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I'd wager the reason a lot of bank systems suck is that them sucking doesn't matter to the banks, and the suck can be even beneficial to them. It's rather diff

I'd wager the reason a lot of bank systems suck is that them sucking doesn't matter to the banks, and the suck can be even beneficial to them. It's rather difficult to change one's bank, and banks actually put up hurdles to make the change difficult. E.g. moving loans can have huge "rearrangement fees", loan guarantees may be almost impossible to transfer and the bank account info is in quite a few places and having it wrong can cause missed payments. A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. And that we still this day and age have to wait for days for a bank transfer to clear. There are some new banks (e.g. Monzo) that once you use them, it really shows that most banks just suck. When you have literally a license to create money out of thin air, you can be really incompetent (except in lobbying of course) and still make hand over fist.

mrkeen 3y ago
> When you have literally a license to create money out of thin air Well, you can loan out some amount of money that you don't have, hopefully get it returned to you with some interest.
- jampekka 3y ago
  If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. And for many loans you automatically get it from the gov if the debtor can't pay.
  - vkou 3y ago
    > If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. No, the gov/central bank will give it to the people you borrowed money from as a bailout. Your equity will be zeroed out, your executives will all be fired, and your customer accounts will be fed to another bank.
    - jampekka 3y ago
      Citibank was bailed out, the stock rose over 50% overnight and the CEO got paid hundreds of millions.
      - alexb_ 3y ago
        You realize bailouts are loans, right? They aren't just free money.
        jampekka 3y ago
        There were many forms of bailout for Citibank (and others). Some were (extremely favorably termed) loans, some government backing of their bad assets and some were buying stock that the market didn't want to touch. May or may not be technically free money, but for sure Citibank doesn't hand out loans to bankrupt customers on such terms. The gov could have e.g. let Citibank go bankrupt and just take it for free. Like banks do to their customers.
      - vkou 3y ago
        Citibank shareholders got diluted, and Citibank paid back for that bailout, with the taxpayers profiting ~12 billion in total. If the money couldn't have been paid back, the shareholders wouldn't have been diluted. They would have been wiped out.
        jampekka 3y ago
        If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And gov would have gotten it for essentially free if wanted. It was not like they saw that here's a great investment opportunity to make profit for taxpayers.
        vkou 3y ago
        > If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And also the entire economy would have collapsed, and we'd all be trading ammunition for bottlecaps, instead of merely living through a nasty recession. Which is why they backstopped it. Yes, it would have been cheaper to let Citi fail and nationalize it, but it wouldn't have been cheaper to then have to deal with all the contagion and all the other businesses that would have exploded because of it.
- skybrian 3y ago
  That's not how it works. When a bank makes a loan, the customer will use it to buy something (say, a house), and probably the money will be put in a different bank. So the money definitely needs to be there, to pay the other bank. There's a deposit in the other bank, along with the payment. Both of which are "money." So, a bank can create money from thin air by making a loan, but typically not for themselves. It happens in a different bank.
- immibis 3y ago
  I want to make it a point that EVERYONE CAN DO THIS. Everyone can make a loan, everyone can count their un-returned loans as money if they want to, and everyone can accept transfers of other people's un-returned loans as payment if they want to. The only special power banks have is that most people accept them doing this. If your whole friend circle accepts un-returned loans from each other as payment, then you're all doing fractional reserve.
  - jampekka 3y ago
    The special power is the banking license they get from the government. Try to do it without and you'll find yourself in prison quite soon. Especially if you do it in official currency.
    - immibis 3y ago
      No, I don't need a banking license to loan my friend $10.
      - desas 3y ago
        The difference is that licensed and regulated banks can scale it. Retail customers can trust them due to their long-standing reputation, their banking licence and linked to that, the FDIC insurance.
        immibis 3y ago
        Yes, but this only grants the ability to scale it, not the ability to do it. We don't say that only licensed restaurants can cook food.
abdullahkhalids 3y ago
> A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. If you mean the bank account numbers used within Finland, sure, they can be changed. In the new system, there will be country-wide database which will now indicate which bank each account number is associated with. But your account also has an IBAN number, which has country and bank/institution identifiers. Those will have to change if a customer moves banks, absent an international finance law change. And my understanding is that its quite common to use IBAN everywhere. So you won't really solve the problem. Just add another layer of complexity.
