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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 sa

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.
      - Joel_Mckay 2y ago
        [flagged]
      - nradov 2y ago
        ETFs are mostly irrelevant from a 401(k) perspective because no one is trading on a daily basis. Some 401(k) plans do now offer ETFs among the investment options but for the most part they have always focused on regular mutual funds. Average expense ratios have come down a bit since 2008.
        Joel_Mckay 2y ago
        Regular mutual funds usually have higher risk and tax exposure than the ETFs... Met a lot of bums in suits trying to sell me on several flavors of BS over the years. lol =3
        throwaway2037 2y ago
        > Regular mutual funds usually have higher risk ... than the ETFs. Can you provide some specific examples? If anything, the transaction friction around mutual funds prevents most regular investors from unnecessary trading that exchange-listed ETFs allow. TL;DR: For most people, more trading means more losses or worse returns.
        Joel_Mckay 2y ago
        There are several potential mutual fund problems, but the ones most consumers are exposed to arise from institutional and private "investment advisors". There is no legal protection from banks externalizing toxic assets acquired though risky decisions onto customers, and or ridiculous ballooning management fees siphoning off actual profit. The other issues are mostly from various end-runs around acceptable market rules and practices. In general, most amateur holds permute well below 3 to 4 months on average. Note the old joke: "Bulls make money, bears make money, pigs get slaughtered"... was never funny for those providing cash capital to gamblers. Most people assume they are luckier than average... and most of Las Vegas was also built on losers money. Have a great day, =3
- WeylandYutani 2y ago
  I think it could also be cultural. In my country people are perfectly happy to have a video chat with a bank employee about mortgages but in other country's you still need to go into a branch office for that kind of thing.
  - lotsofpulp 2y ago
    I don’t even need to have a video chat in the US for a mortgage. I have long been able to shop from any number of lenders and close the deal via email. The lender might send out an appraiser.
  - netdevphoenix 2y ago
    Just curious, why do you need a video chat? Can't you just have a phone call? I don't get the need to see someone's face
    - AdamN 2y ago
      I don't get the need for synchronous comms at all. I can book airplane tickets, food delivery, e-commerce generally, and most other things through a web interface. Not sure why I need to talk to somebody to get a mortgage aside from Know Your Customer but even then a short signing ceremony at the end would be best.
      - netdevphoenix 2y ago
        I agree! I am a big fan of synchronous comms
      - andrepd 2y ago
        I think getting a mortgage might be a tad more of an impactful decision than ordering takeout... I'm not a boomer but I still would like to speak to someone in person before I sign an O(million$) loan.
        JumpCrisscross 2y ago
- dathinab 2y ago
  The EU also has put pressure on Banks for decades now to either "innovate" or "get innovated" by regulations forcing them to implement innovative ideas not coming from them. With both having happened over time. They also at least somewhat try to compete with Paypal on online payment on EU specific shops (not they they have much success, not just because of network effect but because a combination of their products being sub-par and them realizing that various other even less competitive/ux friendly competitors would make them more money if anyone would just be using it..., so they are in the process to "get innovated" again by forcing impl. of certain ideas related to person-to-person money transfer which have proven to work/being useful in a few countries where they/their banks did adapt them years ago.)
  - rvba 2y ago
    In some markets paypal has no market share at all - its whole value proposition is something that banks allready have. Paypal is needed in USA due to archaic systems. In Europe many banks allow instant transactions without the risk of blocking your money for 180 days - what paypal seems to do
