced, but very carefully. A major technology exploit or bug at a major bank would be apocalyptically bad. The stakes are too high to rapidly entrust financial infrastructure to whichever fintech startup comes knocking. Consider the recent case of Robinhood, a big-leaguer as far as fintechs go, accidentally offering infinite leverage. This was enough to convince me not to want fintechs near the bones of the banking system for quite some time.

ForHackernews 7y ago
For those who are unfamiliar with the Robinhood "infinite money cheat code": https://pennystocks.com/featured/2019/11/12/robinhood-left-unlimited-margin-glitch-unfixed-for-nearly-a-year/ https://pennystocks.com/featured/2019/11/12/robinhood-left-u...
mixmastamyk 7y ago
Europe and Australia/NZ solved this decade(s) ago.

stantaylor 7y ago

> I’ve never understood how branches can be profitable. My theory after this week is that some unknown force is sabotaging successful self-serve systems. If the Wells Fargo clusterfuck of several years ago is any indication, that "unknown" is very well known: upsell opportunities (or, in the case of WF, just surreptitiously adding services and hoping the customer doesn't read anything when they sign)

Justsignedup 7y ago

To note, Taxi Medalions server a good purpose, but are also corrupt. There should be NO ABILITY TO TRANSFER a medallion AND requiring proof that it is actively being used. You shouldn't be able to sell it. Taxi medallions actually keep city streets clear of massive cabs, which is exactly the problem that happened in nyc once uber/lyft moved in.

markvdb 7y ago

I guess it's different in the US versus outside. Banks in the EU work relatively well. Recent progress includes much improved and cheaper SEPA payments thanks to EU legislation, and transparent "the customer owns his data" EU legislation pushing financial innovation.

ab_testing 7y ago
Banks in the US also work relatively well. The problems happen when somebody - anybody can find your name, date of birth and ssn from the internet. With these 3 pieces of information, they can call any bank and pretend to be you. That is why banks jump through hoops to verify your identity. That is where questions pop up like 1. What is your mother's maiden name that you gave us when you opened the account 2. What is the phone number listed on your account - so that we can verify that it is really you. And when all else fails. 3. Banks ask you to go to a local branch with your id before they will unlock your account. That is what happened with the author in this case. However he thinks that just because he is calling - the banks know that it is him when the bank can never be sure.

boh 7y ago

The author is comparing two different things, forming an LLC vs initiating/executing transfers. Banks are highly regulated with tight fraud/AML restrictions. The risks are severe enough to demand caution over client experience. I'm sure creating a banking infrastructure from scratch can be done in a more effective way, but regardless of the firm tasked with executing the transfer, they currently need to comply with the existing structure. If, as the author mentions, fintechs will purchase banks for pennies, then they'll be banks and you'll still have your transfer problem. There's a reason why tech firms are making very limited strides towards financial services.

chx 7y ago

Speaking of going to branches, in the beginning my branch manager was awesome. He set up everything for my small business, many of which I had no clue existed which is no surprise since I was a new immigrant to Canada. He left and handed my matters over to someone else who was also quite competent. And then the next contact answered my email with the subject "Issues / meeting tomorrow around 4pm?" with "Yes, I will assist you with all the issue, when is good time to meet tomorrow afternoon?"... things didn't improve from there (she prepared no paperwork for all the issues I detailed in my email and wasted an hour of my time) and only got slightly better when I escalated to the branch manager and got a different contact. You can't explain this sort of attitude with being conservative etc. Nope, banks these days just suck.

reaperducer 7y ago

On my way over, I noticed that there were a cluster of banks at the corner: TD, citi, chase, and like one or two others, all within a one block radius in a relatively high-rent district. Servicing customers is just an ancillary function of most American bank branches these days. If you go into one with a problem, in 90% of the branches, the person helping you can only pick up the phone and dial the same customer service number you would call on your own, and wait the same amount of time you would on hold. It's been a very long time since bank branches were allowed to handle anything but ordinary everyday functions. The larger reason those branches exist is advertising and branding. You see the brand everywhere you go in an average day and subconsciously put together, "$bank is everywhere I go in an average day." It's similar to how banks used to always be constructed to look like ancient Greek and Roman temples: To make you think of banks as solid, trustworthy, safe, and like they'll be around forever. Now that we all know that banks merge, split, are born, and die like herpes germs on an infected lip, they scatter branches all over the place to play the same architectural influence game.