- jampekka 3y ago
  I mean't that you can't change the bank and keep your old account number. IBAN is just the "Finnish" number with FI prefixed and check digits appended. Though probably the old numbers too have per-bank allocated prefixes. BIC identifies the bank. As far as I and a quick web search know, you can't make any of these refer to an account in another bank. Is IP over MAC or DNS over IP just another layer of complexity?
  - abdullahkhalids 3y ago
    The point is that in your proposed system in which the customer keeps their local bank account number when moving banks, there will still be places where the customer will have to change their number - i.e. everywhere where their IBAN is stored. The IBAN cannot remain the same, because international institutions need to know which institutions they are dealing with. Not all institutions are legally allowed to or want to transact with all institutions. So the added layer of complexity is that customers will have to change their number in some places but not in others. And banks will have to have a system of ensuring they match the right IBAN with the right local account number. Whenever this fails, there will be problems such as delays or money being deposited in wrong accounts etc. This is unlike DNS over IP, which is universally/internationally agreed protocol which has 100% coverage. But even in that system, whenever you change your DNS settings, it takes a while to propagate, and in this time there are all sorts of weird errors. Cat picture websites can tolerate those sorts of errors. Financials institutions should not.
namdnay 3y ago
> When you have literally a license to create money out of thin air This is a common but slightly misleading interpretation of fractional reserve banking. If I lend you 100 bucks and you lend those 100 bucks to someone else, you’ve “created 100 bucks” in a monetary sense. But it’s not coming from thin air, from an accounting perspective it’s just a debt moving from one person to another
- kaibee 3y ago
  Yes, but when I deposit $100 with @Bank (ie, effectively lending $100 to the bank), they aren't loaning out $10 to a couple people, they're lending out $100 to a couple people, because they did the math and figured that they can get most of those people to pay them back before I ask them for my $100 back. This is all well and good, but they really are creating money out of thin air when they're loaning out more money than they actually have on hand.
  - cipheredStones 3y ago
    This makes no sense. If the bank lends $100 each to two people, it has to be prepared for them to take that money and spend it more or less immediately - on a house, or payroll, or whatever. When you put your $100 into the ATM, and two people get $100 bills from the ATM, where does the second bill come from?
    - desas 3y ago
      Only something like 10% of the world's money are physical bills and coins. The rest is electronic, just numbers in reputable databases. The bank can rely on this fact. It only needs enough notes to support a likely amount of physical cash withdrawals each day.
      - namdnay 3y ago
        > The rest is electronic, just numbers in reputable databases yes, but they can't fiddle those numbers. if you deposit 100$, they can lend up to 100$. no more
xcrjm 3y ago
> A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. This comparison doesn't make a ton of sense. Of course you can transfer your phone number - every phone number is mandated to be unique across all carriers. Bank account numbers are entirely internal to each bank and made up based on various arbitrary factors. What if the bank you want to move to already has an account with the same number as your account at your existing bank? How would that work?
- jampekka 3y ago
  May depend on the country, but at least in Finland the account numbers have been unique across banks for ages. The first part refers to the bank (actually a branch at least back in the day) and the last part to the account within the bank. There was and is no need to specify the bank separately. The mobile phone numbers had the same system. Three first numbers signified the operator, but the whole number it can now be transfered to another operator. This is not hard stuff. The numbers aren't magic, they're just identifiers. We're not bound to mechanical routers or card sorting machines anymore.
leokennis 3y ago
In The Netherlands there is an interbank "bank transfer" service (https://www.overstapservice.nl/ https://www.overstapservice.nl/, Dutch) where if you move to another bank, your old one wil automatically forward transfers and debits still arriving at your old account to the new one. Also the new bank can notify companies about your new account, and these companies will change your account number in their systems. It's good that it's there and it is used widely, but it hasn't fundamentally made banks suck less. I think the bottom line is that current accounts for individuals are mostly a "loss leader" product for banks. So, keeping costs down (e.g. the tiered support system) is very important. The actual money is made on other products (loans, mortgages) and especially on corporate clients.
- jampekka 3y ago
  Former chairman and a major owner of Finland's largest private bank, and essentially a real life Gordon Gekko, literally said that ordinary customers bring only the sand from their soles to banks. And that's probably getting truer by the day when they don't need even fractional reserves to just create money.

