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No one is disrupting banks – at least not the big ones

232 points by kazanins 2y ago

pg5 2y ago
I personally want my bank to be as boring as possible.
hobs 2y ago
This implies someone can take deposits and issue loans in a "better" way, when the main feature of this type of business to customers is showing up with extremely low risk of losing deposits, not innovation. Credit cards are not taking deposits and issuing loans in a traditional sense, they are fee generation machines that are externalized which would not generally be "traditional banking".
- doomroot 2y ago
  There are other banking models that are needed. Look into Custodia Bank’s model (SPDI). Full reserve system meant to backstop high risk (but legal) businesses. They went through a multi-year lawsuit around the start of 2020 with the fed who didn’t want them to exist, ultimately lost.
  - intalentive 2y ago
    Custodia Bank marks the second enterprise in this thread that attempted to gain direct access to the Fed, bypassing intermediate banks, but was rebuffed. The other was Reserve Trust. Is it possible to obtain and make use of a Fed “Master account”?
Red_Comet_88 2y ago
No one is disrupting banks because the mega banks have the sole power of creating credit out of thin air, and no upstart fintech company has this power. To gain this power requires the creation of a bank, which as you can imagine, is probably the most gate-kept activity on earth. Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat to the banking cabal which runs the American Empire.
- scarface_74 2y ago
  Yes and crypto doesn’t have any inherent risk like a sitting President creating a crypto currency where he has 80% of the currency, will probably make a half billion dollars and then do a rug pull. https://fortune.com/2025/01/22/donald-trump-net-worth-memecoin-red-flag-investors-rug-pull/ https://fortune.com/2025/01/22/donald-trump-net-worth-memeco...
  - Waterluvian 2y ago
    That’s the thing I can’t ever come to understand about crypto. It’s purely about perception of value. At least with some precious metal, it has a floor value as a function of its practical uses and abundance. Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.
    - mlinhares 2y ago
      In this specific case its also about buying access, so I doubt he'll rug pull, he can just direct the access requests to buy something.
    - sali0 2y ago
      The legal landscape forced the industry to be purely financial. Hopefully this changes soon.
    - doomroot 2y ago
      There are pros and cons of cryptocurrencies as money, just like gold, which cause people to speculate on the price.
      - myvoiceismypass 2y ago
        What are the pros of the trump coin or the melania coin?
        2y ago
neilwilson 2y ago
First thing you have to do is understand how banks actually work at root[0] [0]: https://new-wayland.com/blog/framework-of-a-basic-bank/ https://new-wayland.com/blog/framework-of-a-basic-bank/
picafrost 2y ago
In many cases the start-ups that disrupted entrenched big players did so by skirting the existing law and regulations the big players have to abide by and gaining market share before regulators could catch up to them. Maybe I simply lack vision but I don't think this behavior maps well into the fundamental day-to-day livelihoods of every day people. Certainly I am not willing to risk my finances for marginally increased convenience or marginally lower fees.
- m101 2y ago
  This. Regulation has been set so high on banks that it makes it extremely difficult for new players to compete. The reasons given for regulation are: - protection from failure because of inability to not bail them out (and it has done a good job of this by and large, with some obvious risk oversights - e.g. silicon valley bank) - money laundering regulations The real corruption/monopoly in financial services that needs addressing are the amex/visa/mastercard transaction fees. The only way to fix this, in my opinion, is to have the consumer pay the fees.
  - bryanlarsen 2y ago
    The big problem with amex/visa/mastercard is that it's a three sided market. So make it a 2 sided market, unify the processor into one of the sides. In other words, either a merchant co-operative or a consumer co-operative. In this case, a merchant co-operative seems a natural fit. The merchants jointly own the co-op, and get a refund of their fees proportional to the profit of the co-op. And you get the consumers on board the standard way: by bribing them. So something like a 2% rebate. So the merchant fees stay at a similar rate, but the merchants win in other ways because they own the processor. Nobody's going to become a billionaire starting a co-op, but an executive in a successful financial co-op would pull in a multi-seven figure salary, which should be sufficient motivation to interest the startup folks. And Y-Combinator would have to loan money to such a startup, they couldn't buy in. But it's in their interest to do so, given how much of the Y-Combinator portfolio is dependent on credit cards.
    - 2y ago
scarface_74 2y ago
What isn’t the bank doing for me that is in need of “disruption”? High Yield Savings Accounts? Amex offers a HYSA that is 3.8% vs LendingClubs 4.5%. How many people have enough money in savings to make the difference worthwhile and make them willing to trust a non traditional bank? I have a year’s worth of expenses in mine (in addition to retirement savings) and I wouldn’t even bother. My bank is there to accept my money and let me pay stuff with it.
- hansvm 2y ago
  In the $5k-$10k savings range, you can also average 4.5% just by switching banks every year and taking advantage of sign-up bonuses. With a spouse and the referral bonus, the break-even cap goes up to $15k-$30k. Everything is FDIC-insured the whole time. I'll wager that under $5k in savings, the $35/yr difference between those two account types might probably doesn't matter in the slightest. That opinion is colored by a couple of these neobanks "losing" thousands of my dollars for months at a time during transfers, the prospect of which seems much more dangerous to somebody with limited savings and likely only one bank. Above $30k, you can easily and cheaply get a medium-touch experience with a company like Merrill Lynch (who themselves offer 4.2% even in zero-risk (outside of bankruptcy) accounts) and should maybe start looking at moving some of that out of a traditional savings account anyway.
- dylan604 2y ago
  > What isn’t the bank doing for me that is in need of “disruption”? Why is there still a hold for check deposits? Why do we still have banker's hours and business days for transactions? There are plenty of ways banks could be improved
  - scarface_74 2y ago
    What type of transactions do you need to make outside of business hours that you can’t do electronically? And who actually deals with physical checks? Even the various contractors I used when preparing my home for sell took some form of electronic payment
adamtaylor_13 2y ago
I don’t think disrupting banks is even possible. The time, money, and energy required is simply not realistic. There’s so many disrupt-able industries out there and I’m not even sure banking is the most beneficial one to tackle. It’s a realistic Star Wars story where the Empire always wins because… well it’s the fucking empire. They didn’t get there by losing.
- rco8786 2y ago
  Right. Banks are boring. The whole industry is based on very simple math. Nothing much to disrupt.
- absolutelastone 2y ago
  They've "lost" a few times by now. Government has propped them up. The other side of the innovator's dilemma is the fact that the market leaders who don't stick to their current winning formula, instead risking big on a new technology, will sooner or later get it wrong and fail on their own. That's why it's a dilemma.
  - danielmarkbruce 2y ago
    JP Morgan Chase and Wells Fargo would have been fine in '08 had they been left alone.
  - qaq 2y ago
    Not all of them were on the loosing side of that situation JPM had sold off most of risky mortgages in prior years taking a sizable haircut while other banks were supposedly raking it in. There was a ton of pressure on Jamie Dimon not to do it because JPM numbers looked bad compared to peers in those years.
  - adamtaylor_13 2y ago
    I guess that’s my argument as to why it’s not losing. If the government bailed you out, you didn’t lose. They have yet to really lose. Thus no incentive to disrupt such a “steady” industry.
- 2y ago
pqdbr 2y ago
In Brazil traditional banks are totally being disrupted. See Nubank.
- rapfaria 2y ago
  Not sure abou that: Credit portfolio in 2023: Itaú - $1176 billion Banco do Brasil - $1109 billion Bradesco - $877 billion Nubank - $91 billion Nubank also had the highest default rate between them (some 6%). It was great when it was created (fully digital, no credit score check for a credit card), but it is now dealing with the same problems as the big banks
  - hcarvalhoalves 2y ago
    To be fair, you have to compare credit portfolios by product and customer size. That is how the Central Bank reports and tracks these numbers. Nubank offers consumer credit (credit card, personal loans), but you're comparing portfolios that include mortgages, large companies, industry, agriculture, etc. Similarly, the default rate of the entire portfolio varies according to the product mix, so you can't compare that way.
    - rapfaria 2y ago
      Exactly, which is why Nubank is miles away from "disrupting" the traditional banks, and not only at what Nubank does.
d_burfoot 2y ago
It's crazy to me that we're still using the same approach to banking, given that the banking system regularly blows up and drags the rest of the economy into a recession.
- myvoiceismypass 2y ago
  Regularly?
- gabruoy 2y ago
  It’s crazy to me that we’re still living on Earth, given the climate risks and the natural disasters destroying people’s lives.
a1o 2y ago
Aren't the big banks buying the fintech companies that have more probability to create disruption?
nottorp 2y ago
Hm so when a fintech "disrupts" banks it ends up walking and quacking ... like a bank? Is it even a fintech any more?
jbs789 2y ago
The large banks have achieved scale in terms of accepting deposits and lending at lowish margins. To accept deposits they need regulatory approval and oversight. For higher margins lending products they are absolutely being “disrupted” by private credit.
jiehong 2y ago
China has seen its banks disrupted quite a bit more than over here with things like WeChat or AliPay. All daily transactions are done with them, and even small loans. UPI in India at least made payment system much better, by forcing banks in the end. So quite different. In Europe, SEPA is doing something similar to India’s UPI, albeit much slower. Again by forcing banks on a standard, unlike in China.
wslh 2y ago