empath75 7y ago
Capital one branches are basically coffee shops.
- reaperducer 7y ago
  I've heard about those, but haven't seen one in the wild. When I lived in Chicago ING used to have a bank/coffee shop on Rush Street with pretty good coffee. It was free for a long time, and you could use the wifi as long as you liked, you just had to be surrounded by ING/Orange ads.
jeffmould 7y ago
This is completely the case with Chase. I had several accounts with them over the years and increasingly had issues (i.e. false positive fraud alerts, unexplained account locks, etc...). At one point the closest branch was an over an hour away from my home (I had moved since opening the account). When I would call the phone support they would tell me I needed to go to the branch. I would then make the drive to the branch only to have the branch manager call the same phone support I had. It's so bad that I once was locked out of online banking for over 6 months on one account and no one, both at the branch level and corporate level, seemed to know how to fix the issue. When I would go to the branch they would call support, support would tell them it is a branch level issue with needing to verify my identity, and the circle continued. I finally just gave up and closed all my accounts with them. On the other hand, I have an account at BB&T, and their in branch help is phenomenal. Most issues are resolved direct in bank without having to call outside support. Only time they have contacted outside support is when they don't know the answer to a question. On the other hand, if I call support they are quick to answer questions and provide detailed explanations. I have other accounts at another local bank and the same holds true. In branch support is where it is at. There is no question that as a bank grows in size and territory the level of support at the branch level and via phone support seems to degrade rapidly.

avmich 7y ago

> the yubikey is the possession that gives me the most delight. I savor the click when I plug it in. I take it out and look at it sometimes, tipping the gold USB contacts towards the light, muttering about how it was a birthday present. One day someone will win it from me in a riddle contest. Yeah, just don't try to follow the winner having gamer remorse. Rumors are Mordor Security Agency gets serious searching for used keys...

privateSFacct 7y ago

It's really not clear what happened here. Some misconceptions though I'm seeing. 1) Banks always pay ACH debit requests (that draw money from your account). No - you can sign up for ACH positive pay if you want. This generally gives you till 11AM PST to accept or reject an ACH request. You can set rules by originator -ie, always pay up to $X from originator ID $Y. You can also set a default to either pay unless rejected or reject unless approved. You can also put an ACH block on accounts that shouldn't have ACH activity. All this costs money. 2) Wire transfers Hard to rewind these, so lots of extra hoop jumping. New accounts may limit your ability to wire large amounts of money. 3) Fraud is real. Consider your parents and their retirement account. How would you feel if someone wired out or transferred out their entire brokerage balance? Think of how they authenticate with bank - could someone fake this? YES! Your parents re-use their passwords, write them on sticky notes, and their PII is everywhere. Many more (sad) examples here.

Symbiote 7y ago

> why didn’t ATMs reduce the number of bank branches At least in the UK, the number of branches has halved in 30 years: "Over the past three decades, the number of bank branches has fallen steadily. In 1986 there were 21,643 bank or building society branches in the UK. In 2014 there were 10,565. Over this period, the total number of bank and building society branches fell by 11,078 or 51%." Did this not happen in the USA? http://researchbriefings.files.parliament.uk/documents/CBP-8570/CBP-8570.pdf http://researchbriefings.files.parliament.uk/documents/CBP-8...