mrkeen 3y ago

> When you have literally a license to create money out of thin air Well, you can loan out some amount of money that you don't have, hopefully get it returned to you with some interest.

jampekka 3y ago
If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. And for many loans you automatically get it from the gov if the debtor can't pay.
- vkou 3y ago
  > If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. No, the gov/central bank will give it to the people you borrowed money from as a bailout. Your equity will be zeroed out, your executives will all be fired, and your customer accounts will be fed to another bank.
  - jampekka 3y ago
    Citibank was bailed out, the stock rose over 50% overnight and the CEO got paid hundreds of millions.
    - alexb_ 3y ago
      You realize bailouts are loans, right? They aren't just free money.
      - jampekka 3y ago
        There were many forms of bailout for Citibank (and others). Some were (extremely favorably termed) loans, some government backing of their bad assets and some were buying stock that the market didn't want to touch. May or may not be technically free money, but for sure Citibank doesn't hand out loans to bankrupt customers on such terms. The gov could have e.g. let Citibank go bankrupt and just take it for free. Like banks do to their customers.
    - vkou 3y ago
      Citibank shareholders got diluted, and Citibank paid back for that bailout, with the taxpayers profiting ~12 billion in total. If the money couldn't have been paid back, the shareholders wouldn't have been diluted. They would have been wiped out.
      - jampekka 3y ago
        If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And gov would have gotten it for essentially free if wanted. It was not like they saw that here's a great investment opportunity to make profit for taxpayers.
        vkou 3y ago
        > If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And also the entire economy would have collapsed, and we'd all be trading ammunition for bottlecaps, instead of merely living through a nasty recession. Which is why they backstopped it. Yes, it would have been cheaper to let Citi fail and nationalize it, but it wouldn't have been cheaper to then have to deal with all the contagion and all the other businesses that would have exploded because of it.
skybrian 3y ago
That's not how it works. When a bank makes a loan, the customer will use it to buy something (say, a house), and probably the money will be put in a different bank. So the money definitely needs to be there, to pay the other bank. There's a deposit in the other bank, along with the payment. Both of which are "money." So, a bank can create money from thin air by making a loan, but typically not for themselves. It happens in a different bank.
immibis 3y ago
I want to make it a point that EVERYONE CAN DO THIS. Everyone can make a loan, everyone can count their un-returned loans as money if they want to, and everyone can accept transfers of other people's un-returned loans as payment if they want to. The only special power banks have is that most people accept them doing this. If your whole friend circle accepts un-returned loans from each other as payment, then you're all doing fractional reserve.
- jampekka 3y ago
  The special power is the banking license they get from the government. Try to do it without and you'll find yourself in prison quite soon. Especially if you do it in official currency.
  - immibis 3y ago
    No, I don't need a banking license to loan my friend $10.
    - desas 3y ago
      The difference is that licensed and regulated banks can scale it. Retail customers can trust them due to their long-standing reputation, their banking licence and linked to that, the FDIC insurance.
      - immibis 3y ago
        Yes, but this only grants the ability to scale it, not the ability to do it. We don't say that only licensed restaurants can cook food.

abdullahkhalids 3y ago

> A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. If you mean the bank account numbers used within Finland, sure, they can be changed. In the new system, there will be country-wide database which will now indicate which bank each account number is associated with. But your account also has an IBAN number, which has country and bank/institution identifiers. Those will have to change if a customer moves banks, absent an international finance law change. And my understanding is that its quite common to use IBAN everywhere. So you won't really solve the problem. Just add another layer of complexity.