I believe a genuine way to address this problem is through the creation of financial sandboxes [1]: controlled environments where regulations are relaxed to promote innovation at a certain scale. However, current regulations favor banks, making it difficult for new entrants to disrupt the status quo without becoming a bank themselves. This complexity is further compounded by the intersection of regulations and geopolitics, which makes change particularly challenging. Additionally, while lifting regulations can encourage innovation, it must be approached cautiously to avoid potential financial disasters. [1] https://www.fca.org.uk/firms/innovation/regulatory-sandbox https://www.fca.org.uk/firms/innovation/regulatory-sandbox
surfingdino 2y ago
Banks sell one thing--debt. Many have tried to "disrupt" that industry, but all attempts boil down to: getting a cut of payment fees or getting paid to resell debt. All "innovation" in this sector is done by crossing fingers and hoping the regulators don't notice you trying to use language to pretend you are a bank when you are not.
PaywallBuster 2y ago
Revolut had credit cards for a few years but only in Lithuania https://www.revolut.com/en-LT/credit-cards/ https://www.revolut.com/en-LT/credit-cards/ I guess they'd need to apply for banking license to offer CC in every EU state and that would be an order of magnitude more expensive than Lithuania's banking license
- fph 2y ago
  I think that the true reason is another one: credit cards come with credit, which people can choose not to pay back. It is complicated to recover money from a person abroad, possibly having to sue them in every EU state.
- dotcoma 2y ago
  Nope. They still have only a Lithuanian license, plus maybe one for the UK. All it takes to operate in the EU is a license from one member state.
danielmarkbruce 2y ago
No one is providing a value proposition that would make me move away from [my large bank] when it comes to a basic checking account. Banks were disrupted in the mortgage market - a very large chunk of residential mortgages go through brokers. Banks are being disrupted in corporate credit. "Private Credit" is exploding.
zigglezaggle 2y ago
This is like saying "nobody is disrupting AWS" and then pointing out that competitors don't have a version of AWS Glue. Plenty of startups have disrupted banks. AMEX purchased one to jumpstart its small business checking accounts just a few years ago. You're just not looking hard enough. If you move the goal posts to core checking/savings accounts by consumers, then yeah there's not much of an upside there. Consumers go decades to lifetimes on average without changing banks. Capital One was the last one to do anything "disruptive" here re: providing accounts and credit to the lower class, and I'm not sure there's enough juice to squeeze left for a smaller, more focused product to make any money given the stickiness of checking accounts generally.
xyst 2y ago
Disruption will take awhile. The current players have rigged the game in their favor. They have government officials, lobbyists, and 40+ years of shitty neoliberal economic theory behind them. The subprime mortgage crisis and subsequent bailout of banks by main street is an example. It will take more than a credit card or fancy app to disrupt this corrupt machine.
poisonborz 2y ago
What do we understand under "banks"? If keeping with the simply notion of "stores funds and provides debit cards", the most common usage in EU, especially east, banks were deeply disrupted. Revolut and Wise took a large segment of the youth, who now also got hooked on more services like savings accounts and stocks. They have startup-like culture while being registered as standard banks. Obviously their services, quality and support are lightyears ahead of any traditional financial institution.
- liendolucas 2y ago
  I'm a happy Revolut customer. Their app is great and it has features that banks here in Italy don't (or if they do they always charge it, that's why I'm trying to slowly break away from them). Banking in Italy is the worst of the worst. They are extremely well trained to make you waste time. Avoid at all costs Banco Posta. People are not just inefficent, they have absolutely no idea about anything you ask them and they love to make you wait eternally. I have recently asked for more information about a loan at another bank and surprisingly they refuse to send me a formal document to read all the terms and conditions. They literally sent me a plain text email with some numbers, when I required them formal details (the famous "small letter") about it they simply didn't reply.
- epolanski 2y ago
  I'm a revolut user, but I fail to understand how they plan to make any money off me with all they throw.
  - driuha 2y ago
    They are profitable for a few years now, afaik visa/master pays you a share of their profit each time customer makes a transaction(i.e. share of merchant fee). There are also credits, loans, exchange fees, subscription fees i.e. a lot products that make them money.
Havoc 2y ago
There was one playing the move fast and break things playbook. SVB...
devops000 2y ago
Bitcoin
- epolanski 2y ago
  Ah yeah, nothing beats Bitcoin when it comes to banking /s
black_13 2y ago
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ranger207 2y ago
The products being pointed out in this article as an attempt to disrupt banks seem to be basically the same product for a different price. Like, a high-yield savings account is just a savings account with a better price, right? How do you disrupt an industry by selling the same products? The advantage of startups is that they're more nimble, can pivot to fit the market better, and can adapt to customer requests faster. None of that applies to "selling the same product at a lower price", especially for savings accounts where stability ("the company not suddenly disappearing") is an important part of the pitch anyway
- ikr678 2y ago
  This is a very US centric article, a lot of the disruptions listed are incumbent 'big bank' products in other jurisdictions. I feel the lack of adaptability is likely a result of US market conditions/regulations rather than lack of innovation.
  - Joel_Mckay 2y ago
    The US crash of 2008 exposed the nature of their banking system leverage ratios, and worker 401k vulnerability to dubious ETFs. The incoming market volatility will likely have winners and losers... but historically it was mostly losers (>6.4 million families and counting.) =3
    - throwaway2037 2y ago
      > worker 401k vulnerability to dubious ETFs Can you explain this part in my detail? Do you mean money market funds that "broke the buck"?
      - lxm 2y ago
        ETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a single stock - employer's.
rpcope1 2y ago
Well, there was an attempt at it. There was a startup run by one of the best startup guys I've ever seen, Dave Wright, called Reserve Trust, which managed to actually get a fed account. I think some people in power caught wind of it, and it ended up with congressional testimonies and a lot of other problems before it basically got shut down.
- ausbah 2y ago
  seems like there was a conflict of interest where a fed high up helped them get a fed master account while also serving in the company’s board https://www.bankingdive.com/news/kc-fed-has-revoked-reserve-trusts-master-account-toomey-says/625217/ https://www.bankingdive.com/news/kc-fed-has-revoked-reserve-...
pelorat 2y ago
Because it's only possible in the USA. In the rest of the world everything is a bank and regulated as such.
buyucu 2y ago
Banking is a heavily regulated sector. Regulation effectively blocks any kind of disruption and perpetuates the established firms.
create-username 2y ago
I want AI to rename my million of duplicate files
epolanski 2y ago
As an European I love Revolut, it has some nice features. On the other hand when it comes to serious money spending (credit, mortgage) I want my physical local bank.
la64710 2y ago
Disrupt cancer if you can. Don’t disrupt functioning system that is not broken.
- Quindecillion 2y ago
  I really hope this is satire.
1a527dd5 2y ago
They might not be disrupting them, but they are definitely causing competition in the market place again. My main bank account is with Halifax, everyday spend is with Starling. Then Monzo for anything risky. Before Starling/Monzo the Halifax app was _crap_. Barely got any updates and was very basic. Now? The Halifax app is on par with the newer banks, and sometimes even release new features before (e.g. scan cheque in to deposit).
- kylecazar 2y ago
  Interesting... We've had scanned check deposits at Chase (US) for at least 15 years, I think.
  - stevesimmons 2y ago
    Bear in mind that's a measure of how backwards US banking is, not how advanced. In the UK, I can't remember the last time I wrote or received a cheque. Maybe twice in the 17 years I've been living here, and certainly not in the last decade. So with UK cheque usage being a tiny fraction of the US rate, there's simply no demand for it in banking apps.
  - 1oooqooq 2y ago
    most countries abandoned checks at least 15 years...
    - 1oooqooq 2y ago
      ppl dowvoting facts now
  - Symbiote 2y ago
    Cheque use in the UK is now around two per year per person. (This includes business-to-business cheques.) The over-65 age group is most likely to use them, and least likely to use an app, so you can see why it wasn't a big priority for most banks. It's been at least 15 years since the banks stopped giving account holders chequebooks by default. If you want one you have to ask.
anonfordays 2y ago
The sad truth is most people don't have enough money in savings for 4% vs 0.5% to make a material difference. The B2B stuff is tougher to "disrupt", due to contractual agreements, regulatory overhead, etc. Also not as sexy.
phendrenad2 2y ago
Banks are the most immune to disruption, because they function so closely with government, and they are nothing without the blessing of government. And the hurdles to create your own bank are very high. Check out this great Netflix documentary "Bank of Dave": A moderately successful businessman decided to start his own bank, just to see if it could be done (and to lower fees for his local community). The results are... pretty much what you'd expect. "You can't start a bank... nobody starts a BANK!" (They just kinda... have always existed!)
- dalyons 2y ago
  UK specific maybe? ~10 banks get started every year in the US, there are ~5000 US banks.
- phatfish 2y ago
  It depends of the services the bank offers, because there are plenty of smaller regulated banks with deposit protection that offer savings accounts in the UK. I assume running a current account has a lot more regulatory requirements than savings?
TuringNYC 2y ago
I think Evolve/Synapse and the fog surrounding the responsible parties, along with complete radio silence on persons responsible (almost as if newsmedia has been given a gag order) has completely kneecapped bank competition for a half-decade at least. If it takes experts to explain how Evolve/Synapse happened, why it couldnt happen to another "Fintech bank", and how to tell if you are at risk...then there is no point even venturing past Chase/BoA/Citi/your local bank. https://www.reuters.com/business/finance/fed-penalizes-evolve-bank-failing-manage-fintech-partnership-risk-2024-06-14/ https://www.reuters.com/business/finance/fed-penalizes-evolv...
