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Comment by tlb | Hacker News Reader

Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons. They charge high regular fees and even higher "gotcha" fees if you make a mistake. They can take back money sent to you for up to 90 days, but often can't get back money you sent to crooks even if you discover your error the next day. And 100 other complaints.

So if you're doing something involving moving a lot of money around, you may need to be your own bank to make the whole system work well.

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> Another answer: because regular banks are awful to deal with. They don't have nice APIs to just move money around. They apply velocity limits at surprising times. They can terminate your account suddenly for opaque reasons.

Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement.

It seems like they're making the point that this will be better for Google and for things like Google Pay/Wallet which can now operate at a bank level rather than at a customer of a bank level.

For the rest of us, I agree with your view.

> Do you think Google is going to do any better at this?

Google's new checking account isn't really Google. They don't currently have the licenses needed to act as a bank. It's basically a Google branded checking account from Stanford Federal Credit Union.

From what I've read, Google's checking account will be similar to Uber's credit card in that you will sign up and get some benefits through Google/Uber, but pretty much all maintenance will be handled by the issuing bank.

Source: https://www.fool.com/investing/2019/11/17/why-is-google-abou...

And this is intentional. Google definitely doesn’t want to be regulated as a bank. It just wants your financial data, so it can send better targeted ads.

Isn’t access to that financial data extremely well regulated?

I’ve often thought of launching a credit card company solely for access to people’s transaction data. That provides tremendous insight into many companies turnovers allowing to anticipate earnings.

Not regulated well enough, imo, MasterCard is already willing to sell data to these same actors: https://www.theverge.com/2018/8/30/17801880/google-mastercar...

Half of Visa's, and MasterCard's business model is selling payment flow. This isn't some novel development for these processors - they've been doing it for decades.

Shockingly enough, people don't care enough to shred all their credit cards! Even people who tend to get outraged on the internet about these sorts of things still have, and use at least one.

(And before someone brings up that EU is not heavy on credit cards - the function of European debit cards in this space is not one whit different from that of a credit card.)

Live too live in a debt based society!

Well pointed out, Mister Gotcha.

Or you could just open a checking account with a credit union that doesn't sell your data to Google.

> Do you think Google is going to do any better at this? They already have no customer support, close accounts without notice....etc... The article is right, this is about engagement.

Absolutely. I say this as someone who is still angry with them over Reader. I don't trust Google, but I trust them a hell of a lot more than Wells Fargo, Bank of America, et al.

Really? Wells Fargo isn't mining my search history using a black-box algorithm to decide without transparency whether to close my account or decline a transaction because I might have become a risk of some sort.

Not that they would ever do such a thing.

I'd rather have my bank abruptly close my account for opaque reasons than fraudulently open additional accounts in my name.

Why not both? With Wells Fargo you can have it all!

Well...latter is illegal and the former isn't (usually) so I think there's a bit of apples-to-oranges, but yeah you got me, as we've seen being a regulated institution isn't a guarantee of good behavior. I still think the incentive, opportunity and the inclination of Google to not act in my interest is pretty high.

You literally just described fraud protection, which is something most banks nowadays use. It might be opt-out (or even opt-in) but that's very much a thing that banks do, and they get plenty of false positives with it.

I trust Google much as I trust the sun. I believe it’ll keep doing its thing, and that this will probably overall be beneficial. I’m glad there’s a sun. But the problem with the sun is that it doesn’t give a crap about me. If I have a problem I’m going to have a helluva time contacting the sun’s customer support people, and they’re not going to be well incentivised to take care of my problem if I do.

Perhaps that analogy had got away from me a little, but the point is: I like having a bank with branches where I can go in and talk to a person if I ever really have a serious problem. I feel confident that the bank isn’t going to accidentally swallow all my money and then become uncontactable, whereas I tend to worry that about big tech companies.

I think Google can be awful and still fare better than most regular banks.

