Digital upstarts taking on Britain's dominant few banks | Hacker News Reader

Digital upstarts taking on Britain's dominant few banks

economist.com

42 pointsedward29 comments

Monzo is really good but I think it's unfair to characterise the high street banks as dinosaurs that never innovate. They almost all have phone apps that let you instantly send money to other people, often straight from your Contacts.

Disagree. Most of the UK banks are dinosaurs, inhibited by technical debt they were too scared and/or lazy to pay off.

I’ve used four established UK banks. Monzo is light years ahead.

Simple example: buy round in pub.

Monzo: “£10.50 spent at Red Lion in Shoreditch” immediately pops up. Balance is reduced.

All other banks I’ve used: <nothing happens for days, as long as a week>. Showing on app after that: “6-Feb CHG A LO SWIN 3868X £10.50” or similar garbage. And if that subsequently takes you overdrawn, well, your fault buddy! Should have tracked every penny you’d spent and run a spreadsheet to make sure you weren’t going overdrawn. Not our fault you’re too busy to itemise your spending, even though there’s absolutely no good reason for you to have been required to do that for decades.

The first time I used Monzo, I topped up from my bank’s debit card and bought something from the shop. My phone buzzed as I tapped the card reader and it gave me that magic moment feeling startups are always looking for. Five days later, the top up from my old bank appeared on my internet banking. After a minute, I realised what it was, laughed, and closed the old bank account.

personally I'd much rather have the bank-account-that-receives-my-salary have its transactions processed by prehistoric software running on an ultra-reliable mainframe instead of the latest version of mongodb or cassandra on AWS

I will however happily sign up, deposit the bare minimum and thank their VCs for paying the foreign exchange fees for my holiday :)

How is their customer service if you need to phone? I don't think I could go back to a bank without First Direct's phone support - but their back end is just HSBC so slow and jargon statements.

It's true they mostly have phone apps. But phone app is not phone app... there is a huge difference for tracking your account actively with instant messages on charges vs. a more or less good web wrapper as I've seen on most bigger banks.

I think this hits the nail on the head. Sure I can send money to who I like from my UK bank, so long as I have their account number and sort code. But I can find people on Venmo if we have mutual friends, there's a social graph underpinning it. Whereas the banks have a legacy paper system underpinning theirs.

Again, with things like MoneyDashboard, or Mint you can track your as a series of data object, assign tags etc. In my online statements I can track them as if they were double recorded accounting in a book.

The old banks have legacy systems that they are putting new technology on top of. These new banks seem to be having this new technology and thinking as a core part of their process. This is a good thing!

Most UK banks support Paym, which lets you send money to someone using just their phone number. This is paid directly into their chosen bank account, not into an intermediate PayPal-esque wallet service (which is what Venmo seems to be).

https://paym.co.uk/

Only if the recipient is happy to have their name looked up using their mobile number.

>When you select or input your contact’s mobile phone number and the amount you want to pay, you will see a confirmation screen which shows the recipient name as registered to the mobile number on the central database. If this is the person you want to pay you can confirm the payment. If it isn’t the person you intended to pay or isn’t someone you recognise you should cancel the payment.

In what circumstance do you have someones phone number but not their name?

Hopefully only banks/privileged API key holders can look this up

I am not sure that banks are allowed to do that, I know that reverse lookups are banned in the UK for good reasons and abusing the internal systems of phone companies to do that has severe penalties.

reverse lookups aren't banned in the UK, afaik

You might have someone's phone number but not their full name or legal name.

And why would I need to do that send money to some one who doesn't have a sort code and b ac number.

Seriously. I use the N26 and AIB apps regularly and N26 is vastly superior. I can use it to auth transfers (can't with AIB), choose alerting levels, and it's generally faster and more pleasant to use.

Yes, you can send money, but there's no finesse. Various things to prevent human error, or ease integration/usability just haven't been done.

There are no checksums on account numbers to prevent sending money to the wrong place.

You can't give someone a unique, bank generated payment reference for a payment you made that they can check against their incoming account, or prove ownership of a payment with some sort of verifiable transaction-specific secret.