deleted 2y ago
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larrydag 2y ago
I believe disruption can come in the form of underwriting and servicing loans. The old model of large call centers that do buying and servicing loans has been around forever. It scales fairly well but it is costly and very inefficient. If those processes are lean then savings could be passed to pricing. Basically creating a credit union model to a national scale.
bern4444 2y ago
The most interesting tech company in the banking to me is Column[0]. No affiliation but it caught my eye when the launched. Admittedly it still feels abstract to me, but the value proposition of having every capability supported by an API (like AWS's methodology of having all services be API first) on top of an actually chartered bank seems perfectly fitted for the creation of banking services that are significantly easier for consumers to interact with and understand. I'm curious to see what people build on top of it. [0]https://column.com https://column.com
- tiffanyh 2y ago
  No blog post in nearly 3-years https://column.com/blog https://column.com/blog No product updates in over 7-months https://column.com/changelog/ https://column.com/changelog/ That doesn’t instill much confidence.
- deleted 2y ago
  [deleted]
Chengdavid 2y ago
[dead]
cudgy 2y ago
Maybe because the Fintech companies are being built and largely financed by the banks?
Centigonal 2y ago
Capital One did a great job shaking up consumer credit in the late 90s, and then branch banking in the mid 2000s with their weird combination cafe+branches. They're eighth in the US by domestic deposits today. Does the firm need to be headquartered in Silicon Valley for disruption to have occurred?
- onlypassingthru 2y ago
  It was ING Direct who built the unusual US cafe/bank operation and eventually sold it all to Capital One as part of the great financial crisis restructuring in 2011. https://www.ing.com/Newsroom/News/Press-releases/PROld/ING-to-sell-ING-Direct-USA-to-Capital-One.htm https://www.ing.com/Newsroom/News/Press-releases/PROld/ING-t...
  - Centigonal 2y ago
    Interesting! I didn't know that
anself 2y ago
Having worked in banking for many years (no longer), I can say with confidence, the big banks have a giant moat: regulation. They want to be heavily regulated so that new upstart competitors will not come in and spoil their cozy space. And it’s easy to justify because terrorism, money laundering, insider trading, etc etc. And many of these regulations are largely ineffective and easily worked around, whilst costing billions to the banks to comply with. Hence the moat. We won’t get banking disruption until there’s banking deregulation.
- thisislife2 2y ago
  > many of these regulations are largely ineffective ... Maybe in the US or some other parts of the world, but the Reserve Bank of India (RBI), the indian banking regulator, does a pretty decent job, as is evident from the public payment infrastructure they have fostered (see https://en.wikipedia.org/wiki/National_Payments_Corporation_of_India https://en.wikipedia.org/wiki/National_Payments_Corporation_... ) . They also create a competitive market by allowing small players to enter the market (e.g. https://byjus.com/free-ias-prep/payment-banks/ https://byjus.com/free-ias-prep/payment-banks/). Many of their regulations also do a decent job of protecting consumer rights (e.g. https://timesofindia.indiatimes.com/business/india-business/rbi-updates-credit-and-debit-card-rules-heres-what-it-means-for-cardholders/articleshow/108329606.cms https://timesofindia.indiatimes.com/business/india-business/... ).
dlenski 2y ago
From my vantage point, with accounts in both Canada and the US, the US market seems hard to disrupt because its financial sector is already highly competitive. Meanwhile Canada has long been completely dominated by 5 or 6 massive big banks that charge high fees for basic chequing accounts, and where credit card perks are far stingier than in the US… The financially industry is being _pretty massively disrupted_ by Wealthsimple. - They have a cash account (~checking/savings hybrid) that pays much better interest than all the big banks - They offer zero-commission trades on Canadian and US stocks and ETFs - They appear to be preparing a wide rollout of a credit card which offers 2% cash-back on everything (there are few Canadian credit cards that offer more than 1% cashback as a "base rate")
Paddywack 2y ago
In developing countries (Africa, South Asia, South America) many of the banks were disrupted by mobile payments providers. Granted, it was more that they missed servicing the 80% of their markets that were unserviced but still needed to do things we all take for granted. Some of these are now the default payments systems.
spiritplumber 2y ago
https://en.wikipedia.org/wiki/M-Pesa https://en.wikipedia.org/wiki/M-Pesa Stuff like this did happen.
0dayz 2y ago
Isn't this mostly due to fintech being the middleman?
Quindecillion 2y ago
Without being an expert on the topic I'm going hazard a guess that it's due to regulatory moats that keep challengers out of the arena, and banks endlessly lobby to maintain that regulatory capture.
- spacebanana7 2y ago
  In the UK there's no significant regulatory advantage to big banks outside of the mortgage market, yet the same dynamics occur. The biggest issue for new digital banks is customer acquisition cost. Most consumers won't change bank accounts unless you spend hundreds of pounds on adverts and incentives.
fergie 2y ago
There was a massive disruption to banking in 2008. Governments bailed them out.
bux93 2y ago
If you only count startups that offer payments - and little else - as fintechs, then yeah, they're not displacing banks. If you count private credit funds like Apollo Global Management, the story is very different: private credit is seriously encroaching on the balance sheets of banks. Not very tech, but very fin. In investments, ETFs and podshops are both fin and tech, and crushing it.
2d8a875f-39a2-4 2y ago
You can't really "take deposits and issue loans" without just becoming a bank yourself. People start new banks all the time. Or by "disrupting" does he just mean "end run around the laws and regulations"?
- n4r9 2y ago
  > People start new banks all the time Is that true in the US? In the UK there was recently a period of around 150 years during which not a single new banking licence was issued. There's a film called Bank of Dave which dramatises the attempts of Dave Fishwick - a businessman from the North of England - to set up a local community bank. It's distressing the lengths that the established banks went to to quash it. If I understand correctly, he still does not have a licence, although Metro bank did manage to get one in 2010. Wiki article about the film: https://en.wikipedia.org/wiki/Bank_of_Dave_(film) https://en.wikipedia.org/wiki/Bank_of_Dave_(film) Guardian article from the real-life inspiration for the main character: https://www.theguardian.com/tv-and-radio/tvandradioblog/2012/jul/12/why-i-opened-bank-of-dave https://www.theguardian.com/tv-and-radio/tvandradioblog/2012...
  - 2d8a875f-39a2-4 2y ago
    Don't know the UK banking landscape, but it doesn't look that unusual in recent times: https://www.bankofengland.co.uk/prudential-regulation/new-bank-start-up-unit/new-banks-authorised-since-2013 https://www.bankofengland.co.uk/prudential-regulation/new-ba...
  - piperswe 2y ago
    Banking licenses are surely not an easy feat in America, but they are at least regularly issued. Not issuing any licenses for 150 years sounds quite crazy to my American ears, though as I understand it America is quite the outlier with thousands of active banks and credit unions.
biohcacker84 2y ago
Uhmm... isn't that what crypto is basically? Per Mark Marc Andreessen the Biden admin tried to shut down crypto entirely But with the new administration we'll hopefully see growth and real competition to the old banks.
- aketchum 2y ago
  I’m not being a troll I’m seriously asking - how does crypto replace banks? Am I going to get a mortgage in BTC? If narrow banking, why give them my btc at all instead of holding myself? If not narrow banking then they are lending out my btc? Does that even work on blockchain? How do you do fractional reserve lending with a deflationary and one of one asset?
  - tcgv 2y ago
    > how does crypto replace banks? Crypto can replace some banking functions, such as payments, electronic transfers, and lending/borrowing. One could argue that crypto eliminates the need for traditional checking accounts since you have full control over your funds with private keys. However, this doesn’t account for the legal safeguards and protections that banks provide. > Am I going to get a mortgage in BTC? I don’t recall seeing mortgage services in crypto yet. However, there are borrowing platforms like AAVE, primarily used for leveraging crypto investments or speculation. These platforms are decentralized, with strict collateral requirements, typically limiting borrowing to 80% of your collateral. > If narrow banking, why give them my btc at all instead of holding myself? Not sure I fully understand your question, but typically, when you lend your crypto to a service, you’re seeking to earn a yield in exchange for the risk of lending your assets. > Does that even work on blockchain? Theoretically, yes. You could create a narrow bank using crypto, but you’d need a decentralized mechanism to verify the bank’s holdings. This could involve creating an oracle (ex: Chainlink) service to confirm asset reserves. > How do you do fractional reserve lending with a deflationary and one of one asset? Instead of using deflationary assets like BTC, fractional reserve lending could rely on stablecoins, which are better suited for such systems. That said, not all stablecoins are equally reliable.
slashdev 2y ago
I’ve seen plenty of attempts to disrupt the big banks that are quickly bought by the big banks if they develop traction. You see the same with big tech. To get real disruption we need founders and investors willing to play the long game.
egberts1 2y ago
Does the article blatantly ignore the basic principle of fractional reserve? A tiny deposit for a bank to hold means 7x more money to loan out, or something?
alistairSH 2y ago
I'd be thrilled if US banks figured out how to do "instant" money exchanges. Today, if I pay my credit card from an account with a different bank, the payment is reflected immediately in my Visa account, but takes 3-5 days to reflect in my main checking account. It's completely bonkers that a 100% electronic transaction takes days to fulfill.
- slumberlust 2y ago
  It took us 15 years to get tap to pay; I wouldn't holdout on any of these dinos innovating anytime soon.
- tencentshill 2y ago
  They want as much time as possible for that money to gain interest before it leaves their possession.
- BenjiWiebe 2y ago
  FedNow is slowly rolling out. We'll see what happens.