kube-system 7y ago
It hasn't. It looks like the US peaked in 2009 and has had a tiny (~5%) decline since then. https://www.fdic.gov/bank/analytical/quarterly/2015-vol9-1/fdic-4q2014-v9n1-brickandmortar.pdf https://www.fdic.gov/bank/analytical/quarterly/2015-vol9-1/f...
- mixmastamyk 7y ago
  Still using paper checks here! Not far from where the internet was invented. Branches aren’t going anywhere until that is fixed.
  - Symbiote 7y ago
    How often do you go to a bank branch? For me, for the last 15 years, it's less than twice per year, possibly even less than once per year. I used to have cheques to pay in from my grandparents (birthday etc), although I think I usually posted them to the bank. Postage was free. Presumably the in-branch bank tellers have better things to do than process cheques. There were a few visits when I emigrated to close and open accounts. Much of this could be done by phone, but I had some old accounts from childhood which I'd never used online. It's not at all surprising to me that the nearest bank to where my parents live in England is only open three days a week, with the ones that used to be nearer long since closed.
    - mixmastamyk 7y ago

nisten 7y ago

From a UX perspective there's one great service that the banks provide and that is identity managament. In my opinion this is the main reason why things like cryptocurrencies have not taken off, and that is because their identity & fraud management truly sucks. There's no person to talk to when you loose your access keys or forget a pin/password. It's extremely hard to automate all that purely in software, and the very few that have succeeded in managing it(i.e. apple & google) have leveraged their hardware infrastructure plus partnerships with telecom providers and all their physical braches. Yes old-school banks are inconvenient, can be hell to deal with, however it's very hard to scale fraud when you need to physically show up in person at a branch and I feel like this factor is very underappreciated.

Waterluvian 7y ago
For me it's that they're CDIC insured and government regulated. The Government of Canada would have to collapse in some apocalyptic event for me to lose the money in my accounts. They're also very stable (the regulated Canadian ones at least).
BlueTemplar 7y ago
Cryptocurrencies (or at least Bitcoin) has this major flaw/feature that if you fuck up (mistake or get hacked), which happens to everyone, eventually, there are no reversing/chargebacks possible...

Keverw 7y ago

> The chase operators told me a few times that ‘something is weird about these payments’ but couldn’t be more specific Wonder if it got flagged as suspicious? Some banks aren't even legally allowed to tell you some things about your own account. But it does seem banks are still brick and mortar. There's a bank that won't let you reset your pin online or over the phone, so have to psychically show up and show your ID to someone who presses something in their computer and tells you to type a pin into the USB key pad facing you on the other side of the desk. I guess it's just a small annoyance if you live near by, but the same bank doesn't have branches all over the place so if you end up moving across the country probably should get a new bank anyways. I guess tech wise could be done online as they could let you scan your ID and do a quick picture or video chat or something to make sure it's really you maybe. Plus some of the online only banks seem to pay higher interest too but not sure if people really care about interest as not sure if it really makes a big difference to some people. The local bank doesn't even pay 1% and hides the interest rate in the fine print somewhere while some of the online banks pay 1% and openly advertise such.

therealmarv 7y ago

In Europe we have really innovative Fintechs which build awesome apps like e.g. Revolut (which are also in beta in USA) or N26. But guess what: Also fintechs have to comply with regulation and need to comply with AML (Anti Money Laundering) with their software and you also can get in trouble there. When you have problems there then sh*t hits the fan too: You don't have a branch were you could go, not even a telephone number, only chat in the app and maybe twitter. It's like Google for finances. Ideal would be a combination of both worlds I guess.

fogetti 7y ago
Exactly, this is a recurring theme regarding Revolut which hits the media headlines frequently, how Revolut also sucks when the shit hits the fan. I guess there are also similar stories in case of Stripe too.

novok 7y ago

Out of all the large banks, citi has the most obtuse, sensitive and brain dead 'anti-fraud' systems out there. I opened a credit card with them and had such a bad experience with the anti fraud (which involved waiting for a letter for 2 weeks to be able to use the card again) that I won't open an account with them again. Chase, schwab, capital one, discover and amex I've never any issues with like I did with citi. Even BoA was better. I think my experience is a reflection of systemic issues at Citi, which is reflected in how they are doing fairly bad compared to the other big banks.

