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I think in general, between my experience in the United States and this article about Canada, it's clear that banks are against technological innovation across

I think in general, between my experience in the United States and this article about Canada, it's clear that banks are against technological innovation across the board because they are absolutely terrified of being disintermediated completely. And rightly so. The ends of retail banking and plastic cards as we know them are perhaps a few years off (see http://www.aarongreenspan.com/writing/essay.html?id=48 http://www.aarongreenspan.com/writing/essay.html?id=48), and they will do anything they can to stall that day from arriving.

wavephorm 15y ago
Most industries in Canada are protected against innovation and competition by a series of public cartels and legislated monopolies that have been erected over decades. Telecom, Banking, Tobacco, Grain, Lumber... and at the provincial level Energy and Alcohol are all carefully protected. Essentially the entire country is a giant syndicate under the guise of free trade.
- InclinedPlane 15y ago
  Don't forget Canada Poste. E-commerce is significantly stunted in Canada due largely to excessive government protection of monopolies.
- deleted 15y ago
  [deleted]
- a3camero 15y ago
  And those are just the obvious ones. Ontario's bus industry is a regulated near-duopoly of routes. In order to start a new bus route you have to prove that it won't have a negative economic impact on the current operators of that line. It's regulated by the Ontario Highway Transport Board. Same as it was in the 1950s... Just one of many less visible examples.
jerguismi 15y ago
What bitcoin has shown to me, is how simple moving money around could (and should) be. Something similar could cause real distruption to the banking industry. The current system is pain in the ass.
- tomjen3 15y ago
  That is exactly what I hoped would happen with bitcoins. The day we remove that barrier to innovation is the day a lot more startups will be created.
- rick888 15y ago
  It showed me that we still need banks. Even though bitcoin has no banks, people used the wallet sites as essentially a bank. One of the other reasons the banking industry doesn't see much innovation is that it needs to be very secure (which is why it's a pain in the ass) and so it's going to take some time to adopt new technologies.
deleted 15y ago
[deleted]
InclinedPlane 15y ago
For decades heavy regulation of the banking industry has kept out competitors, cementing the advantages of the biggest banks. But it has also held them back from basic innovations that should be ubiquitous in the 21st century. Every bank should natively support the same features as PayPal, and more. That situation is not tenable, eventually more and more banking will migrate to "non-bank" entities who aren't stuck in the mire of traditional banking and banking regulations.
- afterburner 15y ago
  I'm in Canada, and all the major banks have online services. Several have iPhone apps. A recent service lets you email money to someone for a 50 cent fee. Regulation has NOT stifled technical innovation in banking in Canada. It did, however, prevent the banks from getting in up to their necks in the CDO/CDS/real estate boondoggle. I think I like that. The article laments that there are not thousands of banks like in the US. No thanks. How many of those banks went out of business in the last few years? No thanks. Having a small number of very well regulated, and actually fiscally conservative banks sounds to me like a fair trade for whatever it is having thousands of poorly regulated banks gets you that is so awesome its worth risking a major financial meltdown.
  - scottdw2 15y ago
    I'm a US citizen living in Canada. In my experience, your sentiment is common amongst Canadians. The thinking usually goes "Our banks might not be convienient, but at least they won't fail like the ones in the US". My understanding of the mortgage crisis, however, is that most of the problems were with large banks, not small ones. I can tell you that small US banks an credit unions offer substantially better service at better terms than Canadian banks do. In Ontario, for example, there's only 1 bank that offers $0 checking accounts without absurdly low transaction limits (like 1 transaction per month). That bank doesn't have branches, and offers almost no services. It's absurd if you think about it. "You want me to pay you a fee for the privilege of loaning you money." The only way that kind of business can be sustained is through negative externalities. No fee bank accounts are standard practice in the US, precisely because there are many banks to choose from. Choice drives competition. Regulation of big banks may have prevented a banking crash, but I think it's a mistake to extrapolate from that notion to "many small banks are bad", because that was not the problem in the us...

wavephorm 15y ago

Most industries in Canada are protected against innovation and competition by a series of public cartels and legislated monopolies that have been erected over decades. Telecom, Banking, Tobacco, Grain, Lumber... and at the provincial level Energy and Alcohol are all carefully protected. Essentially the entire country is a giant syndicate under the guise of free trade.

InclinedPlane 15y ago
Don't forget Canada Poste. E-commerce is significantly stunted in Canada due largely to excessive government protection of monopolies.
deleted 15y ago
[deleted]
a3camero 15y ago
And those are just the obvious ones. Ontario's bus industry is a regulated near-duopoly of routes. In order to start a new bus route you have to prove that it won't have a negative economic impact on the current operators of that line. It's regulated by the Ontario Highway Transport Board. Same as it was in the 1950s... Just one of many less visible examples.

jerguismi 15y ago

What bitcoin has shown to me, is how simple moving money around could (and should) be. Something similar could cause real distruption to the banking industry. The current system is pain in the ass.

tomjen3 15y ago
That is exactly what I hoped would happen with bitcoins. The day we remove that barrier to innovation is the day a lot more startups will be created.
rick888 15y ago
It showed me that we still need banks. Even though bitcoin has no banks, people used the wallet sites as essentially a bank. One of the other reasons the banking industry doesn't see much innovation is that it needs to be very secure (which is why it's a pain in the ass) and so it's going to take some time to adopt new technologies.

deleted 15y ago

[deleted]

InclinedPlane 15y ago

For decades heavy regulation of the banking industry has kept out competitors, cementing the advantages of the biggest banks. But it has also held them back from basic innovations that should be ubiquitous in the 21st century. Every bank should natively support the same features as PayPal, and more. That situation is not tenable, eventually more and more banking will migrate to "non-bank" entities who aren't stuck in the mire of traditional banking and banking regulations.

afterburner 15y ago
I'm in Canada, and all the major banks have online services. Several have iPhone apps. A recent service lets you email money to someone for a 50 cent fee. Regulation has NOT stifled technical innovation in banking in Canada. It did, however, prevent the banks from getting in up to their necks in the CDO/CDS/real estate boondoggle. I think I like that. The article laments that there are not thousands of banks like in the US. No thanks. How many of those banks went out of business in the last few years? No thanks. Having a small number of very well regulated, and actually fiscally conservative banks sounds to me like a fair trade for whatever it is having thousands of poorly regulated banks gets you that is so awesome its worth risking a major financial meltdown.
- scottdw2 15y ago
  I'm a US citizen living in Canada. In my experience, your sentiment is common amongst Canadians. The thinking usually goes "Our banks might not be convienient, but at least they won't fail like the ones in the US". My understanding of the mortgage crisis, however, is that most of the problems were with large banks, not small ones. I can tell you that small US banks an credit unions offer substantially better service at better terms than Canadian banks do. In Ontario, for example, there's only 1 bank that offers $0 checking accounts without absurdly low transaction limits (like 1 transaction per month). That bank doesn't have branches, and offers almost no services. It's absurd if you think about it. "You want me to pay you a fee for the privilege of loaning you money." The only way that kind of business can be sustained is through negative externalities. No fee bank accounts are standard practice in the US, precisely because there are many banks to choose from. Choice drives competition. Regulation of big banks may have prevented a banking crash, but I think it's a mistake to extrapolate from that notion to "many small banks are bad", because that was not the problem in the us...