I work for a bank. As bad as we can be, there's always a recourse of some sort (not always useful, but sometimes). There's always a regulator (not always activist, but sometimes). There's always an alternative (not always equivalent, but sometimes).

With Google, it's up to Google whether the answer is 'screw you' (unless you're spending tens of millions, it is).

If Google does banking, it has to obey to banking regulations.

Like you say, the banks ignore the regulators, shortcut the recourse and the alternatives, really, are all equally awful.

I will bet, without any specific inside knowledge, that the reason that Google hasn't already gone into banking is that they are looking at how to construct a "financial service company" that does bank-like things without being subject to the full force of OCC oversight.

The traditional banking system is about 150 years old by now. Increasingly, it seems to serve a smaller segment of society, regardless of its half-hearted attempts at innovation.

I have a number of friends working in finance. Lovely people. Absolutely arrogant, though, when it comes to the question of whether their industry will face non-trivial disuption.

Maybe Google and other current tech giants will not be the ones, but someone is going to come along, take a chunk out of financial services, and start the ball rolling on a non-trivial amount of disruption in that space.

I often see people questioning why others would want a new finance/banking system. Yes, the traditional one has some negatives, but how could you want something almost completely new?

I think this line of questioning misses the phenomenon underway. The banking system works for well for me, so it can seem counterintuitive to see people pushing for quite major changes. But, clearly enough people are fed up that things are starting to move in that direction. At what point do I just say, "does it matter whether these people can provide a litany of reasons?"

Either traditional players sack up and satisfy current and potential customers, or someone else will.

Branch banking as we know it was effectively invented by AP Giannini in the 1920's - arguably modern banking didn't exist till the computer and ATM networks arrived in the 1970's.

I'm pretty sure that whoever disrupts banking will do it the Uber way, by disregarding all the laws that they are required to follow and trying to claim not to be what they actually are, with the same eventual success this route has had for Uber.

Uber is succeeding? Its finances don't think so.

It's really amazing how a company can run for so long on so much loss. IIRC Twitter has never turned a profit either, and yet there it stands

Twitter has made profit now. But didn’t for a while. I worked there until 2015 and the consensus was that they had enough money to continue operating at the then current loss levels for like 50 years.

It’s hard to visualize how much money these big tech cos are actually taking in investment. If you have a $B you can lose $10mm a year for one hundred years.

In English if you say "their lack of morality will lead them to have the eventual success of Al Capone" one is generally assumed to mean that the person under discussion will end up in Federal Prison, although also with the chance of running a highly lucrative criminal enterprise first.

Financial crime is something that is heavily enforced on an (inter)national scale.

Local transportation violations aren't enforced in quite the same way.

Yeah, but it's generally enforced by freezing your funds until you show up in court. If you've come up with an alternative, maybe just leave out the government-facing API that lets them freeze funds.

This will just mean that they get to write their "amazing journey" post from prison.

This is now how the banking sector works. Most of the newcomers like N26 and Revolut are pretty much just an average bank with modern technology. The reality however is that they don't have a sustainable business model. They offer bank accounts for free and keep bleeding cash because no one wants their premium accounts, presumably because people don't use them as their primary bank account and just as a middle man for easy access to Google or Apple Pay.

> Increasingly, it seems to serve a smaller segment of society,

I am not certain that it serves a smaller segment of society than ever, I suspect it's always served a small segment of society. Would want to see some data.

No one can disrupt the traditional banking system without getting enabling federal legislation passed first. This isn't an industry where startups can just disregard the laws. The government literally seizes assets and puts violators in prison.

So your friends are right, for now.

This 100%. I work at a fintech that's not a bank. Instead, we integrate with people who integrate with banks--we've basically got one middleman per continent (except a few).

It's awful. Rather than having to figure out the regulatory details of each jurisdiction so that we can be compliant, we instead have to figure out the regulatory details of each jurisdiction so that we can trick whichever middleman into being compliant on our behalf.

The waste is incredible. It's all promises of "we'll handle that" but never any actual contact with somebody who can code and you know... handle it. I'm beginning to think it's just parasites all the way down. And if that's how it's gonna be, why not cut out the middlemen and be the only parasite in the loop?