jampekka 3y ago
I mean't that you can't change the bank and keep your old account number. IBAN is just the "Finnish" number with FI prefixed and check digits appended. Though probably the old numbers too have per-bank allocated prefixes. BIC identifies the bank. As far as I and a quick web search know, you can't make any of these refer to an account in another bank. Is IP over MAC or DNS over IP just another layer of complexity?
- abdullahkhalids 3y ago
  The point is that in your proposed system in which the customer keeps their local bank account number when moving banks, there will still be places where the customer will have to change their number - i.e. everywhere where their IBAN is stored. The IBAN cannot remain the same, because international institutions need to know which institutions they are dealing with. Not all institutions are legally allowed to or want to transact with all institutions. So the added layer of complexity is that customers will have to change their number in some places but not in others. And banks will have to have a system of ensuring they match the right IBAN with the right local account number. Whenever this fails, there will be problems such as delays or money being deposited in wrong accounts etc. This is unlike DNS over IP, which is universally/internationally agreed protocol which has 100% coverage. But even in that system, whenever you change your DNS settings, it takes a while to propagate, and in this time there are all sorts of weird errors. Cat picture websites can tolerate those sorts of errors. Financials institutions should not.

namdnay 3y ago

> When you have literally a license to create money out of thin air This is a common but slightly misleading interpretation of fractional reserve banking. If I lend you 100 bucks and you lend those 100 bucks to someone else, you’ve “created 100 bucks” in a monetary sense. But it’s not coming from thin air, from an accounting perspective it’s just a debt moving from one person to another

kaibee 3y ago
Yes, but when I deposit $100 with @Bank (ie, effectively lending $100 to the bank), they aren't loaning out $10 to a couple people, they're lending out $100 to a couple people, because they did the math and figured that they can get most of those people to pay them back before I ask them for my $100 back. This is all well and good, but they really are creating money out of thin air when they're loaning out more money than they actually have on hand.
- cipheredStones 3y ago
  This makes no sense. If the bank lends $100 each to two people, it has to be prepared for them to take that money and spend it more or less immediately - on a house, or payroll, or whatever. When you put your $100 into the ATM, and two people get $100 bills from the ATM, where does the second bill come from?
  - desas 3y ago
    Only something like 10% of the world's money are physical bills and coins. The rest is electronic, just numbers in reputable databases. The bank can rely on this fact. It only needs enough notes to support a likely amount of physical cash withdrawals each day.
    - namdnay 3y ago
      > The rest is electronic, just numbers in reputable databases yes, but they can't fiddle those numbers. if you deposit 100$, they can lend up to 100$. no more

xcrjm 3y ago

> A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. This comparison doesn't make a ton of sense. Of course you can transfer your phone number - every phone number is mandated to be unique across all carriers. Bank account numbers are entirely internal to each bank and made up based on various arbitrary factors. What if the bank you want to move to already has an account with the same number as your account at your existing bank? How would that work?

jampekka 3y ago
May depend on the country, but at least in Finland the account numbers have been unique across banks for ages. The first part refers to the bank (actually a branch at least back in the day) and the last part to the account within the bank. There was and is no need to specify the bank separately. The mobile phone numbers had the same system. Three first numbers signified the operator, but the whole number it can now be transfered to another operator. This is not hard stuff. The numbers aren't magic, they're just identifiers. We're not bound to mechanical routers or card sorting machines anymore.

leokennis 3y ago

In The Netherlands there is an interbank "bank transfer" service (https://www.overstapservice.nl/ https://www.overstapservice.nl/, Dutch) where if you move to another bank, your old one wil automatically forward transfers and debits still arriving at your old account to the new one. Also the new bank can notify companies about your new account, and these companies will change your account number in their systems. It's good that it's there and it is used widely, but it hasn't fundamentally made banks suck less. I think the bottom line is that current accounts for individuals are mostly a "loss leader" product for banks. So, keeping costs down (e.g. the tiered support system) is very important. The actual money is made on other products (loans, mortgages) and especially on corporate clients.

jampekka 3y ago
Former chairman and a major owner of Finland's largest private bank, and essentially a real life Gordon Gekko, literally said that ordinary customers bring only the sand from their soles to banks. And that's probably getting truer by the day when they don't need even fractional reserves to just create money.