  - krunck 2y ago
    https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow FedNow's list of participating financial institutions on their web site is a downloadable Excel spreadsheet. Innovation indeed.
kasey_junk 2y ago
In the US most banks are no longer in the take deposits and give loans consumer business and haven’t been for a really long time. They do take deposits but the major source of consumer loans, mortgages, are outsourced to Fannie and Freddie. Some big banks have lending arms in the form of credit card issuance, but short term loans like that aren’t really what people tend to mean and they aren’t why we chartered banks as a society historically. Small business loans are both vanishingly rare and governmentally backed. The real disruption in banking going on right now is in large business lending. Commercial real estate, bonds, etc. Those are also no longer showing up on bank balance sheets. Capital regulations have made that too expensive, so the big banks are outsourcing that function to private non—bank companies. They just aren’t fintechs. So disruption is absolutely happening it’s just on the finance side, not the consumer marketing side of the house.
herodoturtle 2y ago
In South Africa the "big" (historically incumbent) banks were indeed disrupted by a "startup" bank relatively recently (in the last 20 years) - and this startup bank went on to in turn become one of the big banks. There is an excellent book called "Stalking Giants" [1] that covers this story nicely. It's a fun read (especially for South Africans) and was published recently. [1] https://www.amazon.co.za/Capitec-Stalking-Giants-T-J-Strydom/dp/0624093131 https://www.amazon.co.za/Capitec-Stalking-Giants-T-J-Strydom...
- NoPicklez 2y ago
  What did they do to "disrupt" the others?
loourr 2y ago
The big banks are larger then ever because of consolidation and inflation but I do think they're getting disrupted. I think services like Fidelity are meaningfully disrupting banks. I much rather have my money in a money market fund then a deposit checking account. Most loans are not being held on bank balance sheets any more either, but are getting sold to the market, so they're no longer as critical a part of the financing stack. And we're still early days on stable tokens and the defi infrastructure around them.
bArray 2y ago
What does "disruption" look like in the banking space? Banks want the perception of immovable, confidence, reliable, resilience, etc. It's what gives them the credibility to move big money. They don't want to "move fast and break things". Some may think about digital currencies. My warning is this: Be careful what you wish for. If we were to switch to a full digital currency, there are significant concerns that money could be allocated like a voucher, where it could be sent and only spent in a certain way. Suddenly the government decides those receiving some kind of social care allowance must spend different parts in different ways, i.e. a minimum of 50% MUST be spent on rent (an extremely enticing proposition in a recession). Perhaps there is a tax for not spending enough, or on the correct thing. Perhaps there is a micro-tax for moving it around. Maybe the micro-tax is dependant on your social credit score. The slippery slope goes on. The only thing currently stopping this is that you can withdraw your entire wage each month and spend it however you want, without such a tax. The government or banks cannot be certain of precisely how you spend your money when using cash. The very moment cash is gone, such implements can be created and there is nothing you can do about it. Maybe I am behind the times, but I don't like the sound of "disruption" in the banking industry. That last time I saw "disruption" was in 2008, and many people lost their homes.
- dr-detroit 2y ago
  [dead]
- jncfhnb 2y ago
  The other thing stopping it is the law and the fact that the US dollar is the global reserve currency and that would be a pretty great way to ruin that
  - JumpCrisscross 2y ago
    > that would be a pretty great way to ruin that Not really. It would be similar to tax rules—not really applicable to non-American depositors.
    - jncfhnb 2y ago
elric 2y ago
US banks are weird [1]. Archaic. Slow. Filthy rich. Incompetent. And yet they're nearly impossible to disrupt due to the benefit of size. Starting a new bank is expensive, unless you want to pretend at being a real bank and letting another bank handling all of the nitty-gritty details. In which case you've now become a reseller of that bank, and will likely be even worse. The only thing that can disrupt US banks is consumer outrage, of which there seems to be very little. [1] Source: I've consulted for some of the largest US, European and African banks.
- throwawaysleep 2y ago
  And trust. Fintech in the US has had a bunch of spectacular implosions and scams.
- GuB-42 2y ago
  What about Japanese banks? They have a reputation of being terrible, justified for the little experience I had with them. Lots of fees, bureaucratic, inconvenient opening times,... In Japan, cash is king, and loan sharking is very prevalent. Not a very good sign for the banking system. Note that it is now becoming increasingly possible to go cashless, though cash is still the most widely accepted option. And I think it is mostly thanks to foreign banks like Citibank.
- lotsofpulp 2y ago
  I don’t see what more US banks could do. I have been transferring money instantly to people online for over a decade for free. They have websites/apps, I can withdraw paper money around the world, what other utility could a “bank” provide me? They are utilities that keep a database associating account number and dollar number. I earn a few thousand dollars from them every year in the form of sign up bonuses, and I have never spent a dime in fees for having an account or transferring money. If the US government offered a more protected way of saving money not subject to know-your-customer-revoke-access-to-your-property-at-anytime-under-the-guise-of-potential-criminal-activity laws, then I would use them.
  - nothercastle 2y ago
kazinator 2y ago
Could it be that the sub-prime mortgage goofballs did exactly that two decades ago, and the shields are still up?
openrisk 2y ago
Both "disruption" and "banks" are very broad terms. The three common subtypes of banks (retail, commercial, investment) live in different planets as far as infrastructure, products, business models etc. So called "fintech disruption" typically concerns just retail banking and is basically just: use an "app" instead of physical branches to cater to the mobile-native generations. Nothing that any old bank cannot also implement as an alternative channel. Real disruptions do happen every once in a while and involve new financial products and business models (securitisation, derivatives etc.). But these are typically driven by legal rather than digital innovations.
- Spooky23 2y ago
  Exactly. Apps can be differentiators. Also, large banks fundamentally work. People with money want excitement and disruption away from their money.
AutistiCoder 2y ago
Bitcoin was supposed to disrupt banking. Look how that turned out.
Developerx 2y ago
Take a look at Russian bank apps and ecosystems. How fadt they transfer money etc. I hate every time I'm in America. So stupid and ugly bank apps. It's funny they still not have portable card readers so I don't give my card to the waitress
Finnucane 2y ago
"Nobody is going to put their money in Fred's Bank."---Steve Martin
jefurii 2y ago
This is probably a good thing. I don't want disruption in my bank.
insane_dreamer 2y ago
The collapse of Synapse is a pretty good example of why people don't -- and shouldn't -- put their money in the hands of a "fintech startup". And while not a "startup", the collapse of SVB certainly doesn't help due to its close association with SV and by extension FinTech startups. I'm happy to use FinTech startup products for certain transactions -- CashApp and Wise are great and I might keep a small balance with them. But it takes decades of being around before people are willing to entrust serious deposits with them.
- financetechbro 2y ago
  I think you’re reaching far to connect dots here. SVB collapse has nothing to do with innovations related to fintech. Their issue was more of the typical run on the bank situation than anything to do with innovation. So it was a failure of the traditional banking model, which any bank is susceptible to
4d4m 2y ago
Chime would disagree with this article title...
- Mathnerd314 2y ago
  Well, it's half true and half false. There are a lot of "new" fintech-ish banks competing on fees, transaction speed, overdrafts, etc. - bank-type things that matter to consumers. But it's true, there are no fintech banks competing to be "too big to fail" and getting that government bailout money. You have to look at crypto for equivalents of the Federal reserve, and people don't recognize those as banks. Although I would say, Coinbase is getting pretty close to a consumer-level "crypto bank".
Yhippa 2y ago
It's hard to break into banking because the big banks successfully used regulatory capture to lock out new participants.
messijohn 2y ago
[dead]
hakfoo 2y ago
Every time I have any interaction with my bank accounts online, they seem to see it as an opportunity to try to cram paperless statements down my throat. Evidently they learned from the software industry that there's no such thing as "no", just "ask again later". Whatever spin they put on it (ecology typically) it's about them wanting to save 70 cents a month on postage. The fact they keep trying to slip it under my radar shows a disrespect for me as a customer. More seriously, I could see it breaking the workflow of people who traditionally used the arrival of the statement as a trigger for other things (maybe they ONLY check their statement for fraudulent transactions once a month, or send off bills when they recieve it), and having it suddenly disappear breaks their workflow. Rather than "we've got a shinier app" or a new way to insert a chatbot between you and the services you want to perform, a disruptor bank should be going all-in in customer service. If you want statements, you'll get them. No dark patterns or "we changed this setting because you gave us the vaguest hint of consent." First contact on the customer service hotline is straight to a human being. Nothing that requires a custom app-- everything online should work on any device with a browser, and 2FA should be a standalone token provided at the bank's expense. (Aside from providing a simpler UI, it's one more hurdle in turning "stolen phone" into "account compromise") All the large national banks are interchangeable for a consumer-- they all pay dreck interest, and their primary selling feature is "you might find a no-fee ATM while travelling." But they'd be very suited to the customer-service pivot because they already have the in-person footprint that allows for handling the "I'm in over my head and want to go down and talk with an actual person to get sorted out" scenarios.