Because that's how the cycle continues and the status quo remains the same.

It once started out with someone asking the exact same question and evolved into this.

Exactly.

I talk to several Fintech startups a month complaining about this sort of thing. Forgive me if I can't quite gin up any sympathy. It's a business with centuries of baggage, massive inertia, vast resources, but what I typically hear is "I'm gonna Uber/Tesla/Bird this financial industry thing in 6/12/18/24 months, ignore the rules because 'disruption' and find someone else to push all the risk, compliance and governance issues off onto. I'm going to pretend it's not a cost of doing business and hope no one catches on before we find an exit and get rich". And now you're finding those 'others' aren't the suckers you wanted them to be, and that complying with regulations, especially across the world, actually costs money. Tons of it.

And most of all...real disruption is incredibly hard, no matter the SV mythmaking. The Fintechs that are going to be unicorns aren't complaining that the people they tried to outsource the hard parts of the business to aren't making all the hard problems magically disappear.

Thank you. Finally a succinct, true statement regarding financial regulation.

I work in finanance and a huge chunk of my work is generating reports for regulators. Specifically in derivatives (swaps and such), which was fairly wild west before the financial crisis.

There's a lot of catching up and a lot of interest into the trades by regulators, which were basically off-exchange and which are a big part of structured products. Those are financial products, which Warren Buffet deigned "Financial Products of Mass Destruction"

And you know what? I agree with those regulations despite the fact that it can be a real pain.

And if anybody really believes such regulation is crap and just there to support entrenched market players. Well; essentially banks self regulated before the financial crisis.

And what could ever go wrong with that?

«why not cut out the middlemen and be the only parasite in the loop?»

Observation: this is precisely what cryptocurrencies do. No middleman. Users transact directly with each other.

> No middleman

except for a handful of giant server farms in china

Miners don't have middlemen powers. They can't censor your transactions like a true middleman could. Even if 9 out of 10 miners colluded to censor you, all you need is 1 out of the 10 to be honest, and your transactions would still go through.

But the biggest actors in crypto are the exchanges, literally the middlemen between buyers and sellers. The volume of trade with crypto as a medium of exchange is dwarfed by the amounts changing hands via the exchanges.

You may need an exchange once to acquire crypto (and even then, not really, you could buy crypto from an individual, or mine it, or just take a payment in crypto...) but once you're "in the system" so to speak, you can pay and receive crypto without ever having to deal with exchanges anymore.

I've made this observation too.

We spend a lot of time trying to achieve consensus with our neighbor parasites about the status of a transaction (slice the pie n ways, perhaps your database says that m of those n got paid, but mine says that m-1 got paid...), but if it were on a public blockchain there would be nothing to dispute.

I don’t know if it is specific to banks but there is a common pattern I have seen among internal developers: not only a complete lack of curiosity to understand finance, the underlying business, but an active resistance to any attempt to explain them. They want the numbers to be data, and don’t want to have to know anything about this data, and be told exactly what to do with it and they will code it up.

I am sure there are exceptions, but my point is if you talk to someone who understand what is going on in a bank, you would be extremely lucky that this person also can code.

This is slowly changing as I see an increasing number of junior bankers who are also interested in picking up coding skills. They won’t be developers per se but will certainly become technically literate interlocutors. But it will take some time.

As a counter, I've contracted for a bank and big business generally, and they are activly resistent to allowing you to interface with the business in any meaningful way.

There's several reasons for this, but at the end of the day people don't take kindly for your making them redundent and there's a lot of fiefdoms going around.

Why would any developer who wants a deeper look stick around?

That is profoundly untrue in my experience (13 years of working as a Dev manager at UBS and BofAML). The knowledge of how the business really works sits largely with the long-served IT and Operations staff. This is certainly the case in the back office (clearing and settlement) and in the regulatory space. I can't speak so much for the front office, but it seemed that the developers with successful careers were those who understood the business and therefore could talk to traders and desk heads in their own language (far more successful than the developers who were actually any good at producing maintainable software, but that's a different rant).

