Why it’s so hard to fix banking: An interview with Simple’s exiting CEO
slate.com
slate.com
bad food? :)
When simple goes wrong though, the leaky abstraction of being a thin wrapper around another bank makes it much more painful. I forget the details now, but some fairly straightforward things broke for me a couple of times. And as friendly as their support might be, they were completely useless for fixing the problem because it was due to the underlying bank they built on top of. Canceling my account was also somewhat opaque.
So I can’t really relate to this article or most of these comments at all.
The underlying money transfer infrastructure in the US (between banks and merchants or banks and other banks) on the other hand really needs an upgrade from the arcane ACH system, that’s the last thing that sucks about consumer banking as far as I can see.
What a bummer! I banked with them for 4 years, and then they can’t verify I exist?
For the bank that was supposed to be the future and all high tech, that was an utter fail. I never bothered funding a dime into the account.
Business pro tip: Don't mess with customers' names. We take it kind of personally.
And then they changed "partner banks," and reissued my debit card with a new number and new bank account number...and changed the name on my card. And when I asked them to change it back, they said no.
And, yeah, I kinda take it personally. Because now, whenever I pay for anything using Simple, I'm called by a name that I don't consider mine. I have to stop and think, "Oh, they just called out an order for 'John,' and that might be me."
I love Simple in theory, but this was an infuriating regression. After a decade, they still can't accept e-bills, either -- that is, American Express can't send a bill to them and have it automatically deducted. I've kept my Bank of America account around in part because for all the crap BoA gets, their online banking system can receive e-bills and pay them from my account at Simple. For a "technology first" bank like Simple, that should really be kind of fucking embarrassing.
Last but not least? Bank of America also calls me by the name I asked for.
Why not legally change your name and get rid of this problem for good?
A couple of examples
No interest: A typical interest rate is 0.015%. No that is not a misprint. It's X * 0.00015 annual interest rate (https://www.boj.or.jp/en/statistics/dl/depo/tento/te180516.p...)
No checks: Not sure about other countries but in the USA sending a check to someone usually costs nothing. In Japan checks really don't exist. Instead to send money you do a bank transfer which costs anywhere from $3 to $8 per transaction. For a regular person they might only have 1 payment like that (rent). But for a company that adds up quick. Electronic payment (sign in to your bank, send payment) uses the same $3 to $8 per transaction system.
Byzantine hours: I recently got a business bank account and signed up for the online banking (costs extra). I'm only allowed to send payments from 8am to 3:30pm.
ATMs are still not 24hrs. 7/11 (Shinsei Bank?) and a few others open 24hrs. Most ATMs still close at some point ever day. MUFG ATMs are currently 7am to midnight.
Japan is still a very cash oriented society. They do have things like Felica (digital cash) but getting around with paper cash is not easy. Note, I don't mind the cash thing since cash = anonymous but I know lots of foreigners east and west that are surprised as they can generally get by cashless in their own countries but not here.
I'm not even scratching the surface. I'm sure the people in power and regulations in place make it nearly impossible to fix the system but someone one out there must have a way.
The interest rate available to consumers is directly related to the rate that banks can borrow from the central bank. The BOJ has had to operate at the ZLB for quite a while: https://www.boj.or.jp/en/announcements/press/koen_2016/data/.... The low interest rates available to consumers are a function of macroeconomic factors and monetary policy, not anything that consumer lending banks themselves do.
Free since at least the 70s is in contrast to Japan today which is still $3 to $8 per transaction.
In many parts of the world, checks are outdated, and can be difficult and expensive to use. That is not a mark of being backwards.
The question is, what services exist to pay business and private citizen in lieu of having cash on hand.
In Denmark you have mobile pay, free bank transfers from your free online banking account. Business can setup monthly payment plans via your debit/credit card.
In such a society, who needs a check, digital or paper?
As others point out, checks don't really exist outside the US, but electronic money transfers are usually mandated to be free. Most countries are starting to have some sort of mandated "basic banking" to allow anyone to have and use a bank account as a replacement for cash.
