5 ms·

Fintech Is a Scam

45 points by myth_drannon 5y ago

missedthecue 5y ago
The hubris of "fintech" is just so funny because it’s tech people looking at a 5000 year old sector that accounts for a double digit size portion of the economy, run by the smartest and most ruthless people in the world and saying “You know what, I bet these guys are leaving a lot of money on the table” BNPL services are just the absolute epitome of this behaviour. Unsecured lending for consumption is a practice that is as old as the hills, it isn't a new thing. It's been tried millions of times before, it's not very profitable, and these firms are doing it at a massive scale. Affirm is one such example, and they aren't just losing money, their quarterly losses are greater than their total quarterly revenue! Once the credit rating in their portfolio starts to slip, (and it will, it happens every business cycle) the carnage will be incredible to see.
- perl4ever 5y ago
  I found out recently I could get an unsecured loan to buy a car. I'm not clear on whether this is a new thing. It wasn't cheap by new car dealer standards, but it was cheaper than other car loan lenders who do require a lien for security. Also cheaper than I can get on a HELOC. And although the name was weird and unfamiliar, it was a subsidiary of a bank I've heard of and not some "fintech" startup.
- whimsicalism 5y ago
  Yeah except for the fact that for most of that 5000 year history incumbents had an incredible advantage because they were literally hereditarily entitled to vast amounts of the financial system (centered around land back in the day)
- WastingMyTime89 5y ago
  > looking at a 5000 year old sector that accounts for a double digit size portion of the economy It’s a strange comment because modern banking is 400 years old and finance is a sector which has seen many innovations though its history. It’s even more amusing when you realise that PayPal, one of the biggest success of the dotcom era, is a financial company. Finance is a sector dominated by very large institutions with a vested interest in not shaking the boat. There is often plenty of money to be made just by being more efficient and selling cheaper services. The European neobanks are a perfect exemple of that.
  - missedthecue 5y ago
    Fractional reserve banking is 400 years old. Fintechs aren't involved in that. Money lending is thousands of years old.
errantmind 5y ago
This article strings a lot of ideas together but the identified cause doesn't seem quite right. The wild speculation we see in the stock market, cryptocurrency, housing market, etc, are mostly due to lax monetary policy. All kinds of bad investments gain traction when money is sloshing around the economy. It can't last, but the alternative is pain, and no one wants to deal with that so here we are.
- passerby1 5y ago
  Out of curiosity, what's the alternative that you mentioned?
  - FuckButtons 5y ago
    A recession.
    - passerby1 5y ago
      Isn't recession is real and what's happening now as a result of covid hit us all? Am I the only one to have a feeling that itcs kind of an escapism to refuse seeing recession?
      - financetechbro 5y ago
        What signals are you seeing that we are in a recession?
kbos87 5y ago
What a pessimistic take. Some corners of "fintech" are worthy of scrutiny, but talk about throwing the baby out with the bathwater. Go talk to someone with bad credit who can't get a loan. Go talk to someone who had to wait three days for a small payment to post to their checking account. Go talk to someone who is stuck renting and can't buy a house. The list of moments of misery caused by the archaic world of "financial services' in 2021 goes on and on. Let's not pretend that there aren't real problems to be solved here, more than there probably are in any other corner of the economy.
- salawat 5y ago
  Many of those 'woes' are artificially created by Fintech, and AML/FINRA/financial services programs. There is no reason whatsoever for ACH's to cost a cent. There is no reason for all the middlemen, and fee extractors that the Fintech industry is at the forefront of reproducing more tap-in points to. Have you ever wondered why there are more and more products/business models that no one would have been dumb enough to try to put a financial transaction in front of? One word. Fintech. Have you ever wondered why it's expensive to be poor when a Fintech company will pair with a bill payment service that charges an extra 2 bucks over and above the bill payment one is doing, when the alternative of a 1-2 cent envelope and a stamp is readily available? Have you wondered why it's become harder and more unusual to see people using cash? Why increasingly traveling with large amounts thereof is becoming even more dangerous as policymakers are normalizing cash exchanges to the realm of "the criminal or impoverished"? Fintech again. Yeah, I've been bit by not being able to move money in the way I wanted to before, but in no way shape or form does that justify the abuse the financial services sector has wrought.
  - perl4ever 5y ago
    I can't dismiss anything you say, but it reminds me of my freshman year at college, long ago, when I had to give a speech in some class and my topic was affirmative action. I talked about the standard stuff, how legacies and stuff are really just affirmative action for privileged people, and actual affirmative action is hardly a deviation from ideal fairness that never existed. So I'm up there, and I just feel stupid. Because I'm basically talking about, like, Harvard or whatever, that is thousands of miles away, and a completely alien world that neither I nor my classmates will ever be anywhere near attending or qualifying for. Also, we all chose to attend this specialized school that's the farthest thing from an ivy league. You could certainly say something about diversity or affirmative action that would be relevant to people at that school, but my presentation wasn't. I read what you write, and I imagine trying to tell people that impoverished people are oppressed by not being allowed to transport large amounts of cash and feeling stupid. Like, I picture them being polite and not arguing with me, but me suddenly being conscious that I really have no clue what I'm talking about, and it doesn't relate to their world either, so I'm just creating barriers to understanding. By no means am I saying you're wrong or I haven't heard similar things before. Just that, if stuff needs changing, I don't think I know how to advocate it. I have lived my whole life without transporting large amounts of cash, or coming in contact with someone who does. When you say "there is no reason whatsoever for ACH's to cost a cent", well, when/where/how do they cost a cent? What would impoverished people use ACHs for anyway? Can you explain more about why a bill payment service is the price of being poor? If Fintech is making the world worse, does that mean they have already displaced large swaths of the financial industry? If not, what forces people to engage?
joelbondurant 5y ago
Bitcoin > Terrorist Paper
ncmncm 5y ago
I have been calling it automated stealing. Does it scale? YES!