There are lots of things wrong with technology in large banks but the business knowledge of developers is pretty low on the list.

I left banking a few months ago, so I am no apologist for the sector.

I've seen that pattern too, and perhaps I'm a little guilty of it.

But if you say:

> we want to encrypt this field with your public key before sending it to you

and they respond:

> yeah, we can handle that

and then contracts with deadlines and penalties are signed... Wouldn't you expect there to be somebody on the other end that is willing/capable to generate a GPG keypair?

At what point is it worth holding their hand through the technical bits, and at which point would it be better to replace them?

> They can terminate your account suddenly for opaque reasons.

I generally am 'ok' with modern (US) banks and global, partly because I know their rules and set my expectations accordingly, but unlike what one of the sub-commenters said: "Chase" completely fucked up my world with no recompense for a while. No rhyme. No reason. Ultimately it was because I had connections to executives of the bank at the CEO level that I was able to get it sorted out, but until then, I was literally "without any money" for about 60 days. That, to put it mildly, if you don't have a reason or a recovery time-line (hard to tell your friends: trust me - I'll pay you in 15 days) if you literally don't know.

EDIT: It was /u/callmeed below. I can't say 'no' to his/her experience - but while I still work with Chase - I feel "on edge" all the time because I never know what they are going to do to me without notice.

Same thing happened to my wife earlier this year. She deposited a check (from an insurance company), Chase apparently deemed it fraudulent (it was not) and with absolutely zero notice simply closed her account. She pulled open the app one day and noticed that the account was just missing, with all the money that was in it.

Hours on the phone with no resolution. They told us we had to get the insurance company to contact them and verify that the check was valid. Like wtf is that. That’s not how checks work. And we’re not talking about a large sum of money. I think it was around $4k. Not particularly abnormal.

We finally walked into a branch with our 4 month old daughter, plopped ourselves in the manager’s office and told him we weren’t leaving until it was resolved. A few hours later we were told that the account was permanently closed and could not be reopened. But that we would receive a check in the mail for the funds that they quite literally stole from us.

As soon as that check cleared we closed all our accounts with Chase. Fuck them.

Sure, don't do business with Chase. But this points to why people use banks, you take for granted that your money won't disappear permanently with no recourse. So you go ballistic when it seems like it might happen. Nobody in their right mind wants to use anything where it really does happen.

If Google had money that belonged to me, I have no idea where to even begin trying to get it back. Do they have offices that you can stage a sit-in in?

Luckily we have regulations for that.

Google is not a bank. If they start to offer banking services it will be through a partnership with an actual bank. Your money will not be “with Google”, unless they enter the multi year, very expensive process of applying for a banking license which they’re not doing.

Not that I don’t disagree with your point, in general. But google can’t just take your money like that. At least not in the US

> the multi year, very expensive process of applying for a banking license

If the upside is taking a chunk of Mastercard/Visa's 600bn market-cap, the $0.01bn effort of a "very expensive" banking licence is peanuts.

Then why aren’t more companies trying to get one?

It’s a huge undertaking to do. You have to prove to the US government that you’re capable of handling people’s money safely and that you’re providing a benefit to your customers. Years of internal systems audits with nebulous requirements. How do you do that without handling people’s money? You partner with a bank. It’s easy and relatively cheap.

But regardless of your ignorance on the subject, the original point still stands that Google is not gonna just “take your money”. Your money will always be in the custody of an actual bank.

The problem is that thing will be regulated like a bank, there will be a lot more scrutiny. And unlike Uber's "but we're just a tech company so we can disrupt by going around the regulation" tactic, doing this with banking would be a tad more challenging. Not necessarily unprofitable but it feels antithetical to the way Google usually works.

