4 ms·

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

by 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?
  - salawat 5y ago
    ACH is short for Automated Clearing House, which is a network that exists between financial institutions. It is nothing more than a set of policies and transmission protocols that encode transactions for transfers of value. Every institution in the network has a compliance department, on which is foisted the task of monitoring these streams of transactions for what one may consider the "illegal or suspicious transaction due jour. "If you think, well that seems like it warrants a fee!" You need to keep in mind that the ACH network is fundamentally about settling transactions between banking entities, not their clients. Making sure money gets to the final account is a matter of internal process. So you literally have banking entities parked in the chain of transaction charging everyone an ACH fee per transactions, when at the end of the day that institution jus batches those all up and does one transaction. This is called rent seeking, and it is bad in the economic world in excess. Now. The bill payment thing. Why is that bad? Middlemen again. You're taking a substantial bill, putting a techie wrapper around it, putting it in front of people who have no idea how the financial system works, then laughing as the tubes use it, incurring an additional one or two dollars into your pocket as a toll fee for doing so. Fintechs operate on a concept known as economies of scale. If you take a small fee from millions of people, you still get a huge pile of money in the end. You know what's really clocked the Fintech dream into overdrive? Mobile phones! No other machine is as capable of rapidly creating a set of transaction opportunities and rent extraction than a micro computer in the presence of ubiquitous networking infrastructure! Africa literally has Internet access in places that food, clean water, and medicine aren't even givens, and the lack of consumer protections/savvy with technology have seen predatory micro-loan Fintech businesses crop up like hot cakes over there. Fintech firms can easily hit revenue figures and profitability at orders of magnitude less capital expenditure than pretty much any other industrial vertical that actually has to move something material around. This creates a brain drain problem in capitalist/free market driven economies away from things that can make an actual material difference in the world. Now... The cash bit: Have you ever wondered why 50 dollar bills are basically non-existent anymore? Why everything is in 20's at the ATM? Why there is a perpetual coin shortage? Have you ever seen any of the stories in the news where someone goes on travel with their life savings, then ends up with them seized by a government somewhere, and having to go through hell, litigation and high water to get it back? That didn't used to happen (in my living recollection) before a bunch of data analysis was done that came to the conclusion that the only people who do large money transfers in cash, were terrorists, criminals, or those not serviced by the government approved financial surveillance infrastructure known as banks. Thusly, travel with large amounts of cash is now seen as suspicious in and of itself. Combined with various flavors of perverse incentives and bad law that constitute the practices known as Civil Asset Forfeiture, and you're one pissed off, anal retentive bureaucrat away from having your life ruined for nothing more than trying to get somewhere. These are no mere academic points. I've seen, scrutinized, reconfigured, and much to my regret, took part in lubricating those gears of predatory commerce. Something which I still consider myself atoning for to this day. I've sat back and watched as an actor in the space wasn't content with their profitability being as in the black as it was that year, so turned the thumbscrews jacking up the overdraft fees for day juice, while implementing other institutional policies to assure they stayed pinned to the demographic they could actually extract value most effectively from. I've seen the equity holders laughing at company parties, the misery at the call center, and the frustrations of the end users. Do some legitimately help some small slice of their userbase? Assuredly. Does that outweigh the damage done over time, or justify the ongoing encroachment into people's lives in terms of the ever increasing dependence of the average person on electronic, surveillable/censorable by default transfers? No... I don't think so. Then again, I've been known to be a harbor of controversial views.
- qwertyuiop_ 5y ago
  Well put. Mostly regulatory capture and the resulting “problems” the connections to politicians, hedgies, VC set out to solve the problems they created in the first place. The perfect con.

by kbos87 5y ago

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?
- salawat 5y ago
  ACH is short for Automated Clearing House, which is a network that exists between financial institutions. It is nothing more than a set of policies and transmission protocols that encode transactions for transfers of value. Every institution in the network has a compliance department, on which is foisted the task of monitoring these streams of transactions for what one may consider the "illegal or suspicious transaction due jour. "If you think, well that seems like it warrants a fee!" You need to keep in mind that the ACH network is fundamentally about settling transactions between banking entities, not their clients. Making sure money gets to the final account is a matter of internal process. So you literally have banking entities parked in the chain of transaction charging everyone an ACH fee per transactions, when at the end of the day that institution jus batches those all up and does one transaction. This is called rent seeking, and it is bad in the economic world in excess. Now. The bill payment thing. Why is that bad? Middlemen again. You're taking a substantial bill, putting a techie wrapper around it, putting it in front of people who have no idea how the financial system works, then laughing as the tubes use it, incurring an additional one or two dollars into your pocket as a toll fee for doing so. Fintechs operate on a concept known as economies of scale. If you take a small fee from millions of people, you still get a huge pile of money in the end. You know what's really clocked the Fintech dream into overdrive? Mobile phones! No other machine is as capable of rapidly creating a set of transaction opportunities and rent extraction than a micro computer in the presence of ubiquitous networking infrastructure! Africa literally has Internet access in places that food, clean water, and medicine aren't even givens, and the lack of consumer protections/savvy with technology have seen predatory micro-loan Fintech businesses crop up like hot cakes over there. Fintech firms can easily hit revenue figures and profitability at orders of magnitude less capital expenditure than pretty much any other industrial vertical that actually has to move something material around. This creates a brain drain problem in capitalist/free market driven economies away from things that can make an actual material difference in the world. Now... The cash bit: Have you ever wondered why 50 dollar bills are basically non-existent anymore? Why everything is in 20's at the ATM? Why there is a perpetual coin shortage? Have you ever seen any of the stories in the news where someone goes on travel with their life savings, then ends up with them seized by a government somewhere, and having to go through hell, litigation and high water to get it back? That didn't used to happen (in my living recollection) before a bunch of data analysis was done that came to the conclusion that the only people who do large money transfers in cash, were terrorists, criminals, or those not serviced by the government approved financial surveillance infrastructure known as banks. Thusly, travel with large amounts of cash is now seen as suspicious in and of itself. Combined with various flavors of perverse incentives and bad law that constitute the practices known as Civil Asset Forfeiture, and you're one pissed off, anal retentive bureaucrat away from having your life ruined for nothing more than trying to get somewhere. These are no mere academic points. I've seen, scrutinized, reconfigured, and much to my regret, took part in lubricating those gears of predatory commerce. Something which I still consider myself atoning for to this day. I've sat back and watched as an actor in the space wasn't content with their profitability being as in the black as it was that year, so turned the thumbscrews jacking up the overdraft fees for day juice, while implementing other institutional policies to assure they stayed pinned to the demographic they could actually extract value most effectively from. I've seen the equity holders laughing at company parties, the misery at the call center, and the frustrations of the end users. Do some legitimately help some small slice of their userbase? Assuredly. Does that outweigh the damage done over time, or justify the ongoing encroachment into people's lives in terms of the ever increasing dependence of the average person on electronic, surveillable/censorable by default transfers? No... I don't think so. Then again, I've been known to be a harbor of controversial views.
qwertyuiop_ 5y ago
Well put. Mostly regulatory capture and the resulting “problems” the connections to politicians, hedgies, VC set out to solve the problems they created in the first place. The perfect con.