232 points by kazanins 2y ago

pg5 2y ago

I personally want my bank to be as boring as possible.

hobs 2y ago

This implies someone can take deposits and issue loans in a "better" way, when the main feature of this type of business to customers is showing up with extremely low risk of losing deposits, not innovation. Credit cards are not taking deposits and issuing loans in a traditional sense, they are fee generation machines that are externalized which would not generally be "traditional banking".

doomroot 2y ago
There are other banking models that are needed. Look into Custodia Bank’s model (SPDI). Full reserve system meant to backstop high risk (but legal) businesses. They went through a multi-year lawsuit around the start of 2020 with the fed who didn’t want them to exist, ultimately lost.
- intalentive 2y ago
  Custodia Bank marks the second enterprise in this thread that attempted to gain direct access to the Fed, bypassing intermediate banks, but was rebuffed. The other was Reserve Trust. Is it possible to obtain and make use of a Fed “Master account”?

Red_Comet_88 2y ago

No one is disrupting banks because the mega banks have the sole power of creating credit out of thin air, and no upstart fintech company has this power. To gain this power requires the creation of a bank, which as you can imagine, is probably the most gate-kept activity on earth. Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat to the banking cabal which runs the American Empire.

scarface_74 2y ago
Yes and crypto doesn’t have any inherent risk like a sitting President creating a crypto currency where he has 80% of the currency, will probably make a half billion dollars and then do a rug pull. https://fortune.com/2025/01/22/donald-trump-net-worth-memecoin-red-flag-investors-rug-pull/ https://fortune.com/2025/01/22/donald-trump-net-worth-memeco...
- Waterluvian 2y ago
  That’s the thing I can’t ever come to understand about crypto. It’s purely about perception of value. At least with some precious metal, it has a floor value as a function of its practical uses and abundance. Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.
  - mlinhares 2y ago
    In this specific case its also about buying access, so I doubt he'll rug pull, he can just direct the access requests to buy something.
  - sali0 2y ago
    The legal landscape forced the industry to be purely financial. Hopefully this changes soon.
  - doomroot 2y ago
    There are pros and cons of cryptocurrencies as money, just like gold, which cause people to speculate on the price.
    - myvoiceismypass 2y ago
      What are the pros of the trump coin or the melania coin?
      - 2y ago

neilwilson 2y ago

First thing you have to do is understand how banks actually work at root[0] [0]: https://new-wayland.com/blog/framework-of-a-basic-bank/ https://new-wayland.com/blog/framework-of-a-basic-bank/

picafrost 2y ago

In many cases the start-ups that disrupted entrenched big players did so by skirting the existing law and regulations the big players have to abide by and gaining market share before regulators could catch up to them. Maybe I simply lack vision but I don't think this behavior maps well into the fundamental day-to-day livelihoods of every day people. Certainly I am not willing to risk my finances for marginally increased convenience or marginally lower fees.

m101 2y ago
This. Regulation has been set so high on banks that it makes it extremely difficult for new players to compete. The reasons given for regulation are: - protection from failure because of inability to not bail them out (and it has done a good job of this by and large, with some obvious risk oversights - e.g. silicon valley bank) - money laundering regulations The real corruption/monopoly in financial services that needs addressing are the amex/visa/mastercard transaction fees. The only way to fix this, in my opinion, is to have the consumer pay the fees.
- bryanlarsen 2y ago
  The big problem with amex/visa/mastercard is that it's a three sided market. So make it a 2 sided market, unify the processor into one of the sides. In other words, either a merchant co-operative or a consumer co-operative. In this case, a merchant co-operative seems a natural fit. The merchants jointly own the co-op, and get a refund of their fees proportional to the profit of the co-op. And you get the consumers on board the standard way: by bribing them. So something like a 2% rebate. So the merchant fees stay at a similar rate, but the merchants win in other ways because they own the processor. Nobody's going to become a billionaire starting a co-op, but an executive in a successful financial co-op would pull in a multi-seven figure salary, which should be sufficient motivation to interest the startup folks. And Y-Combinator would have to loan money to such a startup, they couldn't buy in. But it's in their interest to do so, given how much of the Y-Combinator portfolio is dependent on credit cards.
  - 2y ago

scarface_74 2y ago

What isn’t the bank doing for me that is in need of “disruption”? High Yield Savings Accounts? Amex offers a HYSA that is 3.8% vs LendingClubs 4.5%. How many people have enough money in savings to make the difference worthwhile and make them willing to trust a non traditional bank? I have a year’s worth of expenses in mine (in addition to retirement savings) and I wouldn’t even bother. My bank is there to accept my money and let me pay stuff with it.

hansvm 2y ago
In the $5k-$10k savings range, you can also average 4.5% just by switching banks every year and taking advantage of sign-up bonuses. With a spouse and the referral bonus, the break-even cap goes up to $15k-$30k. Everything is FDIC-insured the whole time. I'll wager that under $5k in savings, the $35/yr difference between those two account types might probably doesn't matter in the slightest. That opinion is colored by a couple of these neobanks "losing" thousands of my dollars for months at a time during transfers, the prospect of which seems much more dangerous to somebody with limited savings and likely only one bank. Above $30k, you can easily and cheaply get a medium-touch experience with a company like Merrill Lynch (who themselves offer 4.2% even in zero-risk (outside of bankruptcy) accounts) and should maybe start looking at moving some of that out of a traditional savings account anyway.
dylan604 2y ago
> What isn’t the bank doing for me that is in need of “disruption”? Why is there still a hold for check deposits? Why do we still have banker's hours and business days for transactions? There are plenty of ways banks could be improved
- scarface_74 2y ago
  What type of transactions do you need to make outside of business hours that you can’t do electronically? And who actually deals with physical checks? Even the various contractors I used when preparing my home for sell took some form of electronic payment

adamtaylor_13 2y ago

I don’t think disrupting banks is even possible. The time, money, and energy required is simply not realistic. There’s so many disrupt-able industries out there and I’m not even sure banking is the most beneficial one to tackle. It’s a realistic Star Wars story where the Empire always wins because… well it’s the fucking empire. They didn’t get there by losing.

rco8786 2y ago
Right. Banks are boring. The whole industry is based on very simple math. Nothing much to disrupt.
absolutelastone 2y ago
They've "lost" a few times by now. Government has propped them up. The other side of the innovator's dilemma is the fact that the market leaders who don't stick to their current winning formula, instead risking big on a new technology, will sooner or later get it wrong and fail on their own. That's why it's a dilemma.
- danielmarkbruce 2y ago
  JP Morgan Chase and Wells Fargo would have been fine in '08 had they been left alone.
- qaq 2y ago
  Not all of them were on the loosing side of that situation JPM had sold off most of risky mortgages in prior years taking a sizable haircut while other banks were supposedly raking it in. There was a ton of pressure on Jamie Dimon not to do it because JPM numbers looked bad compared to peers in those years.
- adamtaylor_13 2y ago
  I guess that’s my argument as to why it’s not losing. If the government bailed you out, you didn’t lose. They have yet to really lose. Thus no incentive to disrupt such a “steady” industry.
2y ago

pqdbr 2y ago

In Brazil traditional banks are totally being disrupted. See Nubank.

rapfaria 2y ago
Not sure abou that: Credit portfolio in 2023: Itaú - $1176 billion Banco do Brasil - $1109 billion Bradesco - $877 billion Nubank - $91 billion Nubank also had the highest default rate between them (some 6%). It was great when it was created (fully digital, no credit score check for a credit card), but it is now dealing with the same problems as the big banks
- hcarvalhoalves 2y ago
  To be fair, you have to compare credit portfolios by product and customer size. That is how the Central Bank reports and tracks these numbers. Nubank offers consumer credit (credit card, personal loans), but you're comparing portfolios that include mortgages, large companies, industry, agriculture, etc. Similarly, the default rate of the entire portfolio varies according to the product mix, so you can't compare that way.
  - rapfaria 2y ago
    Exactly, which is why Nubank is miles away from "disrupting" the traditional banks, and not only at what Nubank does.

d_burfoot 2y ago

It's crazy to me that we're still using the same approach to banking, given that the banking system regularly blows up and drags the rest of the economy into a recession.

myvoiceismypass 2y ago
Regularly?
gabruoy 2y ago
It’s crazy to me that we’re still living on Earth, given the climate risks and the natural disasters destroying people’s lives.

a1o 2y ago

Aren't the big banks buying the fintech companies that have more probability to create disruption?

nottorp 2y ago

Hm so when a fintech "disrupts" banks it ends up walking and quacking ... like a bank? Is it even a fintech any more?

jbs789 2y ago

The large banks have achieved scale in terms of accepting deposits and lending at lowish margins. To accept deposits they need regulatory approval and oversight. For higher margins lending products they are absolutely being “disrupted” by private credit.

jiehong 2y ago

China has seen its banks disrupted quite a bit more than over here with things like WeChat or AliPay. All daily transactions are done with them, and even small loans. UPI in India at least made payment system much better, by forcing banks in the end. So quite different. In Europe, SEPA is doing something similar to India’s UPI, albeit much slower. Again by forcing banks on a standard, unlike in China.

wslh 2y ago

I believe a genuine way to address this problem is through the creation of financial sandboxes [1]: controlled environments where regulations are relaxed to promote innovation at a certain scale. However, current regulations favor banks, making it difficult for new entrants to disrupt the status quo without becoming a bank themselves. This complexity is further compounded by the intersection of regulations and geopolitics, which makes change particularly challenging. Additionally, while lifting regulations can encourage innovation, it must be approached cautiously to avoid potential financial disasters. [1] https://www.fca.org.uk/firms/innovation/regulatory-sandbox https://www.fca.org.uk/firms/innovation/regulatory-sandbox

surfingdino 2y ago

Banks sell one thing--debt. Many have tried to "disrupt" that industry, but all attempts boil down to: getting a cut of payment fees or getting paid to resell debt. All "innovation" in this sector is done by crossing fingers and hoping the regulators don't notice you trying to use language to pretend you are a bank when you are not.