And where might that bank be? I live in a relatively small city (~100k people) and each of the three banks I have accounts with has at least 3 branches within 30 minutes walking distance. Even if all of them tell me to fuck off, I can hop in a car and be at their headquarters in 2 hours or at the ministry of finance to file a formal complaint in even less.

Best case scenario for me with Google's bank would be an 8-hour drive to Germany, just to run into not only a language barrier, but a buerocratic one as my ID would not mean shit to them and their regulatory bodies would not even consider hearing me out without going through the EU first (== more buerocracy). All of this I would of course have to accomplish while not having access to my bank account.

Banks are one of the few decentralized services that have survived the modern economy and while I would switch banks immediately to have access to even something as simple as a balance check API, I would rather continue to fight the reverse-engineering arms race with my current bank than hand over my finances to a faceless, poorly regulated, foreign corporation and risk any one of a million possible small mistakes leave me penniless.

Even worse scenario here. I had 4 accounts (a personal checking, savings, a joint checking, and a business account) at Chase. I transferred money from my savings to my checking one day to buy a car. Did a wire transfer from the checking to the dealership. The next day transferred excess funds back to my savings. To me a completely normal set of banking transactions. To some Chase fraud algorithm though it was a red flag and my primary checking was closed. But instead of notifying me there was an issue or that they were closing the account they opted to just lock me out of online banking entirely on ALL my accounts since they were all linked together with one user id.

When I called to figure out what was going on I was advised the account was closed and that a check would be mailed with remaining funds within 60-90 days. I asked about the other accounts and they are all fine and open. BUT, because the fraud closure was related to an online banking transaction I would no longer have access to online banking. Pretty much rendered the remaining accounts useless at this point. So while they didn't close all my accounts themselves, they pretty much forced my hand to close my remaining accounts.

To their defence you should see the eye watering piles of regulations they have to comply with. A large international bank will typically have a whole team dedicated to just reading all the draft and final regulations that are coming every week.

Regulators state that they want more competition but in reality they don’t. Those regulations create massive barriers to entry. And regulators are wary about smaller players who will not have the scale to be financially robust, will be more likely to be a dodgy operation, and not to have all the established procedures of a large player.

If someone sent you money via an ACH push, they shouldn't hold money for 90 days. If you have pulled the money in via ACH pull. The bank you have pulled from has 90 days to contest that money transfer. Fintech banks will also do holds and have low amount thresholds to mitigate risk. One of the large fintech banks actively advertises $1 million in FDIC insurance but you can only move $50k a day with no way to remove the fraud controls for your account.

Also none of these fintechs are actually banks. They just partnered with a small bank(s) and are still beholden to these banks compliance team. There are strict rules about monitoring bank transfers and reporting suspicious transfers. If your funneling cash through your fintech bank, you'll probably get shutdown with no explanation.

Paypal is generally considered to be worse than banks. They will "freeze" your funds for months. You have very weak rights there. With real banks, if that happens, you raise hell with the bank regulators and something happens.

PayPal is actually a bank in some countries.

I wanted to build a product based on moving money around, and it seemed like it would be easier to start my own than to get what I wanted at a reasonable price. The financial industry is needlessly complicated and I don't know why it's so hard to just move money around.

I can write checks easily and even manually set up recurring ACH transfers, so why can't I automate that with an API? There are a couple companies that do it, but it's too expensive for doing lots of small transactions, yet it's free through ACH and writing checks...

> The financial industry is needlessly complicated and I don't know why it's so hard to just move money around.

I guess regulation and the technology being fairly hard to iterate on since a lot of systems are running the same software as they were 20-30 years ago when everything was moved over.

The financial industry is difficult because of money laundering.

Any illegal activity requires a financial crime at some point to launder the spoils. Therefore, financial institutions are the perfect place for law enforcement to hook into to try to crack down on the more widespread and organized forms of crime. The financial system is so much of a force multiplier for criminal activity that LE can't really ignore it.

To hook in, they need you to do KYC, they need you to check with OFAC, they need you to do you to do SAR's and report any attempts to structure financial activity. Basically, actors in the financial services industry, as a prereq to being able to do so, have to agree to act as a modern day Stasi.