    - 0xffff2 2y ago
      Paypal (or its little brother Venmo) haven't been needed in the US in nearly a decade. I've never had a European bank account, but Zelle seems to me to be just as good as what the Europeans have.
      - dathinab 2y ago
        Paypal is never needed, not in the EU nor in the US but that misses the point. Pretty much every single online shop/website ever allows paying with PayPal (and Credit Card). And you pretty much have to use it as not allowing paying with PayPal will reduce your sales noticeable, especially for international orders. This is something people funnily frequently rediscover, again and again. Also I don't thing many people do use PayPal to send money between each other tbh. when I mean competing I mean for paying online not for p2p money transfer. Like sending other private people money always had been trivial, through slightly annoying, in the EU, even before smartphones where a thing.
- biohcacker84 2y ago
  US Banks are much worse at serving common people than many other old big banks around the world, certainly compared to Germany's banks for example. And yes it is thanks to a byzantine system of history, regulations and very few Americans travelling abroad to experience radically better systems.
  - ty6853 2y ago
    FATCA makes Americans pariahs at foreign banks. I would love to store cash outside US jurisdiction but it is a compliance nightmare usually only worth it for high net worth clients. We know better systems exist, we just often can't use them even when we live overseas. Crypto is the last offshore banking for the middle class. It essentially took over right when FATF eliminated banking privacy and bearer shares -- which IMO is no mere coincidence.
    - psunavy03 2y ago
      Crypto is not banking.
      - deleted 2y ago
        [deleted]
    - dghlsakjg 2y ago
      I'm a middle class American that has lived in various places, Canada currently. I opened my first account in Canada while I was still a US resident. FATCA compliance was a matter of a single extra form, and providing my US SSN. It was about the same for my Caribbean accounts with international banks. If what you are trying to do is open an account that is not visible to the US government, that is much harder.
Joel_Mckay 2y ago
Most people have zero notion of what money is... let alone what banks offer as a business. Indeed, the entrenched investment industry has become less fair (or an outright liability) to customers, but casinos are at least honest with their customers. Gambling with other peoples money was not a real financial service until relatively recently. There is a market for a fiscally sustainable savings/investment industry, but most people with under $2m in cash can't afford the bonded fiduciary services. Good luck, I kind of admire their ill fated ambition. =3
- nine_k 2y ago
  > fiscally sustainable savings Buy gold bullion, rent a bank safe deposit box, store it there. I suspect this is what comes closest to that, as of now. (Sigh.)
  - Joel_Mckay 2y ago
    Precious metal prices rarely track with inflation, but 1.7% of a portfolio should contain such leaky holdings. While it is currently legal for US citizens to own gold bars since 1974, if the tax man gets hungry... the old rules may come back into popularity. Best of luck, =3
  - JumpCrisscross 2y ago
    > Buy gold bullion, rent a bank safe deposit box, store it there This is the worst of all worlds. You have a high-transaction cost volatile asset in a box which provides you with less legal protection than crap stored in a home with renter’s or homeowner’s insurance [1]. [1] https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html https://www.nytimes.com/2019/07/19/business/safe-deposit-box...
    - ty6853 2y ago
      Renter/homeowner insurance rarely cover precious metals unless they are in their highest premium ( read worst as store of value ) forms as jewelry or kitchenware. A vault with stronger property rights than US and insurance is probably better than your house (Singapore insured PM vault maybe) but not as good as a hole in the ground somewhere where metal detectors get a lot of false positives somewhere remote with no attachment to your identity.
Dalewyn 2y ago