PaywallBuster 2y ago

Revolut had credit cards for a few years but only in Lithuania https://www.revolut.com/en-LT/credit-cards/ https://www.revolut.com/en-LT/credit-cards/ I guess they'd need to apply for banking license to offer CC in every EU state and that would be an order of magnitude more expensive than Lithuania's banking license

fph 2y ago
I think that the true reason is another one: credit cards come with credit, which people can choose not to pay back. It is complicated to recover money from a person abroad, possibly having to sue them in every EU state.
dotcoma 2y ago
Nope. They still have only a Lithuanian license, plus maybe one for the UK. All it takes to operate in the EU is a license from one member state.

danielmarkbruce 2y ago

No one is providing a value proposition that would make me move away from [my large bank] when it comes to a basic checking account. Banks were disrupted in the mortgage market - a very large chunk of residential mortgages go through brokers. Banks are being disrupted in corporate credit. "Private Credit" is exploding.

zigglezaggle 2y ago

This is like saying "nobody is disrupting AWS" and then pointing out that competitors don't have a version of AWS Glue. Plenty of startups have disrupted banks. AMEX purchased one to jumpstart its small business checking accounts just a few years ago. You're just not looking hard enough. If you move the goal posts to core checking/savings accounts by consumers, then yeah there's not much of an upside there. Consumers go decades to lifetimes on average without changing banks. Capital One was the last one to do anything "disruptive" here re: providing accounts and credit to the lower class, and I'm not sure there's enough juice to squeeze left for a smaller, more focused product to make any money given the stickiness of checking accounts generally.

xyst 2y ago

Disruption will take awhile. The current players have rigged the game in their favor. They have government officials, lobbyists, and 40+ years of shitty neoliberal economic theory behind them. The subprime mortgage crisis and subsequent bailout of banks by main street is an example. It will take more than a credit card or fancy app to disrupt this corrupt machine.

poisonborz 2y ago

What do we understand under "banks"? If keeping with the simply notion of "stores funds and provides debit cards", the most common usage in EU, especially east, banks were deeply disrupted. Revolut and Wise took a large segment of the youth, who now also got hooked on more services like savings accounts and stocks. They have startup-like culture while being registered as standard banks. Obviously their services, quality and support are lightyears ahead of any traditional financial institution.

liendolucas 2y ago
I'm a happy Revolut customer. Their app is great and it has features that banks here in Italy don't (or if they do they always charge it, that's why I'm trying to slowly break away from them). Banking in Italy is the worst of the worst. They are extremely well trained to make you waste time. Avoid at all costs Banco Posta. People are not just inefficent, they have absolutely no idea about anything you ask them and they love to make you wait eternally. I have recently asked for more information about a loan at another bank and surprisingly they refuse to send me a formal document to read all the terms and conditions. They literally sent me a plain text email with some numbers, when I required them formal details (the famous "small letter") about it they simply didn't reply.
epolanski 2y ago
I'm a revolut user, but I fail to understand how they plan to make any money off me with all they throw.
- driuha 2y ago
  They are profitable for a few years now, afaik visa/master pays you a share of their profit each time customer makes a transaction(i.e. share of merchant fee). There are also credits, loans, exchange fees, subscription fees i.e. a lot products that make them money.

Havoc 2y ago

There was one playing the move fast and break things playbook. SVB...

devops000 2y ago

Bitcoin

epolanski 2y ago
Ah yeah, nothing beats Bitcoin when it comes to banking /s

black_13 2y ago

[dead]

ranger207 2y ago

The products being pointed out in this article as an attempt to disrupt banks seem to be basically the same product for a different price. Like, a high-yield savings account is just a savings account with a better price, right? How do you disrupt an industry by selling the same products? The advantage of startups is that they're more nimble, can pivot to fit the market better, and can adapt to customer requests faster. None of that applies to "selling the same product at a lower price", especially for savings accounts where stability ("the company not suddenly disappearing") is an important part of the pitch anyway

ikr678 2y ago
This is a very US centric article, a lot of the disruptions listed are incumbent 'big bank' products in other jurisdictions. I feel the lack of adaptability is likely a result of US market conditions/regulations rather than lack of innovation.
- Joel_Mckay 2y ago
  The US crash of 2008 exposed the nature of their banking system leverage ratios, and worker 401k vulnerability to dubious ETFs. The incoming market volatility will likely have winners and losers... but historically it was mostly losers (>6.4 million families and counting.) =3
  - throwaway2037 2y ago
    > worker 401k vulnerability to dubious ETFs Can you explain this part in my detail? Do you mean money market funds that "broke the buck"?
    - lxm 2y ago
      ETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a single stock - employer's.

rpcope1 2y ago

Well, there was an attempt at it. There was a startup run by one of the best startup guys I've ever seen, Dave Wright, called Reserve Trust, which managed to actually get a fed account. I think some people in power caught wind of it, and it ended up with congressional testimonies and a lot of other problems before it basically got shut down.

ausbah 2y ago
seems like there was a conflict of interest where a fed high up helped them get a fed master account while also serving in the company’s board https://www.bankingdive.com/news/kc-fed-has-revoked-reserve-trusts-master-account-toomey-says/625217/ https://www.bankingdive.com/news/kc-fed-has-revoked-reserve-...

pelorat 2y ago

Because it's only possible in the USA. In the rest of the world everything is a bank and regulated as such.

buyucu 2y ago

Banking is a heavily regulated sector. Regulation effectively blocks any kind of disruption and perpetuates the established firms.

create-username 2y ago

I want AI to rename my million of duplicate files

epolanski 2y ago

As an European I love Revolut, it has some nice features. On the other hand when it comes to serious money spending (credit, mortgage) I want my physical local bank.

la64710 2y ago

Disrupt cancer if you can. Don’t disrupt functioning system that is not broken.

Quindecillion 2y ago
I really hope this is satire.

1a527dd5 2y ago

They might not be disrupting them, but they are definitely causing competition in the market place again. My main bank account is with Halifax, everyday spend is with Starling. Then Monzo for anything risky. Before Starling/Monzo the Halifax app was _crap_. Barely got any updates and was very basic. Now? The Halifax app is on par with the newer banks, and sometimes even release new features before (e.g. scan cheque in to deposit).

kylecazar 2y ago
Interesting... We've had scanned check deposits at Chase (US) for at least 15 years, I think.
- stevesimmons 2y ago
  Bear in mind that's a measure of how backwards US banking is, not how advanced. In the UK, I can't remember the last time I wrote or received a cheque. Maybe twice in the 17 years I've been living here, and certainly not in the last decade. So with UK cheque usage being a tiny fraction of the US rate, there's simply no demand for it in banking apps.
- 1oooqooq 2y ago
  most countries abandoned checks at least 15 years...
  - 1oooqooq 2y ago
    ppl dowvoting facts now
- Symbiote 2y ago
  Cheque use in the UK is now around two per year per person. (This includes business-to-business cheques.) The over-65 age group is most likely to use them, and least likely to use an app, so you can see why it wasn't a big priority for most banks. It's been at least 15 years since the banks stopped giving account holders chequebooks by default. If you want one you have to ask.

anonfordays 2y ago

The sad truth is most people don't have enough money in savings for 4% vs 0.5% to make a material difference. The B2B stuff is tougher to "disrupt", due to contractual agreements, regulatory overhead, etc. Also not as sexy.

phendrenad2 2y ago

Banks are the most immune to disruption, because they function so closely with government, and they are nothing without the blessing of government. And the hurdles to create your own bank are very high. Check out this great Netflix documentary "Bank of Dave": A moderately successful businessman decided to start his own bank, just to see if it could be done (and to lower fees for his local community). The results are... pretty much what you'd expect. "You can't start a bank... nobody starts a BANK!" (They just kinda... have always existed!)

dalyons 2y ago
UK specific maybe? ~10 banks get started every year in the US, there are ~5000 US banks.
phatfish 2y ago
It depends of the services the bank offers, because there are plenty of smaller regulated banks with deposit protection that offer savings accounts in the UK. I assume running a current account has a lot more regulatory requirements than savings?

TuringNYC 2y ago

I think Evolve/Synapse and the fog surrounding the responsible parties, along with complete radio silence on persons responsible (almost as if newsmedia has been given a gag order) has completely kneecapped bank competition for a half-decade at least. If it takes experts to explain how Evolve/Synapse happened, why it couldnt happen to another "Fintech bank", and how to tell if you are at risk...then there is no point even venturing past Chase/BoA/Citi/your local bank. https://www.reuters.com/business/finance/fed-penalizes-evolve-bank-failing-manage-fintech-partnership-risk-2024-06-14/ https://www.reuters.com/business/finance/fed-penalizes-evolv...