Thank the criminals and reactionary Congressfolk of the last fifty or so years.

If you think it is easy to charter a bank you are in for a huge surprise. Credit Union might be an option though.

ACH / writing checks is free through your bank because if it wasn't, you'd bank somewhere else. But there's 0 incentive to give you API access, your usage could skyrocket and it wouldn't be profitable anymore.

Honestly, I wouldn't trust Google (or any other tech giant) to be my bank.

My bank doesn't have a history of locking people's accounts when they post "the wrong" political opinions online.

My bank doesn't have a plan to monetize access to my account, or to limit use of the account to only those activities of which the bank's army of woke employees approve.

I think I'll stick with a real bank, thanks.

While I agree with your caution regarding Google, banks do indeed lock or close accounts for entirely opaque reasons, too, with little to no recourse!

Oh, so not true. Banks often close accounts of types of people or businesses they don’t like at the moment. Just ask a PE/VC with a BofA account!

I think people willfully conflate accounts being closed with your money actually disappearing.

That, though, is mostly about risk management -- and even if they close your account, you get the money back.

(I also would never do business with Bank of America, because they're awful and they hate their customers even more than Wells does)

But even BofA doesn't do things like read your Twitter posts and YouTube comments so they can blackhole your account if you have have the wrong politics.

The tech giants, on the other hand, will seize your stuff in a heartbeat if you step out of Silicon Valley's definition of acceptable beliefs and opinions.

My credit card works at any merchant -- and the fees are the same. I don't get hit with a temporary ban if I buy a Chick-fil-A sandwich, for example.

> But even BofA doesn't do things like read your Twitter posts and YouTube comments so they can blackhole your account if you have have the wrong politics.

Yet.

Banks have a habit of closing accounts of people involved in the sex industry and recreational drugs (even in places theses are legal)

Marijuana, one of these recreational drugs, is not legal in the United States.. and banks are beholden to federal regulators. The “legality” of marijuana is in dispute because it’s still a federal crime. The Supremacy Clause overrides thèse state “legalizations.”

I am vastly in favor of states rights and the 10th Amendment, however states seem to only care about those things when it supports what they want to do.

Gun shops as well, and they have an even stronger legal standing under federal law.

Just in the past 4 days:

https://news.ycombinator.com/item?id=21561725

https://news.ycombinator.com/item?id=21538460

^this is a real problem

Google "reputational risk"

Patreon kicked off some political content because mastercard wouldn't continue to work with Patreon after a certain point.

I absolutely agree.

Back in 2016 I wrote a blog post about accounting being still a strangely manual process: https://bjoernkw.com/2016/04/03/accounting-in-2016/

Ultimately, I came to the conclusion that in order to solve these problems I would have to start my own bank.

Unfortunately, not much has changed since then. At least I now use this useful tool for converting CSV exports of my account statements to MT940 files: https://github.com/msc01/soacsv2mt940

It’s still a semi-automatic and somewhat error-prone process, though.

Another reason is the horrible interest rates. Wealthfront and Robinhood are offering "bank" accounts that have 1.8% APY that is FDIC insured.

If your business has a high turnover month-to-month, that money used to pay your bills can accumulate interest.

I bank with a shitty national bank (long story, need access to Zelle/P2P transfers). My emergency fund is 6 months expenses, low 5 figures. 150-200 basis points of interest annually is trivial when 1 or 2 wire fees ($20) to get access to those funds same day blows away all of interest gains over 6-12 months.

If interest rate mattered to folks, more would move to providers offering higher rates (you see this sprouting up with Credit Karma, Personal Capital, and other fintech startups offering cash management accounts because they're making a fee for getting deposits to underlying banks hungry for them). But that doesn't seem to be the case. Which is unfortunate, because it should be not too difficult to offer a checking account with check access, ATM access, unlimited transactions, P2P payments, mobile deposits, and interest bearing (brokerages do it living off the float [1]).