Interest rates for savings account in India is usually 4% p.a. It’s higher for term deposits.
Every time I use the banking system here I see the same problems I've experienced in the 90's in EU.
I’ll note they are much different than a “small” credit union in terms of reach & technology.
In their competitor comparison[1], you'll note they don't list USAA or any credit unions, because it would look basically the same as the Schwab account. Low or no fees, low or no minimum balance, decent interest rates, etc.
There's no reason for you to switch, either, but not everyone needs or wants a Schwab brokerage account too.
[1]: https://www.schwab.com/public/schwab/banking_lending/checkin...
IMO Schwab is still the best because I travel a lot. There's no downside to keeping an empty brokerage account
USAA also usually has very competitive personal loan rates and mortgage rates. Their insurance rates are usually unbelievable. Their customer service is top rated as well.
*not a joke the military death rate on motorcycles...
Full disclosure: I serve on the board of a credit union; although, I also hold accounts at banks.
The lack of simple usage (account, transaction) fees, better interest rates, and better account security features do it for me.
They are less visible than large banks because their budgets are smaller and the pooled campaigns suffer from committee problems. They aren’t any less visible than local/regional banks, though.
(I worked at a credit union.)
Edit: A credit union wouldn’t consider advertising a waste, either. Their thinking: 1) A certain number of members is needed to keep yields and rates competitive by reducing fixed costs per account or loan. 2) Growth makes new services possible; banking is competitive. 3) Marketing makes it more difficult for new entrants to expand into an area; local credit unions in particular believe there is a level of competition above and below which a community is not served as well as they could be.
Very easy question. There are people who profit from how <X> fails. The reason it bothers you is because you are not one of the people who are profiting. You might not be profiting from <X> but you are likely profiting from some <Y>. And when it comes to <Y> you are probably not recognizing how it fails on the cost of others and are not really bothered by it. So good luck convincing the people who profit from <X> to change it.
There are only 3 types of people: the poor that wants to be rich, the rich that wants to continue to be rich and the idealist, that using his ideals, wants to be rich.
edit: I always read it figuratively. Getting rich meaning to improve position in whatever hierarchy the person cares about.
This is great. It resonated with me because I guess subconsciously I've always had the intuition that this is true. However, I can't really find the original quote. Help?
No, but neither can we discount that they may be. Financial regulations in particular usually come about in response to failures and abuses.
That's the just-so story they tell children, but in living memory the only function of new financial regulations has been to exempt rich assholes from consequences of already-illegal things they already did and decided they want to do more of. One wonders if one went back in history far enough, would this aetiology ever be correct?
Lots of measures have been put in place in the last decade to prevent '08 style crashes happening again.
The entrenched interests want less regulation, not more.
I'm sorry if you don't want to hear it, but some regulation is good and put in place to protect the consumer.
People just don't seem to care how many times they get ripped off by WF. They don't move to the competition. They just stay there and take it over and over again. There is absolutely no incentive for banks to improve. Indeed, it is against the interests of big banks to improve the customer experience.
Poland was never part of the Soviet Union.
This is why my co-founder and I decided to relocate to the UK in order to set up our bank. The friendlier regulatory ecosystem here is just a huge advantage compared to the US.
Plus, there's still a pretty clear path to getting a national US banking license - it just requires you to expand in from abroad, rather than trying to build it within the US.
I suppose I'm willing to believe this claim, but I find it pretty surprising. In my social group, the commercial banks are viewed negatively almost to the point of stigma against using them. Everyone uses credit unions for their checking, and several credit unions in this area (Nusenda, Rio Grande, USEagle) are at least as convenient as the major national banks.
I think a large part of the perception of convenience comes down to the Credit Union strategy of federating services. An ATM network jointly operated by many of the credit unions in the region (CU Anytime) has a large fleet and has focused on placing ATMs in high-convenience locations like offices of major employers and college campuses. Co-Op Shared Branching means that you can walk into a branch of almost any credit union and they can access your accounts at your own credit union. And as for avoiding ATMs and branches at all - the online and mobile services offered by most credit unions are perhaps a bit behind aesthetically, but they work just fine, and the credit unions seem to have been offering free and easy person-to-person transfers for longer than the commercial banks have.