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larrydag 2y ago

I believe disruption can come in the form of underwriting and servicing loans. The old model of large call centers that do buying and servicing loans has been around forever. It scales fairly well but it is costly and very inefficient. If those processes are lean then savings could be passed to pricing. Basically creating a credit union model to a national scale.

bern4444 2y ago

The most interesting tech company in the banking to me is Column[0]. No affiliation but it caught my eye when the launched. Admittedly it still feels abstract to me, but the value proposition of having every capability supported by an API (like AWS's methodology of having all services be API first) on top of an actually chartered bank seems perfectly fitted for the creation of banking services that are significantly easier for consumers to interact with and understand. I'm curious to see what people build on top of it. [0]https://column.com https://column.com

tiffanyh 2y ago
No blog post in nearly 3-years https://column.com/blog https://column.com/blog No product updates in over 7-months https://column.com/changelog/ https://column.com/changelog/ That doesn’t instill much confidence.
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Chengdavid 2y ago

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cudgy 2y ago

Maybe because the Fintech companies are being built and largely financed by the banks?

Centigonal 2y ago

Capital One did a great job shaking up consumer credit in the late 90s, and then branch banking in the mid 2000s with their weird combination cafe+branches. They're eighth in the US by domestic deposits today. Does the firm need to be headquartered in Silicon Valley for disruption to have occurred?

onlypassingthru 2y ago
It was ING Direct who built the unusual US cafe/bank operation and eventually sold it all to Capital One as part of the great financial crisis restructuring in 2011. https://www.ing.com/Newsroom/News/Press-releases/PROld/ING-to-sell-ING-Direct-USA-to-Capital-One.htm https://www.ing.com/Newsroom/News/Press-releases/PROld/ING-t...
- Centigonal 2y ago
  Interesting! I didn't know that

anself 2y ago

Having worked in banking for many years (no longer), I can say with confidence, the big banks have a giant moat: regulation. They want to be heavily regulated so that new upstart competitors will not come in and spoil their cozy space. And it’s easy to justify because terrorism, money laundering, insider trading, etc etc. And many of these regulations are largely ineffective and easily worked around, whilst costing billions to the banks to comply with. Hence the moat. We won’t get banking disruption until there’s banking deregulation.

thisislife2 2y ago
> many of these regulations are largely ineffective ... Maybe in the US or some other parts of the world, but the Reserve Bank of India (RBI), the indian banking regulator, does a pretty decent job, as is evident from the public payment infrastructure they have fostered (see https://en.wikipedia.org/wiki/National_Payments_Corporation_of_India https://en.wikipedia.org/wiki/National_Payments_Corporation_... ) . They also create a competitive market by allowing small players to enter the market (e.g. https://byjus.com/free-ias-prep/payment-banks/ https://byjus.com/free-ias-prep/payment-banks/). Many of their regulations also do a decent job of protecting consumer rights (e.g. https://timesofindia.indiatimes.com/business/india-business/rbi-updates-credit-and-debit-card-rules-heres-what-it-means-for-cardholders/articleshow/108329606.cms https://timesofindia.indiatimes.com/business/india-business/... ).

dlenski 2y ago

From my vantage point, with accounts in both Canada and the US, the US market seems hard to disrupt because its financial sector is already highly competitive. Meanwhile Canada has long been completely dominated by 5 or 6 massive big banks that charge high fees for basic chequing accounts, and where credit card perks are far stingier than in the US… The financially industry is being _pretty massively disrupted_ by Wealthsimple. - They have a cash account (~checking/savings hybrid) that pays much better interest than all the big banks - They offer zero-commission trades on Canadian and US stocks and ETFs - They appear to be preparing a wide rollout of a credit card which offers 2% cash-back on everything (there are few Canadian credit cards that offer more than 1% cashback as a "base rate")

Paddywack 2y ago

In developing countries (Africa, South Asia, South America) many of the banks were disrupted by mobile payments providers. Granted, it was more that they missed servicing the 80% of their markets that were unserviced but still needed to do things we all take for granted. Some of these are now the default payments systems.

spiritplumber 2y ago

https://en.wikipedia.org/wiki/M-Pesa https://en.wikipedia.org/wiki/M-Pesa Stuff like this did happen.

0dayz 2y ago

Isn't this mostly due to fintech being the middleman?

Quindecillion 2y ago

Without being an expert on the topic I'm going hazard a guess that it's due to regulatory moats that keep challengers out of the arena, and banks endlessly lobby to maintain that regulatory capture.

spacebanana7 2y ago
In the UK there's no significant regulatory advantage to big banks outside of the mortgage market, yet the same dynamics occur. The biggest issue for new digital banks is customer acquisition cost. Most consumers won't change bank accounts unless you spend hundreds of pounds on adverts and incentives.

fergie 2y ago

There was a massive disruption to banking in 2008. Governments bailed them out.

bux93 2y ago

If you only count startups that offer payments - and little else - as fintechs, then yeah, they're not displacing banks. If you count private credit funds like Apollo Global Management, the story is very different: private credit is seriously encroaching on the balance sheets of banks. Not very tech, but very fin. In investments, ETFs and podshops are both fin and tech, and crushing it.

2d8a875f-39a2-4 2y ago

You can't really "take deposits and issue loans" without just becoming a bank yourself. People start new banks all the time. Or by "disrupting" does he just mean "end run around the laws and regulations"?

n4r9 2y ago
> People start new banks all the time Is that true in the US? In the UK there was recently a period of around 150 years during which not a single new banking licence was issued. There's a film called Bank of Dave which dramatises the attempts of Dave Fishwick - a businessman from the North of England - to set up a local community bank. It's distressing the lengths that the established banks went to to quash it. If I understand correctly, he still does not have a licence, although Metro bank did manage to get one in 2010. Wiki article about the film: https://en.wikipedia.org/wiki/Bank_of_Dave_(film) https://en.wikipedia.org/wiki/Bank_of_Dave_(film) Guardian article from the real-life inspiration for the main character: https://www.theguardian.com/tv-and-radio/tvandradioblog/2012/jul/12/why-i-opened-bank-of-dave https://www.theguardian.com/tv-and-radio/tvandradioblog/2012...
- 2d8a875f-39a2-4 2y ago
  Don't know the UK banking landscape, but it doesn't look that unusual in recent times: https://www.bankofengland.co.uk/prudential-regulation/new-bank-start-up-unit/new-banks-authorised-since-2013 https://www.bankofengland.co.uk/prudential-regulation/new-ba...
- piperswe 2y ago
  Banking licenses are surely not an easy feat in America, but they are at least regularly issued. Not issuing any licenses for 150 years sounds quite crazy to my American ears, though as I understand it America is quite the outlier with thousands of active banks and credit unions.

biohcacker84 2y ago

Uhmm... isn't that what crypto is basically? Per Mark Marc Andreessen the Biden admin tried to shut down crypto entirely But with the new administration we'll hopefully see growth and real competition to the old banks.

aketchum 2y ago
I’m not being a troll I’m seriously asking - how does crypto replace banks? Am I going to get a mortgage in BTC? If narrow banking, why give them my btc at all instead of holding myself? If not narrow banking then they are lending out my btc? Does that even work on blockchain? How do you do fractional reserve lending with a deflationary and one of one asset?
- tcgv 2y ago
  > how does crypto replace banks? Crypto can replace some banking functions, such as payments, electronic transfers, and lending/borrowing. One could argue that crypto eliminates the need for traditional checking accounts since you have full control over your funds with private keys. However, this doesn’t account for the legal safeguards and protections that banks provide. > Am I going to get a mortgage in BTC? I don’t recall seeing mortgage services in crypto yet. However, there are borrowing platforms like AAVE, primarily used for leveraging crypto investments or speculation. These platforms are decentralized, with strict collateral requirements, typically limiting borrowing to 80% of your collateral. > If narrow banking, why give them my btc at all instead of holding myself? Not sure I fully understand your question, but typically, when you lend your crypto to a service, you’re seeking to earn a yield in exchange for the risk of lending your assets. > Does that even work on blockchain? Theoretically, yes. You could create a narrow bank using crypto, but you’d need a decentralized mechanism to verify the bank’s holdings. This could involve creating an oracle (ex: Chainlink) service to confirm asset reserves. > How do you do fractional reserve lending with a deflationary and one of one asset? Instead of using deflationary assets like BTC, fractional reserve lending could rely on stablecoins, which are better suited for such systems. That said, not all stablecoins are equally reliable.

slashdev 2y ago

I’ve seen plenty of attempts to disrupt the big banks that are quickly bought by the big banks if they develop traction. You see the same with big tech. To get real disruption we need founders and investors willing to play the long game.

egberts1 2y ago

Does the article blatantly ignore the basic principle of fractional reserve? A tiny deposit for a bank to hold means 7x more money to loan out, or something?

alistairSH 2y ago

I'd be thrilled if US banks figured out how to do "instant" money exchanges. Today, if I pay my credit card from an account with a different bank, the payment is reflected immediately in my Visa account, but takes 3-5 days to reflect in my main checking account. It's completely bonkers that a 100% electronic transaction takes days to fulfill.