You can't give someone an electronic invoice to pay (by bank transfer) that binds a unique reference number, amount, and target account into something they can't screw up.

I use Monzo, I can see what I spent where, and eacd 'where' is part of a broader category so I can see what is being spent by category. It is the ui that banking has needed for a long time.

It must be relatively easy to only operate the liabilities side of banking, its the assets (loans) side I would expect to be the most difficult path to navigate for new banks.

Nothing on the Monzo roadmap re loans: https://trello.com/b/9tcaMB4w/monzo-transparent-product-road...

I used to work with the head of engineering at Monzo, smart guy.

I know he pushes a lot of their tertiary code open source.

Curious for those that use "upstart" banks, what convinced you to try out and move funds into that bank account? In the US at least, customer stickiness to their financial institution is extremely high and personally, the last time I opened a new bank account and moved out all of my funds was due to how I was treated as a customer at my old bank.

The other appealing draw for me was also high interest rate, but curious to hear what are the killer features for a digital bank.

> new research reveals that account holders are more likely to stay with their bank – typically for 17 years – than remain loyal to their husband or wife, with the average British marriage lasting just 11 years and six months.

https://www.theguardian.com/money/2013/sep/07/switching-bank...

I use Monzo. Initially I was curious about the tech. I've since used it and Revolut for the cheap foreign exchange/cash withdrawal. I've still got my regular bank accounts.

Digital servicing and apps, no need to head into a branch, ever.

MM and you trust an easily losable, stealable, and hackable phone also prone to catastrophic failure with access to you bank account.

The UK broadsheet weekend financial sections regularly future people who have lost life changing amounts to fraud and the banks response is to shrug and say "data protection"

And you think an "app" based bank is going to be better.

I sometimes wonder how much of the UK economy is actually built on this fraud. The vast majority of these accounts are with UK institutions, it should be rather trivial to track down. Just the sort code alone tells you the bank and very often the branch.

I've heard it claimed that often the money gets transferred internationally from the shell account. Even so, the KYC for anti-money-laundering purposes should cover who owns the account it first lands in.

The most benign sounding explanation I've heard that sounds plausible is that privacy is a key selling point for UK financial services (I hear Switzerland isn't so private any more) and that main parties that investigate organized fraud (typically City of London police -- distinct from the Metropolitan police) know where their money's coming from.

Viewed from this perspective, every article on a couple being blatantly defrauded of their life savings is more like an advert for those international customers that might want a bank within a country that allows the whole banking system to take "data protection" to ridiculous levels.

very little I would imagine compared to the absolute vast amounts that travel around the financial system every day

If you have a business and spending a lot of money on banking take a closer to the new Fintechs around the globe. If you are e.g. in the EU you are not forced to have a bank in the same country as your company... you can use any bank in the EU (and also beyond). It's also advisable to have bank accounts in different countries. I've seen more than once bank account blocks by state regulation although no crime was conducted, simply an computer error on tax authorities side (this can happen any time). Many banks live in the past and think they can charge a lot because there are no visible alternatives... but they are wrong in the digital age...

If you think high street banks are slow and cumbersome and can’t catch up you are (probably) wrong; I know enough from being a contractor in London to know they very much are catching up. They are changing every aspect from internal APIs and tech stack to customer-facing apps and sites. I definitely wouldn’t bet against them. Monzo has a clear lead but I can’t see that being sustained long enough to counteract the strength of existing brands once they start to release their new products.

> ...counteract the strength of existing brands

Hmm, apart from being widely known (thanks to marketing), I'd argue existing banks don't have a very strong brand. Mention the word Natwest, HSBC or Santander and most people's first response will be "I hate them, they took forever to open my account/incorrectly charged me/have closed all their branches".

Fair. And especially HSBC who are pretty much universally hated. But I know that at least a couple of others are making huge improvements. Plus by “brand” you need to include “trust” (wither or not that’s misguided!)

Or in Ireland: "I hate banks because they helped destroy our economy in 2008"

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