>Like, a high-yield savings account is just a savings account with a better price, right? Most if not all the big banks have a high yield savings account or an equivalent under different names. And yes, it's just a savings account with an actually noteworthy interest rate. It's usually a bit below the interest rate of money market funds.
abdullahkhalids 2y ago
One datapoint: On /r/PersonalFinanceCanada a very common advice is to save money in WealthSimple or Questrade type of online financial institutions. And people seem to be very happy with doing this. Any financial institution that makes the act of investing money simple and legible will win some market share. I have some savings accounts in RBC Canada, and the UX seems to be designed by monkeys throwing around crayons.
- smnrchrds 2y ago
  Wealthsimple is a subsidiary of Power Corporation, a gigantic financial services company that has existed for 100 years. Its success is more an example of insider innovation rather than outsider disruption.
  - BenoitEssiambre 2y ago
    Ah that's an interesting tidbit. I have a Wealthsimple account through my (YC company) employer. The Desmarais (Power corp folks) gave me a scholarship back in the day. I hadn't made the connection.
  - abdullahkhalids 2y ago
    Interesting. I did not know that. But not surprising in retrospect. But I think the point still stands. WealthSimple is probably not perceived by the median customer as a traditional bank. So people using it is a counter-example to GGP's point that people won't use "startup" banks.
    - kevin_nisbet 2y ago
      I don't know if the point should be that people won't use a startup bank, just that the assets being directed to the startups/disruptors are not presently threatening to the big banks. I would suspect this is currently the case with WealthSimple here in Canada as well. WealthSimple is at something like $50 billion assets under management [1]. Vanguard asset allocation ETFs are at like $1.3T [2]. 4 Of Canada's Big banks appear to add up to just over 2T Assets under management based on what Google just gave me as summary. So while I think this is a great outcome for a startup (even with Power backing them), to me it seems in a similar space as the above article that we're still talking a relatively small market share, and likely still closer to early adopter status. [1] - https://en.wikipedia.org/wiki/Wealthsimple#:~:text=As%20of%20September%2018%2C%202024,billion%20in%20assets%20under%20management. https://en.wikipedia.org/wiki/Wealthsimple#:~:text=As%20of%2... [2] - https://www.vanguard.ca/en/product/investment-capabilities/asset-allocation-etfs https://www.vanguard.ca/en/product/investment-capabilities/a...
xwolfi 2y ago
Plus hum, would you deposit large money amounts in a small fintech company ? The advantage of giant banks is that you sort of trust their size will make them able to weather a crisis, if only because so many taxpayers are involved that the government has no choice but to help. A fintech with 1M users screwing up loan rate timings being unable to finance savings accounts and facing a run, would not have much runway and the government would simply slowly try to make people get 50c on the dollar and tell them to go back to a big bank if they want better...
- SpicyLemonZest 2y ago
  I considered doing it a few years ago with a company called Yotta, and thank God I didn’t, because they pivoted to a gambling app before losing track of user funds when one of their providers went bankrupt.
- nradov 2y ago
  It's not just size. Real banks maintain customer deposits in separate named accounts. They don't co-mingle funds like fintech companies. This makes a huge difference in the case of insolvency or any sort of fraud.
- netdevphoenix 2y ago
  Ideally, financial regulation should be there for you in terms of bank failure without you having to trust old players and further making disruption harder. And no matter how big or small the bank, you should never put all your savings in the same bank.
jiggawatts 2y ago