So what's limiting adoption of credit unions? I'm skeptical that it's awareness because the branches are everywhere and some of the larger ones around here purchase billboards and TV advertising regularly. Is there a feeling that they're more limited in their service offerings?
I very rarely even use ATMs anymore; mostly cashless. So ATMs don't even matter.
I mean....I'm not sure there's a lot to learn from the Simple story beyond that.
4 years later I can say it is basically unchanged. It really isn't very usable. I do still like how it implements the envelope savings towards your goals, but for managing and tracking money it really isn't useful. Mint is better for tracking.
I like Simple, but I wouldn't say I love Simple.
- I can get same deals from Ally bank. No fees.
- Ally bank reimburses 100% of all ATM fees I pay.
- Ally bank savings account is 1.60% at the moment. It is no investment account but better than any other bank period.
- Ally's customer support is pretty darn good
I don't see ally going crying around about how hard banking is.
Simple was just sub-par.
My problem was that I had a large check to deposit and before they cleared it they insist I not only specify the source of the funds but also what I was going to use the monies for! I understand they need to ask the former (per IRS regulations and "Suspicious Activity Reporting") but the latter is frankly NOTFB and no other bank has asked me that question. I told them as such and closed the account.
P.S. Banks should also be required by law to provide minimal services to every American citizen. It is absolutely beyond stupid that there are 10 million American households that don't have access to a bank account [1]. These households are then forced into dealing with the Check Cashing/Payday Loan businesses who are pure, unmitigated fucking evil. These firms charge outrageous fees that trap many people in poverty.
I've never used such a service myself, but I have heard from friends that the process was pretty painless.
Most banks offer it, or at least claim to. However there's still no penalty for banks that don't do their job properly. But it shouldn't stop you, transferring all your SEPA direct payments isn't that hard even if you do it yourself.
If I need cash, I walk into a Chase branch [Not my bank, but conveniently near a Thai Restaurant I like to visit] and just ask for cash advance against my VISA card. Done by a teller, there's no ATM fees.
_Nickel and Dimed_[1] is oldish, but still highly relevant, if you want to read a depressing book.
[1] http://barbaraehrenreich.com/nickel-and-dimed-by-barbara-ehr... https://www.amazon.com/Nickel-Dimed-Not-Getting-America/dp/0...
Like every other thing poor people can't afford, it could be solved by UBI/EITC/negative income tax, or direct service if you like big government, but banking isn't special.
Use credit unions or small, local banks and you likely won't have this sort of problem.
IIRC, the fee was $10, I had to provide my ID, secondary id and provide a fingerprint.
https://boards.straightdope.com/sdmb/showpost.php?s=0a4ad0b9...
I remember hearing someone sued BoA(?) for "failure to honor the face value of a check" and lost. After that, fee's started spreading. I can't find an online reference to this story.
If you look into the fintech space, there's a stark difference between Europe and the North American market. We have several players entering retail banking every year in Europe, and that's partly thanks to regulations.
Really? "ATM" withdraws are free in the UK, money transfers are instant, checks are dead, and account data easily downloadable as e.g. CSV.
I've had US and UK accounts and it is night and day. Who were you banking with in the US who gave you as good of an experience as a UK bank because I'd love to move to them?
Get a local credit union and you should be more than happy.
The only times I get frustrated are when you need a lot of cash (think buying stuff from Craigslist). Incoming wires are free; outgoing wires are reasonably priced (and is how I submitted funds to the attorney in a different state to close on our house).
The few times I’ve had to contact customer support my wait time was in the single digit minutes.
Many other things I could add, but I already sound like a shill. Schwab is also great for ETFs. No experience with their other banking products.
I have zero interest in seeing blockchains enter any financial services I'm part of.
The reason the number of unbanked keeps going up is that post-9/11 the USA kept tightening anti-money laundering requirements. These require banks to refuse to bank with clients who they suspect might be criminals, on pain of the banker becoming a criminal themselves. That means once people fall out of the banking system for whatever reason and have to live in the cash economy for a while, they cannot prove where their income came from and are thus presumed guilty by default.
