7 ms·

Bank economists warn of disruptive threat from mobile and crowdfunding

97 points by Irishsteve 13y ago

rossjudson 13y ago
The easiest way for banks to deal with this disruptive threat is, of course, to make it illegal. Watch the lobbying efforts first; that's where you'll see "helpful" investor safety rules be proposed that begin the erosion of kickstart models.
- jaydz 13y ago
  The casinos did this with online poker and it worked.
  - cinquemb 13y ago
    On which side of the Atlantic?
    - vermontdevil 13y ago
      On the USA side.
- yuhong 13y ago
  I think Congress recently went in the opposite direction.
apineda 13y ago
The government doesn't have to though cause it has our money anyway ( and our communications information ).
oofabz 13y ago
For now, banks continue to profit from crowdfunding. They get a percentage of each credit card transaction. However, they could be in serious trouble if an alternative payment system becomes popular. The stage is set - NFC and Bitcoin are growing in popularity, and the federal government recently began allowing merchants to charge a credit card fee. If a taco cost $1.50 with my smartphone, or $1.75 with my credit card, I know how I'd pay.
- jjoonathan 13y ago
  They already force retailers to not give discounts for using cash. If they've figured out how to make that legal, why do you think BTC would be any different? What we really need is for the justice department* to explicitly include the goal of making markets competitive in its short list of (un)official objectives. * Or any branch of government. I mention the judicial because I think it is the branch least susceptible to bribery. Since competitive markets are bad for business, that makes it the most likely candidate to promote this kind of change.
  - spc476 13y ago
    I suspect that's more or a contractual thing than a legal thing. I know gas stations around South Florida are now advertising cash and credit prices (so my thought is---the gas companies have enough pull to get favorable terms from the credit card companies).
    - epoxyhockey 13y ago
      I know gas stations around South Florida are now advertising cash and credit prices It's not just Florida. Every state I've traveled to recently now proudly advertises separate cash and credit pricing.
      - protomyth 13y ago
        That's happening a lot in the northern plain states. Also, I am seeing a lot more "must buy $10 or more to use credit card" signs.
        deleted 13y ago
        [deleted]
    - rayiner 13y ago
      To date it has been contractual. However, as a result of an antitrust lawsuit, Visa and Mastercard changed the provisions that ban merchants from charging a credit card surcharge. But states are now trying to bad adding those surcharges: http://www.cnbc.com/id/100485094 http://www.cnbc.com/id/100485094.
ballard 13y ago
Article seems to be inventing a need in the banking set for yet another crowdfunding meets YC knock-off. For them I also have a bridge for sale, low mileage and runs great.
christiangenco 13y ago
Looks like Simple[1] is perfectly positioned for the future of banking. 1. http://simple.com http://simple.com
- jsemrau 13y ago
  I voted you up. People might think you post is spam for showing off what might be your own site. But for me at the end of the day this site is about exactly this, to show of the product of your work.
  - wavefunction 13y ago
    Don't vote him up yet. Visa/Mastercard programs like Simple still have to be backed by a bank. If you scroll to the bottom you'll see it's backed by "The Bankcorp Bank." Or maybe that's irrelevant to what you're saying, but it needs to be said.
  - christiangenco 13y ago
    Hah, for the record: not my own site, just a very happy customer.
- radicaldreamer 13y ago
  That's complete nonsense, Simple is simply a front-end for one of the worst banks out there: http://en.wikipedia.org/wiki/U.S._Bancorp http://en.wikipedia.org/wiki/U.S._Bancorp There's a reason they're no longer called Bank Simple- because the law is very clear on what you can actually called a bank. Simple is not a bank.
  - parsnips 13y ago
    They are not a front for US Bancorp. They're a front for Bancorp Bank (http://www.thebancorp.com/ http://www.thebancorp.com/), which is in fact a completely different and unrelated small bank.
    - radicaldreamer 13y ago
mmahemoff 13y ago
I've been consistently disappointed by UK retail/commercial banks' online services. My "business" bank (Cater Allen) provides maximum 13 months electronic history. Anything else you have to call and ask nicely to pay £10 for a snail-mail printout. Fully aware this would be a problem, I tried to do due diligence before signing up and there's nowhere to get a decent comparison, e.g. see feature matrixes and screenshots of the various offerings. They'll spend millions on football sponsorship and inane TV ads, but none differentiate on the basis of first-class online services a la Simple. Whoever is cloning Simple, please do it fast!
- alexqgb 13y ago
  Excessive advertising is the best sign that you're going to get shafted in whatever ways they need to shaft you in order to cover the costs of signing up more people to shaft to pay the costs of signing up more people to shaft... You see how this works? Finding a bank that doesn't operate like a ponzi scheme starts with finding one that doesn't advertise heavily.
- IanCal 13y ago
  What I'm really after, which doesn't feel like a hard thing for a large company to add, is a read-only api. Give me an access token and a set of endpoints to get my data out and I'll be a happy bunny, because then I can build my own tools on top. I find it's a shame that they don't really compete on features like this. Most people still go on personal recommendations (/OH GOD AVOID THIS BANK comments from friends). Either that or who will give me a few quid a year?
Apocryphon 13y ago
How are credit unions affected by mobile and crowdfunding?
- aet 13y ago
  I think crowd funding competes with investment banks more so than credit unions.
pathy 13y ago
BBC's Bottom Line did a podcast on alternative banking earlier this year, which might be of interest when discussing this topic. Especially about M-Pesa, which is truly disruptive in Africa. http://www.bbc.co.uk/programmes/b01qkmwl http://www.bbc.co.uk/programmes/b01qkmwl
dreen 13y ago
> To what extent crowdfunding platforms will displace commercial banks in the retail and small business segments remains to be seen. If crowdfunding gives banks too much trouble, they will simply complain to governments that they are "too big to fail" and that crowdfunding websites need to be regulated to their death.
aggronn 13y ago
Everyone in the comments here seems pretty pessimistic about what this is implying. I got the opposite impression--I think this report is actually very progressive, and that we should commend the economists at BBVA bank for identifying a trend so far in advance. Most significantly, there is this quote: >"For banks, crowdfunding poses a challenge ... However, banks should be prepared for this trend and make it work to their advantage." Making crowdsourcing 'work to their advantage' is very different than making crowdsourcing illegal. It would be much more profitable for them to start up their own crowdsourcing platforms. That way, people deposit money into the banks interest earning accounts, AND they get a cut. Instead of 7% interest with a non-trivial chance of default (which, if you account for ~3% inflation, means their true benefit is only 4%), they get a clean 5% fee right off the top. With no risk. At all. Its free money. This is a no-brainer for me. Banks are built to help people get the money they need to do what they would like to do. They would only stand to gain money by doing this on their own. Shutting down the whole system would be stupid, and I think the economists at BBVA would agree.
aet 13y ago
Which investment has more risk? A typical market neutral hedge fund or a typical crowd-funded type start up. Obviously there are tons of idiosyncrasies, but I'm thinking on average. I noticed that I am allowed to invest in companies via crowd funding, but, since I'm not an accredited investor, I can't invest in a hedge fund. I would also venture to say that most people investing via crowd funding are not accredited investors.