yellow_lead 7y ago

This post seems to have all the qualities of a highly popular HN post * Anti-incumbents in large industry * Poor customer experience / hit piece * The new tech company does it much better * Doesn't try to understand the intracacies of the industry being criticized (wire vs. ACH???) I know very little about banking and even I know (roughly) the difference between ACH and wire. My point is not that the author lacks intelligence, just that they should, as other commenters point out, try to learn about banking before you're so quick to criticize. I think us programmers suffer from thinking "this is all too complicated, it could easily be done simpler and better." That's not always the case and it can help us to understand how the current system came to be before making these judgements.

et2o 7y ago
Agree. This is a prime example of a blowhard programmer making a bunch of naive and half-true accusations. I see things like this in healthcare constantly.
- commandar 7y ago
  >I see things like this in healthcare constantly. Cosign. I worked in healthcare for the better part of a decade and spent just over five years of that doing data interchange (mostly HL7). It's always somewhat amusing when threads about it pop up on HN because it almost invariably winds up with smart programmers insisting that these have to be simple problems that would be easily solved if only we were using the right API, while having zero understanding of the business and regulatory requirements that, in reality, make many of the things attached to it very difficult to get right in a field where you literally have the potential of killing somebody with a severe enough mistake.
  - RockIslandLine 7y ago
    "it almost invariably winds up with smart programmers insisting that these have to be simple problems that would be easily solved if only we were using the right API" Because they are. Make the common case fast. There is no reason to expose all possible complexity to every transaction.

0xff00ffee 7y ago

I don't follow Abe Winter's logic: he had a good experience with an online service and a bad experience with a bank, and the bad experience required significant time to correct. Therefore: banks are bad. To make an accurate comparison, he would need to document a fraud alert on his Stripe side. Otherwise this comparison is meaningless. Anecdote: I had a massive issue with PayPal payments being held up due to a changing my business to a different state. It took literally 2 months of losing 80% of my online purchasing revenue (paypal vs. CC). I had a very difficult time getting in touch with a human, let alone a human with authority. I felt like I was never making progress. So from my perspective, talking to a chatbot or sending emails to anonymous mailboxes is equally fraught as OP's experience and I could enumerate a similar list of gripes. Bottom line: complex systems fail spectacularly when you encounter a new bug, regardless if it is some <10year old online startup or >100 year old banking system.

coredog64 7y ago
I swore off PayPal for ~5 years for something similar. I was part of a group buy of something, and PayPal got overzealous in recognizing fraud. They locked the target account for months, preventing the buy from completing. But they also decided that they couldn’t refund the money either. In the end it took a heroic effort by the guy doing the buy. TBH, I think he had fronted the money for the buy, and so had to do the work to recover it.
- chipperyman573 7y ago
  FWIW he probably did eventually get the money, paypal has a policy that they'll release your money in a maximum of 180 days from when they freeze it. But it's very likely he had to wait the full 180 days to withdraw it. Source: Happened to me a few years ago as well

anonymoushn 7y ago

I'd like to use this version of Stripe's product. The one I used makes you wait a month or so until you give up and use LegalZoom.

jijji 7y ago

automation of an LLC seems like a pretty dangerous thing considering you are trying to automate dealing with 1) secretary of state and 2) irs and 3) creation of a business bank account.... does this really need to be automated? it seems like a solution looking for a problem. It also seems like a minefield from an automation perspective because there are too many errors that can happen through automation at each step in this process. Its mostly an information gathering process for step one and step two, step three is information gathering and verification of what you submitted... it takes a few hours to this by yourself online and in person at the bank, and when it fails, you will need various humans in each step to figure out what went wrong. For example, IRS.gov will block on SS4 filings for various reasons, i.e. only one filing per day.. Seems too error prone to try and automate, and I bet they are using screen scrape tools to do it and so its probably going to break when the endpoint changes any form variables too..