I can tell you right now what I want from a "bank" as a consumer: Putting the consumer first, not seventeenth or whatever I typically experience with retail banks. As a random example, I had $3,600 stolen from one of my accounts by transactions labelled "Microsoft Online Services" or something like that. The bank reversed most, but not all of the transactions, and then had the nerve to lecture me -- an IT professional more than a bit knowledgeable about security -- about how somehow this was all my fault. Turns out that banking security and reliability from a customer's perspective is absolutely insane. It's totally ass-backwards. It's the opposite of the Apple experience that made that particular company the biggest in the world. 1) Every field in a credit card transaction is attacker-controlled. They can put down whatever business name they want, whatever text they want, etc... 2) Every field in a transaction history is either an alias ("operating as xyz pty ltd"), an abbreviation, or just outright confusing. 3) Transaction histories and "you paid $ to X" notifications often turn up hours or days later. There's no geo-location or any other strong identifier linking these to the actual business because of (1) and (2). 4) There's no receipt details in the transaction history. "XYZ pulled $123 from your account... for reasons. It's a mystery!" 5) You can't see who's got recurring subscriptions on your account. You can't trivially cancel or block someone from pulling money from your account. 6) Some banks now show categorised graphs of what you're spending your money on, but they're guessing. They don't actually have the info of where the money went, so this is useless. You can't figure this out yourself either because of the tiny amount of info available to you. 7) You can't use your transaction history for warranty purposes, or any similar thing. You have to keep tiny pieces of paper that fade rapidly... which is I'm suuuure is just a coincidence, right? Right? 8) My bank claims I get notified if a transaction occurs on my account. This is a lie, they only notify me of some types of transactions, and not reliably either. 9) Trivial impossible-travel protections are not put in place. If my phone is used for a payment in a "physical store" while the GPS says it's in a different continent, pop up an "Approve Y/N?" prompt at a minimum! 10) You can't generally limit a vendor's access to your account if they have your credit card details. You can't restrict them to a single transaction, a fixed amount, or no-sneaky-subscriptions. 11) With shared accounts, you can't generally tell who made a transaction, even if they have individual cards and/or mobile devices. (You can sometimes, depending on the bank and the type of account, but it's not consistent. This is what happened to us: Both of us assumed the other partner set up a valid subscription.) Etc, etc, etc.... I could go on for hours. Unfortunately, like many people of said, the inertia of the incumbents and their moat of regulation makes this kind of thing nigh impossible with backwards compatibility. Some org like Apple or Meta with very wide reach might be able to force vendors to jump through their hoops, which then will drag the traditional banks kicking and screaming into the future. I'm not holding my breath.
lazide 2y ago
Finance is heavily regulated. Disrupting a heavily regulated market is usually called ‘racketeering’ or ‘organized crime’.
- ty6853 2y ago
  Regulation is the racketeering. The central ringleader is the fed, who 'ease' money into thin air, bypassing the pesky annoyance of going around and collecting taxes to fund their private and public benefactors.
  - lazide 2y ago
    Hey, you can assert cops are the real criminals all you want - but one of them is thrown in jail, and the other (typically) isn’t.
    - ty6853 2y ago
      It does share the characteristic it was secretly planned under assumed identities (on jackyll island) and intentionally set up to be 'governed' by unelected bosses intentionally firewalled from democratic processes.
dartharva 2y ago
"Neobanks" in India, although not disruptive, are doing rather well. In general, though, the real disruption Fintech can bring is by working with existing trusted entities, not against them. I use Fi[1] - it is a service layer on top of an existing savings account from a traditional bank, which offers things like automatic budget/expense tracking with UPI (standardized cashfree payments platform that everybody uses), quick access to debt and equity funds, credit-profiling and networth-tracking, rewards etc. It's pretty good for now at least: https://fi.money/ https://fi.money/