97 points by Irishsteve 13y ago

The easiest way for banks to deal with this disruptive threat is, of course, to make it illegal. Watch the lobbying efforts first; that's where you'll see "helpful" investor safety rules be proposed that begin the erosion of kickstart models.

jaydz 13y ago
The casinos did this with online poker and it worked.
- cinquemb 13y ago
  On which side of the Atlantic?
  - vermontdevil 13y ago
    On the USA side.
yuhong 13y ago
I think Congress recently went in the opposite direction.

apineda 13y ago

The government doesn't have to though cause it has our money anyway ( and our communications information ).

oofabz 13y ago

For now, banks continue to profit from crowdfunding. They get a percentage of each credit card transaction. However, they could be in serious trouble if an alternative payment system becomes popular. The stage is set - NFC and Bitcoin are growing in popularity, and the federal government recently began allowing merchants to charge a credit card fee. If a taco cost $1.50 with my smartphone, or $1.75 with my credit card, I know how I'd pay.

jjoonathan 13y ago
They already force retailers to not give discounts for using cash. If they've figured out how to make that legal, why do you think BTC would be any different? What we really need is for the justice department* to explicitly include the goal of making markets competitive in its short list of (un)official objectives. * Or any branch of government. I mention the judicial because I think it is the branch least susceptible to bribery. Since competitive markets are bad for business, that makes it the most likely candidate to promote this kind of change.
- spc476 13y ago
  I suspect that's more or a contractual thing than a legal thing. I know gas stations around South Florida are now advertising cash and credit prices (so my thought is---the gas companies have enough pull to get favorable terms from the credit card companies).
  - epoxyhockey 13y ago
    I know gas stations around South Florida are now advertising cash and credit prices It's not just Florida. Every state I've traveled to recently now proudly advertises separate cash and credit pricing.
    - protomyth 13y ago
      That's happening a lot in the northern plain states. Also, I am seeing a lot more "must buy $10 or more to use credit card" signs.
      - deleted 13y ago
        [deleted]
  - rayiner 13y ago
    To date it has been contractual. However, as a result of an antitrust lawsuit, Visa and Mastercard changed the provisions that ban merchants from charging a credit card surcharge. But states are now trying to bad adding those surcharges: http://www.cnbc.com/id/100485094 http://www.cnbc.com/id/100485094.