kevindong 7y ago

Citi is notorious for having some of the worst tech in banking. It's bad by even banking standards. Anecdotally, I opened up a consumer Citi checking account. The account has two distinct web UIs for transferring money via ACH. One looked modern but outright didn't work (as I recall, I couldn't get any of the dropdowns to populate with my account info so I couldn't use any of the web forms). The other was clearly ripped straight out of the late 90s/early 00s, but it did indeed work. The new version was the easily findable version, the older version could be hunted down with enough effort. Additionally, it was actually impossible for me to find my routing number initially. I had to actually start a live chat with a customer service representative to get it.

stevula 7y ago
I just got one of their retail credit cards and it is the only card I own at this point that doesn’t work with Apple Pay. Even my local credit union has figured this out. I can believe Citi has some bad tech debt.

aj7 7y ago

Walked into a Chase branch with a $43,000 Wells Fargo insurance claim check. Informed there’d be a 10-day hold. I exploded. (I didn’t need the $ immediately. It was the principal of the thing.) Went back to the car and drove 1000 feet over to the WF branch. Same crap. 10 days. Even if I opened a WF account with a WF CHECK! Went back to Chase, giving up. Silver lining. I manage all my cash better today. It’s hand to hand combat, so you get good at it.

bullfightonmars 7y ago
This is most likely relates to the Bank Secrecy Act and IRS regulations for deposits over 10k. https://en.m.wikipedia.org/wiki/Bank_Secrecy_Act https://en.m.wikipedia.org/wiki/Bank_Secrecy_Act

aj7 7y ago

There’s a tremendous amount of “analysis” below on just how the convoluted payment systems work. Keep in mind that their first design principle is to maximize profit by limiting customer liquidity. At a certain point, as a consumer, I do not care about the problems within a system designed to reduce my utility to increase your profits.

bagacrap 7y ago
I've heard this claim before and I think it's plainly false. They're mostly worried about fraud, which is far more rampant that anyone who believes in crypto currency likely realizes.

xvilka 7y ago

I like the approach of Chinese banks here - almost everything can be done from the mobile application, way more than in US or EU banks apps (apart a few exceptions). There is another problem though - they are riddled with advertisement on every screen. I wish more innovation in that sphere. It applies to both personal and corporate experience.

twothamendment 7y ago

When I was 18 I had saved about $10k. I noticed on my statement it said I was being taxed. What? I went into the branch to ask about it and they couldn't tell me why tax was being taken out or when it would stop. I asked for a cashier's check for the full balance so I could close my account. The teller's jaw hit the desk. What did they expect? A bank that can't explain their own statement to me is no bank of mine.

juskrey 7y ago

US banks are simply not suitable for remote problem solving. I once have run US company remotely, which was completely blocked for three weeks after one typo in outgoing transfer. Never remotely again. I thought Stripe Atlas have solved this problem.. Turns out not..

nottorp 7y ago

Hmm yes we know. US banks suck. However, I'd tone down the Stripe praise a bit. I bet that if you had a need that isn't covered by their script you'll be in even more trouble than with a traditional bank.

immad 7y ago

I am the cofounder of Mercury.co. We built a modern bank to support US businesses. I am somewhat surprised by the negativity on HN to this post. I think the author is on target with issues he identifies at incumbent banks. The future is going to be customer centric, technology driven banks and the incumbents are going to have a very hard time adapting to that change.

miki123211 7y ago

I feel like European banking is so much better than the U.S. You can do so much on line, and everything is way more secure.

nraynaud 7y ago
It really is, because the regulation is strong, faster and cheaper transfers, common account numbering system, nobody bats an eye if your money crosses the border (it was a nightmare in the US, BoA would reject my client's wires all the time without explanation), etc.
- BlueTemplar 7y ago
  "Crosses the border", how exactly? (Countries = States, Schengen = Federal)
  - nraynaud 7y ago
    I have no issues sending money from the continent to the UK or the US if that's your intellectual model. But I don't think you're on the correct track. edit: this sentence is weird, on the US, the money is blocked on the American side according to the EU bank.
    - BlueTemplar 7y ago
      mental model : USA as one gathering of states, EU (Schengen) as another.