45 points by myth_drannon 5y ago

The hubris of "fintech" is just so funny because it’s tech people looking at a 5000 year old sector that accounts for a double digit size portion of the economy, run by the smartest and most ruthless people in the world and saying “You know what, I bet these guys are leaving a lot of money on the table” BNPL services are just the absolute epitome of this behaviour. Unsecured lending for consumption is a practice that is as old as the hills, it isn't a new thing. It's been tried millions of times before, it's not very profitable, and these firms are doing it at a massive scale. Affirm is one such example, and they aren't just losing money, their quarterly losses are greater than their total quarterly revenue! Once the credit rating in their portfolio starts to slip, (and it will, it happens every business cycle) the carnage will be incredible to see.

perl4ever 5y ago
I found out recently I could get an unsecured loan to buy a car. I'm not clear on whether this is a new thing. It wasn't cheap by new car dealer standards, but it was cheaper than other car loan lenders who do require a lien for security. Also cheaper than I can get on a HELOC. And although the name was weird and unfamiliar, it was a subsidiary of a bank I've heard of and not some "fintech" startup.
whimsicalism 5y ago
Yeah except for the fact that for most of that 5000 year history incumbents had an incredible advantage because they were literally hereditarily entitled to vast amounts of the financial system (centered around land back in the day)
WastingMyTime89 5y ago
> looking at a 5000 year old sector that accounts for a double digit size portion of the economy It’s a strange comment because modern banking is 400 years old and finance is a sector which has seen many innovations though its history. It’s even more amusing when you realise that PayPal, one of the biggest success of the dotcom era, is a financial company. Finance is a sector dominated by very large institutions with a vested interest in not shaking the boat. There is often plenty of money to be made just by being more efficient and selling cheaper services. The European neobanks are a perfect exemple of that.
- missedthecue 5y ago
  Fractional reserve banking is 400 years old. Fintechs aren't involved in that. Money lending is thousands of years old.