ballard 13y ago

Article seems to be inventing a need in the banking set for yet another crowdfunding meets YC knock-off. For them I also have a bridge for sale, low mileage and runs great.

christiangenco 13y ago

Looks like Simple[1] is perfectly positioned for the future of banking. 1. http://simple.com http://simple.com

jsemrau 13y ago
I voted you up. People might think you post is spam for showing off what might be your own site. But for me at the end of the day this site is about exactly this, to show of the product of your work.
- wavefunction 13y ago
  Don't vote him up yet. Visa/Mastercard programs like Simple still have to be backed by a bank. If you scroll to the bottom you'll see it's backed by "The Bankcorp Bank." Or maybe that's irrelevant to what you're saying, but it needs to be said.
- christiangenco 13y ago
  Hah, for the record: not my own site, just a very happy customer.
radicaldreamer 13y ago
That's complete nonsense, Simple is simply a front-end for one of the worst banks out there: http://en.wikipedia.org/wiki/U.S._Bancorp http://en.wikipedia.org/wiki/U.S._Bancorp There's a reason they're no longer called Bank Simple- because the law is very clear on what you can actually called a bank. Simple is not a bank.
- parsnips 13y ago
  They are not a front for US Bancorp. They're a front for Bancorp Bank (http://www.thebancorp.com/ http://www.thebancorp.com/), which is in fact a completely different and unrelated small bank.
  - radicaldreamer 13y ago

mmahemoff 13y ago

I've been consistently disappointed by UK retail/commercial banks' online services. My "business" bank (Cater Allen) provides maximum 13 months electronic history. Anything else you have to call and ask nicely to pay £10 for a snail-mail printout. Fully aware this would be a problem, I tried to do due diligence before signing up and there's nowhere to get a decent comparison, e.g. see feature matrixes and screenshots of the various offerings. They'll spend millions on football sponsorship and inane TV ads, but none differentiate on the basis of first-class online services a la Simple. Whoever is cloning Simple, please do it fast!

alexqgb 13y ago
Excessive advertising is the best sign that you're going to get shafted in whatever ways they need to shaft you in order to cover the costs of signing up more people to shaft to pay the costs of signing up more people to shaft... You see how this works? Finding a bank that doesn't operate like a ponzi scheme starts with finding one that doesn't advertise heavily.
IanCal 13y ago
What I'm really after, which doesn't feel like a hard thing for a large company to add, is a read-only api. Give me an access token and a set of endpoints to get my data out and I'll be a happy bunny, because then I can build my own tools on top. I find it's a shame that they don't really compete on features like this. Most people still go on personal recommendations (/OH GOD AVOID THIS BANK comments from friends). Either that or who will give me a few quid a year?

Apocryphon 13y ago

How are credit unions affected by mobile and crowdfunding?

aet 13y ago
I think crowd funding competes with investment banks more so than credit unions.

pathy 13y ago

BBC's Bottom Line did a podcast on alternative banking earlier this year, which might be of interest when discussing this topic. Especially about M-Pesa, which is truly disruptive in Africa. http://www.bbc.co.uk/programmes/b01qkmwl http://www.bbc.co.uk/programmes/b01qkmwl

dreen 13y ago

> To what extent crowdfunding platforms will displace commercial banks in the retail and small business segments remains to be seen. If crowdfunding gives banks too much trouble, they will simply complain to governments that they are "too big to fail" and that crowdfunding websites need to be regulated to their death.

aggronn 13y ago

Everyone in the comments here seems pretty pessimistic about what this is implying. I got the opposite impression--I think this report is actually very progressive, and that we should commend the economists at BBVA bank for identifying a trend so far in advance. Most significantly, there is this quote: >"For banks, crowdfunding poses a challenge ... However, banks should be prepared for this trend and make it work to their advantage." Making crowdsourcing 'work to their advantage' is very different than making crowdsourcing illegal. It would be much more profitable for them to start up their own crowdsourcing platforms. That way, people deposit money into the banks interest earning accounts, AND they get a cut. Instead of 7% interest with a non-trivial chance of default (which, if you account for ~3% inflation, means their true benefit is only 4%), they get a clean 5% fee right off the top. With no risk. At all. Its free money. This is a no-brainer for me. Banks are built to help people get the money they need to do what they would like to do. They would only stand to gain money by doing this on their own. Shutting down the whole system would be stupid, and I think the economists at BBVA would agree.

aet 13y ago

Which investment has more risk? A typical market neutral hedge fund or a typical crowd-funded type start up. Obviously there are tons of idiosyncrasies, but I'm thinking on average. I noticed that I am allowed to invest in companies via crowd funding, but, since I'm not an accredited investor, I can't invest in a hedge fund. I would also venture to say that most people investing via crowd funding are not accredited investors.