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.
    - Joel_Mckay 2y ago
      [flagged]
    - nradov 2y ago
      ETFs are mostly irrelevant from a 401(k) perspective because no one is trading on a daily basis. Some 401(k) plans do now offer ETFs among the investment options but for the most part they have always focused on regular mutual funds. Average expense ratios have come down a bit since 2008.
      - Joel_Mckay 2y ago
        Regular mutual funds usually have higher risk and tax exposure than the ETFs... Met a lot of bums in suits trying to sell me on several flavors of BS over the years. lol =3
        throwaway2037 2y ago
        > Regular mutual funds usually have higher risk ... than the ETFs. Can you provide some specific examples? If anything, the transaction friction around mutual funds prevents most regular investors from unnecessary trading that exchange-listed ETFs allow. TL;DR: For most people, more trading means more losses or worse returns.
        Joel_Mckay 2y ago
        There are several potential mutual fund problems, but the ones most consumers are exposed to arise from institutional and private "investment advisors". There is no legal protection from banks externalizing toxic assets acquired though risky decisions onto customers, and or ridiculous ballooning management fees siphoning off actual profit. The other issues are mostly from various end-runs around acceptable market rules and practices. In general, most amateur holds permute well below 3 to 4 months on average. Note the old joke: "Bulls make money, bears make money, pigs get slaughtered"... was never funny for those providing cash capital to gamblers. Most people assume they are luckier than average... and most of Las Vegas was also built on losers money. Have a great day, =3
WeylandYutani 2y ago
I think it could also be cultural. In my country people are perfectly happy to have a video chat with a bank employee about mortgages but in other country's you still need to go into a branch office for that kind of thing.
- lotsofpulp 2y ago
  I don’t even need to have a video chat in the US for a mortgage. I have long been able to shop from any number of lenders and close the deal via email. The lender might send out an appraiser.
- netdevphoenix 2y ago
  Just curious, why do you need a video chat? Can't you just have a phone call? I don't get the need to see someone's face
  - AdamN 2y ago
    I don't get the need for synchronous comms at all. I can book airplane tickets, food delivery, e-commerce generally, and most other things through a web interface. Not sure why I need to talk to somebody to get a mortgage aside from Know Your Customer but even then a short signing ceremony at the end would be best.
    - netdevphoenix 2y ago
      I agree! I am a big fan of synchronous comms
    - andrepd 2y ago
      I think getting a mortgage might be a tad more of an impactful decision than ordering takeout... I'm not a boomer but I still would like to speak to someone in person before I sign an O(million$) loan.
      - JumpCrisscross 2y ago
dathinab 2y ago
The EU also has put pressure on Banks for decades now to either "innovate" or "get innovated" by regulations forcing them to implement innovative ideas not coming from them. With both having happened over time. They also at least somewhat try to compete with Paypal on online payment on EU specific shops (not they they have much success, not just because of network effect but because a combination of their products being sub-par and them realizing that various other even less competitive/ux friendly competitors would make them more money if anyone would just be using it..., so they are in the process to "get innovated" again by forcing impl. of certain ideas related to person-to-person money transfer which have proven to work/being useful in a few countries where they/their banks did adapt them years ago.)
- rvba 2y ago
  In some markets paypal has no market share at all - its whole value proposition is something that banks allready have. Paypal is needed in USA due to archaic systems. In Europe many banks allow instant transactions without the risk of blocking your money for 180 days - what paypal seems to do
  - 0xffff2 2y ago
    Paypal (or its little brother Venmo) haven't been needed in the US in nearly a decade. I've never had a European bank account, but Zelle seems to me to be just as good as what the Europeans have.
    - dathinab 2y ago
      Paypal is never needed, not in the EU nor in the US but that misses the point. Pretty much every single online shop/website ever allows paying with PayPal (and Credit Card). And you pretty much have to use it as not allowing paying with PayPal will reduce your sales noticeable, especially for international orders. This is something people funnily frequently rediscover, again and again. Also I don't thing many people do use PayPal to send money between each other tbh. when I mean competing I mean for paying online not for p2p money transfer. Like sending other private people money always had been trivial, through slightly annoying, in the EU, even before smartphones where a thing.
biohcacker84 2y ago
US Banks are much worse at serving common people than many other old big banks around the world, certainly compared to Germany's banks for example. And yes it is thanks to a byzantine system of history, regulations and very few Americans travelling abroad to experience radically better systems.
- ty6853 2y ago
  FATCA makes Americans pariahs at foreign banks. I would love to store cash outside US jurisdiction but it is a compliance nightmare usually only worth it for high net worth clients. We know better systems exist, we just often can't use them even when we live overseas. Crypto is the last offshore banking for the middle class. It essentially took over right when FATF eliminated banking privacy and bearer shares -- which IMO is no mere coincidence.
  - psunavy03 2y ago
    Crypto is not banking.
    - deleted 2y ago
      [deleted]
  - dghlsakjg 2y ago
    I'm a middle class American that has lived in various places, Canada currently. I opened my first account in Canada while I was still a US resident. FATCA compliance was a matter of a single extra form, and providing my US SSN. It was about the same for my Caribbean accounts with international banks. If what you are trying to do is open an account that is not visible to the US government, that is much harder.