orf 7y ago

It seems that without regulation and legislation, if left to its own devices, the banking industry settles in a terrible equilibrium where you end up using cheques and signing for card transactions in 2020. This extends deeper into the technology that underpins the banks. The USA has a _ridiculous_ amount of banking fraud compared to Europe, more than an order of magnitude higher for some types. So, say what you want about government overreach but Europe has legislated lower fraud rates, better technology and even a banking API for interoperability. Not to mention fostering a lot of new fintech startups and challenger banks.

nerdkid93 7y ago
Do you have a source for this "_ridiculous_ amount of banking fraud"? I have seen stats around credit cards that show higher fraud now compared to Europe, but that's because we were late to the chipped credit card game. To be fair, until France switched to chipped credit cards, they had higher levels of fraud. Source: https://youtu.be/2IksSNiEo2g https://youtu.be/2IksSNiEo2g
- orf 7y ago
  The one that comes to mind is the federal reserve report. https://www.federalreserve.gov/publications/files/changes-in-us-payments-fraud-from-2012-to-2016-20181016.pdf https://www.federalreserve.gov/publications/files/changes-in... Tl;dr For reference, according to the last ECB report in the EU the total value of fraudulent transactions from cards issued by SEPA countries was 0.041% of the total value of transactions (€1.8 billion - That's over 5x less fraud). Only 19% of that was point of sale fraud $3.6 billion card fraud in the US is point of sale - 10x more than the €342 million point of sale EU fraud. Overall there is $2.62 billion of counterfeit card fraud, $3.46 billion of "Fraudulent use of account number" (whatever that is), $810 million "lost or stolen card" fraud (not an issue with chip and pin), and $360 million "fraudulent application" fraud.

vonseel 7y ago

This is a fun article, and I’m still reading it, but my immediate thoughts are that 1) self-serve is a relatively new thing enabled by tech. 2) even in 2020 there are still clusters of people who aren’t great at using computers, smart-phones, and apps and prefer doing things in person or on the phone; yeah, you have some older people in there, but there are young people who still do things the old way, because they never had an interest in technology or just don’t know about other options. 3) Health-care and banking aren’t the only industries that don’t have slick self-service portals like Stripe. I’d argue the opposite; only companies built after the advent of recent web tech usually offer that, many of them, in fact, are tech companies. Think about United Health, this company employs some 300,000 persons. CEOs at both United and Aetna are paid around $20M annual comp. Why does an insurance company need 300k employees? Google itself apparently has around 100k - and they do much more than just pushing paper. Why are these guys paid so much? To resist change perhaps, embrace too big to fail culture, and keep their 300,000 employees employed? If private industry can seem this wasteful and inefficient, I don’t even want to know about the dark corners of government where people are paid to sit at desks and make photocopies on 30 year old Xerox machines everyday.

BlueTemplar 7y ago
Not to mention that self-serve can suck, and in-person interaction can be great. In both cases it's about effort (money) put into it. And into maintaining it once it's not "shiny-new" any more...

BlueTemplar 7y ago

Why is this guy still not using an online-only bank in 2020 ?!?

mrep 7y ago
What's better about an online-only bank? From what I have seen, I could get some interest on my checking account but that wouldn't be much as I only keep enough in there to autopay my rent and credit cards. Other than that, my checking account is free, they have ATMs everywhere, and there are tons of banks I can go to if I need to.
- BlueTemplar 7y ago
  Well, I don't know, I'm still using a traditional credit union (?) bank, but this guy certainly seems like it should have been an early customer of those ?

jotakami 7y ago

I just read The Phoenix Project so I feel like they just need more DevOps lol. But seriously, banking is a sales-and-marketing-driven industry and those are the least likely to understand and embrace the process improvement revolution that transformed manufacturing and is currently transforming IT. I think the author’s comment about the lack of technical expertise in management explains it most succinctly.