slumberlust 2y ago
It took us 15 years to get tap to pay; I wouldn't holdout on any of these dinos innovating anytime soon.
tencentshill 2y ago
They want as much time as possible for that money to gain interest before it leaves their possession.
BenjiWiebe 2y ago
FedNow is slowly rolling out. We'll see what happens.
- krunck 2y ago
  https://en.wikipedia.org/wiki/FedNow https://en.wikipedia.org/wiki/FedNow FedNow's list of participating financial institutions on their web site is a downloadable Excel spreadsheet. Innovation indeed.

kasey_junk 2y ago

In the US most banks are no longer in the take deposits and give loans consumer business and haven’t been for a really long time. They do take deposits but the major source of consumer loans, mortgages, are outsourced to Fannie and Freddie. Some big banks have lending arms in the form of credit card issuance, but short term loans like that aren’t really what people tend to mean and they aren’t why we chartered banks as a society historically. Small business loans are both vanishingly rare and governmentally backed. The real disruption in banking going on right now is in large business lending. Commercial real estate, bonds, etc. Those are also no longer showing up on bank balance sheets. Capital regulations have made that too expensive, so the big banks are outsourcing that function to private non—bank companies. They just aren’t fintechs. So disruption is absolutely happening it’s just on the finance side, not the consumer marketing side of the house.

herodoturtle 2y ago

In South Africa the "big" (historically incumbent) banks were indeed disrupted by a "startup" bank relatively recently (in the last 20 years) - and this startup bank went on to in turn become one of the big banks. There is an excellent book called "Stalking Giants" [1] that covers this story nicely. It's a fun read (especially for South Africans) and was published recently. [1] https://www.amazon.co.za/Capitec-Stalking-Giants-T-J-Strydom/dp/0624093131 https://www.amazon.co.za/Capitec-Stalking-Giants-T-J-Strydom...

NoPicklez 2y ago
What did they do to "disrupt" the others?

loourr 2y ago

The big banks are larger then ever because of consolidation and inflation but I do think they're getting disrupted. I think services like Fidelity are meaningfully disrupting banks. I much rather have my money in a money market fund then a deposit checking account. Most loans are not being held on bank balance sheets any more either, but are getting sold to the market, so they're no longer as critical a part of the financing stack. And we're still early days on stable tokens and the defi infrastructure around them.

bArray 2y ago

What does "disruption" look like in the banking space? Banks want the perception of immovable, confidence, reliable, resilience, etc. It's what gives them the credibility to move big money. They don't want to "move fast and break things". Some may think about digital currencies. My warning is this: Be careful what you wish for. If we were to switch to a full digital currency, there are significant concerns that money could be allocated like a voucher, where it could be sent and only spent in a certain way. Suddenly the government decides those receiving some kind of social care allowance must spend different parts in different ways, i.e. a minimum of 50% MUST be spent on rent (an extremely enticing proposition in a recession). Perhaps there is a tax for not spending enough, or on the correct thing. Perhaps there is a micro-tax for moving it around. Maybe the micro-tax is dependant on your social credit score. The slippery slope goes on. The only thing currently stopping this is that you can withdraw your entire wage each month and spend it however you want, without such a tax. The government or banks cannot be certain of precisely how you spend your money when using cash. The very moment cash is gone, such implements can be created and there is nothing you can do about it. Maybe I am behind the times, but I don't like the sound of "disruption" in the banking industry. That last time I saw "disruption" was in 2008, and many people lost their homes.

dr-detroit 2y ago
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jncfhnb 2y ago
The other thing stopping it is the law and the fact that the US dollar is the global reserve currency and that would be a pretty great way to ruin that
- JumpCrisscross 2y ago
  > that would be a pretty great way to ruin that Not really. It would be similar to tax rules—not really applicable to non-American depositors.
  - jncfhnb 2y ago

elric 2y ago

US banks are weird [1]. Archaic. Slow. Filthy rich. Incompetent. And yet they're nearly impossible to disrupt due to the benefit of size. Starting a new bank is expensive, unless you want to pretend at being a real bank and letting another bank handling all of the nitty-gritty details. In which case you've now become a reseller of that bank, and will likely be even worse. The only thing that can disrupt US banks is consumer outrage, of which there seems to be very little. [1] Source: I've consulted for some of the largest US, European and African banks.

throwawaysleep 2y ago
And trust. Fintech in the US has had a bunch of spectacular implosions and scams.
GuB-42 2y ago
What about Japanese banks? They have a reputation of being terrible, justified for the little experience I had with them. Lots of fees, bureaucratic, inconvenient opening times,... In Japan, cash is king, and loan sharking is very prevalent. Not a very good sign for the banking system. Note that it is now becoming increasingly possible to go cashless, though cash is still the most widely accepted option. And I think it is mostly thanks to foreign banks like Citibank.
lotsofpulp 2y ago
I don’t see what more US banks could do. I have been transferring money instantly to people online for over a decade for free. They have websites/apps, I can withdraw paper money around the world, what other utility could a “bank” provide me? They are utilities that keep a database associating account number and dollar number. I earn a few thousand dollars from them every year in the form of sign up bonuses, and I have never spent a dime in fees for having an account or transferring money. If the US government offered a more protected way of saving money not subject to know-your-customer-revoke-access-to-your-property-at-anytime-under-the-guise-of-potential-criminal-activity laws, then I would use them.
- nothercastle 2y ago

kazinator 2y ago

Could it be that the sub-prime mortgage goofballs did exactly that two decades ago, and the shields are still up?

openrisk 2y ago

Both "disruption" and "banks" are very broad terms. The three common subtypes of banks (retail, commercial, investment) live in different planets as far as infrastructure, products, business models etc. So called "fintech disruption" typically concerns just retail banking and is basically just: use an "app" instead of physical branches to cater to the mobile-native generations. Nothing that any old bank cannot also implement as an alternative channel. Real disruptions do happen every once in a while and involve new financial products and business models (securitisation, derivatives etc.). But these are typically driven by legal rather than digital innovations.

Spooky23 2y ago
Exactly. Apps can be differentiators. Also, large banks fundamentally work. People with money want excitement and disruption away from their money.

AutistiCoder 2y ago

Bitcoin was supposed to disrupt banking. Look how that turned out.

Developerx 2y ago

Take a look at Russian bank apps and ecosystems. How fadt they transfer money etc. I hate every time I'm in America. So stupid and ugly bank apps. It's funny they still not have portable card readers so I don't give my card to the waitress

Finnucane 2y ago

"Nobody is going to put their money in Fred's Bank."---Steve Martin

jefurii 2y ago

This is probably a good thing. I don't want disruption in my bank.

insane_dreamer 2y ago

The collapse of Synapse is a pretty good example of why people don't -- and shouldn't -- put their money in the hands of a "fintech startup". And while not a "startup", the collapse of SVB certainly doesn't help due to its close association with SV and by extension FinTech startups. I'm happy to use FinTech startup products for certain transactions -- CashApp and Wise are great and I might keep a small balance with them. But it takes decades of being around before people are willing to entrust serious deposits with them.

financetechbro 2y ago
I think you’re reaching far to connect dots here. SVB collapse has nothing to do with innovations related to fintech. Their issue was more of the typical run on the bank situation than anything to do with innovation. So it was a failure of the traditional banking model, which any bank is susceptible to

4d4m 2y ago

Chime would disagree with this article title...

Mathnerd314 2y ago
Well, it's half true and half false. There are a lot of "new" fintech-ish banks competing on fees, transaction speed, overdrafts, etc. - bank-type things that matter to consumers. But it's true, there are no fintech banks competing to be "too big to fail" and getting that government bailout money. You have to look at crypto for equivalents of the Federal reserve, and people don't recognize those as banks. Although I would say, Coinbase is getting pretty close to a consumer-level "crypto bank".

Yhippa 2y ago

It's hard to break into banking because the big banks successfully used regulatory capture to lock out new participants.

messijohn 2y ago

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hakfoo 2y ago

Every time I have any interaction with my bank accounts online, they seem to see it as an opportunity to try to cram paperless statements down my throat. Evidently they learned from the software industry that there's no such thing as "no", just "ask again later". Whatever spin they put on it (ecology typically) it's about them wanting to save 70 cents a month on postage. The fact they keep trying to slip it under my radar shows a disrespect for me as a customer. More seriously, I could see it breaking the workflow of people who traditionally used the arrival of the statement as a trigger for other things (maybe they ONLY check their statement for fraudulent transactions once a month, or send off bills when they recieve it), and having it suddenly disappear breaks their workflow. Rather than "we've got a shinier app" or a new way to insert a chatbot between you and the services you want to perform, a disruptor bank should be going all-in in customer service. If you want statements, you'll get them. No dark patterns or "we changed this setting because you gave us the vaguest hint of consent." First contact on the customer service hotline is straight to a human being. Nothing that requires a custom app-- everything online should work on any device with a browser, and 2FA should be a standalone token provided at the bank's expense. (Aside from providing a simpler UI, it's one more hurdle in turning "stolen phone" into "account compromise") All the large national banks are interchangeable for a consumer-- they all pay dreck interest, and their primary selling feature is "you might find a no-fee ATM while travelling." But they'd be very suited to the customer-service pivot because they already have the in-person footprint that allows for handling the "I'm in over my head and want to go down and talk with an actual person to get sorted out" scenarios.