To fix that you'd need to make US AML laws much less punitive. No political appetite exists to do that.
https://www.nerdwallet.com/blog/banking/blacklisted-by-chexs...
In the 4 years since, I've had a few instances where I needed checks. I have a plumber I like, but he isn't really a businessman, and so he wants cash or a check when he's done with work. The only tradesman I've dealt with that wasn't happy with me sending a check from Simple. He does good work though. I have some bills I pay via check, like the yearly pool membership, that I can just use Simple to send out.
I've been pretty happy to not have a check book. Especially after I had a $45 check I sent someone that got stolen from their mailbox and cashed for around $2,000 each, twice at different branches of my bank. Thankfully, I noticed within a day or two, and it was only a big hassle.
Frankly as someone who used to work in the field I found this insanely frustrating and would constantly hate that I was forced to get rid of customers who I wasn't positive had done anything wrong to protect the bank, and if they HAD done something wrong I was basically destroying law enforcement's lead and possibly alerting the target. But that's the current effect of the laws. They definitely need to be fixed not just for broader goals like banking inclusion but to effectively do what they're supposed to do in the first place.
The anti-money laundering laws came out of domestic organized crime. After the feds got Al Capone on tax evasion the mobsters started paying their taxes but the feds still wanted to go after them that way, so the concept of "money laundering" was created from whole cloth.
The problem is it never really worked once the crime bosses had an accountant on payroll. And organized crime itself was primarily an artifact of Prohibition and the Depression and has been on the decline ever since. The WoD is probably the only reason it still exists at all, but unlike Prohibition, that is international. Which means the criminals can export the money from the US as cash or precious commodities and don't have to deal with the US banking system at all.
With terrorism it's even worse. If some prince in the middle east is using oil money to fund terrorism, the money is never even in the US to begin with.
It's the textbook example of a law whose costs outweigh its benefits but no one wants to fix it because they don't want to look soft on drugs/terrorism.
Old school mafia are using check cashing places to launder money.
What, charging mobsters with tax evasion? It might still work on the occasional mid-level guy who was dumb enough to not pay his taxes. When was the last time a top-level crime boss was charged with it?
> Old school mafia are using check cashing places to launder money.
Of course they are. That's why the laws against money laundering are harmful. Most of the people you're trying to catch with them are adept at navigating around them, so all they really do is molest honest citizens/businesses and degrade privacy.
Very few people ever switch an account anyway. Something loke 0.4% of the market have evere done it.
PSD2 is supposed to make it even easier but I guess we'll see.
Honestly can't find it now. It may just have been something I heard around the office (I am currently consulting with Open Banking in the UK but do not speak for them here or anywhere else)
You won't get a competitive market if you don't solve those two. But it's not even clear if it would be benefic to lower the barriers to entry.
So based on that, Account portability is not whatever it is that is stopping the US banks providing a service to the entire population.
There's no need to do it in 2 days -- take as long as needed for securr setup, then use both accounts for a month.
Perhaps his criticisms of those regulations are valid — but those regulations exist because of previous problems.
In many cases, the same people who scream, “banking sucks” would also scream if their bank failed due to a reason that some existing regulation would have prevented.
No.
2002 7,870
2003 7,750
2004 7,612
2005 7,507
2006 7,380
2007 7,262
2008 7,061
2009 6,813
2010 6,506
2011 6,263
2012 6,061
2013 5,836
2014 5,596
2015 5,330
2016 5,102
You think it’s unfair you can’t cash your check for free and have to pay a $10 fee? Take a look at what the bank is required by the BSA and later KYC laws to do after accepting that check and understand it’s not the bank that’s the problem. It’s the onerous regulations that have literally almost halved the number of institutions able to survive.
In my country (Brazil), the bank identifier used by several banking protocols is three digits. It's hard to imagine over a thousand separate banks in a single country.
(For the curious, the full list of identifiers: http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPCNC.pdf and http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPECNC.pdf)