errantmind 5y ago

This article strings a lot of ideas together but the identified cause doesn't seem quite right. The wild speculation we see in the stock market, cryptocurrency, housing market, etc, are mostly due to lax monetary policy. All kinds of bad investments gain traction when money is sloshing around the economy. It can't last, but the alternative is pain, and no one wants to deal with that so here we are.

passerby1 5y ago
Out of curiosity, what's the alternative that you mentioned?
- FuckButtons 5y ago
  A recession.
  - passerby1 5y ago
    Isn't recession is real and what's happening now as a result of covid hit us all? Am I the only one to have a feeling that itcs kind of an escapism to refuse seeing recession?
    - financetechbro 5y ago
      What signals are you seeing that we are in a recession?

kbos87 5y ago

What a pessimistic take. Some corners of "fintech" are worthy of scrutiny, but talk about throwing the baby out with the bathwater. Go talk to someone with bad credit who can't get a loan. Go talk to someone who had to wait three days for a small payment to post to their checking account. Go talk to someone who is stuck renting and can't buy a house. The list of moments of misery caused by the archaic world of "financial services' in 2021 goes on and on. Let's not pretend that there aren't real problems to be solved here, more than there probably are in any other corner of the economy.

salawat 5y ago
Many of those 'woes' are artificially created by Fintech, and AML/FINRA/financial services programs. There is no reason whatsoever for ACH's to cost a cent. There is no reason for all the middlemen, and fee extractors that the Fintech industry is at the forefront of reproducing more tap-in points to. Have you ever wondered why there are more and more products/business models that no one would have been dumb enough to try to put a financial transaction in front of? One word. Fintech. Have you ever wondered why it's expensive to be poor when a Fintech company will pair with a bill payment service that charges an extra 2 bucks over and above the bill payment one is doing, when the alternative of a 1-2 cent envelope and a stamp is readily available? Have you wondered why it's become harder and more unusual to see people using cash? Why increasingly traveling with large amounts thereof is becoming even more dangerous as policymakers are normalizing cash exchanges to the realm of "the criminal or impoverished"? Fintech again. Yeah, I've been bit by not being able to move money in the way I wanted to before, but in no way shape or form does that justify the abuse the financial services sector has wrought.
- perl4ever 5y ago
  I can't dismiss anything you say, but it reminds me of my freshman year at college, long ago, when I had to give a speech in some class and my topic was affirmative action. I talked about the standard stuff, how legacies and stuff are really just affirmative action for privileged people, and actual affirmative action is hardly a deviation from ideal fairness that never existed. So I'm up there, and I just feel stupid. Because I'm basically talking about, like, Harvard or whatever, that is thousands of miles away, and a completely alien world that neither I nor my classmates will ever be anywhere near attending or qualifying for. Also, we all chose to attend this specialized school that's the farthest thing from an ivy league. You could certainly say something about diversity or affirmative action that would be relevant to people at that school, but my presentation wasn't. I read what you write, and I imagine trying to tell people that impoverished people are oppressed by not being allowed to transport large amounts of cash and feeling stupid. Like, I picture them being polite and not arguing with me, but me suddenly being conscious that I really have no clue what I'm talking about, and it doesn't relate to their world either, so I'm just creating barriers to understanding. By no means am I saying you're wrong or I haven't heard similar things before. Just that, if stuff needs changing, I don't think I know how to advocate it. I have lived my whole life without transporting large amounts of cash, or coming in contact with someone who does. When you say "there is no reason whatsoever for ACH's to cost a cent", well, when/where/how do they cost a cent? What would impoverished people use ACHs for anyway? Can you explain more about why a bill payment service is the price of being poor? If Fintech is making the world worse, does that mean they have already displaced large swaths of the financial industry? If not, what forces people to engage?

joelbondurant 5y ago

Bitcoin > Terrorist Paper

ncmncm 5y ago

I have been calling it automated stealing. Does it scale? YES!