Joel_Mckay 2y ago

Most people have zero notion of what money is... let alone what banks offer as a business. Indeed, the entrenched investment industry has become less fair (or an outright liability) to customers, but casinos are at least honest with their customers. Gambling with other peoples money was not a real financial service until relatively recently. There is a market for a fiscally sustainable savings/investment industry, but most people with under $2m in cash can't afford the bonded fiduciary services. Good luck, I kind of admire their ill fated ambition. =3

nine_k 2y ago
> fiscally sustainable savings Buy gold bullion, rent a bank safe deposit box, store it there. I suspect this is what comes closest to that, as of now. (Sigh.)
- Joel_Mckay 2y ago
  Precious metal prices rarely track with inflation, but 1.7% of a portfolio should contain such leaky holdings. While it is currently legal for US citizens to own gold bars since 1974, if the tax man gets hungry... the old rules may come back into popularity. Best of luck, =3
- JumpCrisscross 2y ago
  > Buy gold bullion, rent a bank safe deposit box, store it there This is the worst of all worlds. You have a high-transaction cost volatile asset in a box which provides you with less legal protection than crap stored in a home with renter’s or homeowner’s insurance [1]. [1] https://www.nytimes.com/2019/07/19/business/safe-deposit-box-theft.html https://www.nytimes.com/2019/07/19/business/safe-deposit-box...
  - ty6853 2y ago
    Renter/homeowner insurance rarely cover precious metals unless they are in their highest premium ( read worst as store of value ) forms as jewelry or kitchenware. A vault with stronger property rights than US and insurance is probably better than your house (Singapore insured PM vault maybe) but not as good as a hole in the ground somewhere where metal detectors get a lot of false positives somewhere remote with no attachment to your identity.

Dalewyn 2y ago

>Like, a high-yield savings account is just a savings account with a better price, right? Most if not all the big banks have a high yield savings account or an equivalent under different names. And yes, it's just a savings account with an actually noteworthy interest rate. It's usually a bit below the interest rate of money market funds.

abdullahkhalids 2y ago

One datapoint: On /r/PersonalFinanceCanada a very common advice is to save money in WealthSimple or Questrade type of online financial institutions. And people seem to be very happy with doing this. Any financial institution that makes the act of investing money simple and legible will win some market share. I have some savings accounts in RBC Canada, and the UX seems to be designed by monkeys throwing around crayons.

smnrchrds 2y ago
Wealthsimple is a subsidiary of Power Corporation, a gigantic financial services company that has existed for 100 years. Its success is more an example of insider innovation rather than outsider disruption.
- BenoitEssiambre 2y ago
  Ah that's an interesting tidbit. I have a Wealthsimple account through my (YC company) employer. The Desmarais (Power corp folks) gave me a scholarship back in the day. I hadn't made the connection.
- abdullahkhalids 2y ago
  Interesting. I did not know that. But not surprising in retrospect. But I think the point still stands. WealthSimple is probably not perceived by the median customer as a traditional bank. So people using it is a counter-example to GGP's point that people won't use "startup" banks.
  - kevin_nisbet 2y ago
    I don't know if the point should be that people won't use a startup bank, just that the assets being directed to the startups/disruptors are not presently threatening to the big banks. I would suspect this is currently the case with WealthSimple here in Canada as well. WealthSimple is at something like $50 billion assets under management [1]. Vanguard asset allocation ETFs are at like $1.3T [2]. 4 Of Canada's Big banks appear to add up to just over 2T Assets under management based on what Google just gave me as summary. So while I think this is a great outcome for a startup (even with Power backing them), to me it seems in a similar space as the above article that we're still talking a relatively small market share, and likely still closer to early adopter status. [1] - https://en.wikipedia.org/wiki/Wealthsimple#:~:text=As%20of%20September%2018%2C%202024,billion%20in%20assets%20under%20management. https://en.wikipedia.org/wiki/Wealthsimple#:~:text=As%20of%2... [2] - https://www.vanguard.ca/en/product/investment-capabilities/asset-allocation-etfs https://www.vanguard.ca/en/product/investment-capabilities/a...

xwolfi 2y ago

Plus hum, would you deposit large money amounts in a small fintech company ? The advantage of giant banks is that you sort of trust their size will make them able to weather a crisis, if only because so many taxpayers are involved that the government has no choice but to help. A fintech with 1M users screwing up loan rate timings being unable to finance savings accounts and facing a run, would not have much runway and the government would simply slowly try to make people get 50c on the dollar and tell them to go back to a big bank if they want better...

SpicyLemonZest 2y ago
I considered doing it a few years ago with a company called Yotta, and thank God I didn’t, because they pivoted to a gambling app before losing track of user funds when one of their providers went bankrupt.
nradov 2y ago
It's not just size. Real banks maintain customer deposits in separate named accounts. They don't co-mingle funds like fintech companies. This makes a huge difference in the case of insolvency or any sort of fraud.
netdevphoenix 2y ago
Ideally, financial regulation should be there for you in terms of bank failure without you having to trust old players and further making disruption harder. And no matter how big or small the bank, you should never put all your savings in the same bank.

jiggawatts 2y ago

I can tell you right now what I want from a "bank" as a consumer: Putting the consumer first, not seventeenth or whatever I typically experience with retail banks. As a random example, I had $3,600 stolen from one of my accounts by transactions labelled "Microsoft Online Services" or something like that. The bank reversed most, but not all of the transactions, and then had the nerve to lecture me -- an IT professional more than a bit knowledgeable about security -- about how somehow this was all my fault. Turns out that banking security and reliability from a customer's perspective is absolutely insane. It's totally ass-backwards. It's the opposite of the Apple experience that made that particular company the biggest in the world. 1) Every field in a credit card transaction is attacker-controlled. They can put down whatever business name they want, whatever text they want, etc... 2) Every field in a transaction history is either an alias ("operating as xyz pty ltd"), an abbreviation, or just outright confusing. 3) Transaction histories and "you paid $ to X" notifications often turn up hours or days later. There's no geo-location or any other strong identifier linking these to the actual business because of (1) and (2). 4) There's no receipt details in the transaction history. "XYZ pulled $123 from your account... for reasons. It's a mystery!" 5) You can't see who's got recurring subscriptions on your account. You can't trivially cancel or block someone from pulling money from your account. 6) Some banks now show categorised graphs of what you're spending your money on, but they're guessing. They don't actually have the info of where the money went, so this is useless. You can't figure this out yourself either because of the tiny amount of info available to you. 7) You can't use your transaction history for warranty purposes, or any similar thing. You have to keep tiny pieces of paper that fade rapidly... which is I'm suuuure is just a coincidence, right? Right? 8) My bank claims I get notified if a transaction occurs on my account. This is a lie, they only notify me of some types of transactions, and not reliably either. 9) Trivial impossible-travel protections are not put in place. If my phone is used for a payment in a "physical store" while the GPS says it's in a different continent, pop up an "Approve Y/N?" prompt at a minimum! 10) You can't generally limit a vendor's access to your account if they have your credit card details. You can't restrict them to a single transaction, a fixed amount, or no-sneaky-subscriptions. 11) With shared accounts, you can't generally tell who made a transaction, even if they have individual cards and/or mobile devices. (You can sometimes, depending on the bank and the type of account, but it's not consistent. This is what happened to us: Both of us assumed the other partner set up a valid subscription.) Etc, etc, etc.... I could go on for hours. Unfortunately, like many people of said, the inertia of the incumbents and their moat of regulation makes this kind of thing nigh impossible with backwards compatibility. Some org like Apple or Meta with very wide reach might be able to force vendors to jump through their hoops, which then will drag the traditional banks kicking and screaming into the future. I'm not holding my breath.

lazide 2y ago

Finance is heavily regulated. Disrupting a heavily regulated market is usually called ‘racketeering’ or ‘organized crime’.

ty6853 2y ago
Regulation is the racketeering. The central ringleader is the fed, who 'ease' money into thin air, bypassing the pesky annoyance of going around and collecting taxes to fund their private and public benefactors.
- lazide 2y ago
  Hey, you can assert cops are the real criminals all you want - but one of them is thrown in jail, and the other (typically) isn’t.
  - ty6853 2y ago
    It does share the characteristic it was secretly planned under assumed identities (on jackyll island) and intentionally set up to be 'governed' by unelected bosses intentionally firewalled from democratic processes.

dartharva 2y ago

"Neobanks" in India, although not disruptive, are doing rather well. In general, though, the real disruption Fintech can bring is by working with existing trusted entities, not against them. I use Fi[1] - it is a service layer on top of an existing savings account from a traditional bank, which offers things like automatic budget/expense tracking with UPI (standardized cashfree payments platform that everybody uses), quick access to debt and equity funds, credit-profiling and networth-tracking, rewards etc. It's pretty good for now at least: https://fi.money/ https://fi.money/