Sidenote: This focuses on personal accounts. Brex's Cash Management account seems to be a great biz banking option for those who qualify. No affiliation. Banking infra in the US sucks, which is why everyone has to be a bank.

[1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

If you have 6 months expenses saved, you don't need same day access. You keep 1 month in an immediate access account and 5 in the high yield savings account.

I have had to come up with a dollar amount worth several months of expenses on very short notice (same day, life is unpredictable). YMMV, but there's no reason I shouldn't be able to get those funds within seconds (if I'm adequately authenticated). With a wire, I can get it same day (if executed by ~3pm eastern). I shouldn't need to pay for a wire, or talk to a human unless a fraud signal was detected. I'm not a hedge fund seeking tens of millions of dollars of liquidity of a cash equivalent in a moment. These dollar amounts are trivial (<$100k).

Financial services users should be able to have access to and be able to move their funds through financial plumbing inexpensively and rapidly. Fix the plumbing, raise the bar with regulations on financial services providers to commodify the offerings.

> I have had to come up with a dollar amount worth several months of expenses on very short notice (same day, life is unpredictable).

That seems like a perfect use case for using a credit card to cover the expense and then pay yourself back when your money moves out of the savings account.

I have trouble imagining a case outside of a hostage situation where you would need access to your emergency fund same day.

Two examples: Auto purchase where there was an issue with the banking partner of the vehicle manufacturer. Another is a real estate transaction. Bailing friends out of jail is always cheap (~$500), but not everyone takes credit cards (no chance for the first two scenarios).

Fundamentally, I should not have to explain why I would desire immediate access to my own cash reserves at a moment's notice to excuse broken financial infrastructure.

Your examples seem like cases that can easily be handled by a checking account.

> Fundamentally, I should not have to explain why I would desire immediate access to my own cash reserves at a moment's notice to excuse broken financial infrastructure.

Yes, if you are investing in less-liquid assets to get a better RoI then you absolutely do. If you don't like the terms then you are free to keep your cash in your checking account.

Most people are reluctant to accept large personal checks for one-shot transactions. Most people selling cars on Craigslist won't just take a personal check, for instance. It depends a bit on how reputable you look. You can't write one as bail, or to get your car out of the impound lot.

Most people are reluctant to accept large certified checks or money orders, going back to at least the 90s, because of counterfeits.

Personal and certified checks aren’t immediate or same day settlement, only wires or Zelle transfers are (Zelle transfers can take more than a day depending on the sending and receiving bank).

If the settlement isn’t rapid, you can’t guarantee the funds will actually settle (checks). Lots of situations where someone wants the same guarantee as cash or a wire.

Just bought a brand new car this week from a dealership (US) and the seller refused to accept a check.

They’ll generally accept a cashier’s check. Ours would also accept a personal one as long as you didn’t mind them delaying mailing the title for a few weeks.

I made a down payment on a car with a money order and the dealer yelled at me that the agreement said they weren't allowed. Eventually they relented, because they wanted to complete the deal.

Back in the 90s, I tried to pay for a computer with a certified check and CompUSA treated it as a likely counterfeit.

That’s crazy. I’ve never had that problem, even when buying cars out of state. Were you paying the full amount by check or something?

Yes, was attempting to pay full amount. Couldn't remember my PIN to unfreeze my credit, and just seemed like it would be easier since I was in a position to pay in full.

That makes somewhat more sense. Trading a signed title without a lien for a check places a lot of risk on the dealer. Although there are ways to mitigate this, maybe the dealer in your case didn’t feel like bothering or it didn’t occur to them.

I don't think the question is so much asking "why", but rather "what" does "access to my own ... reserves at a moment's notice" even mean in a debt-based financial system?

Writing a check is instantaneous, but you obviously don't mean that.

If you're talking about wires and the like, then what you're really paying for is the sending institution taking on liability if there turns out to be a cascading problem.

People buy cars in Europe using debit cards, at least in the UK.

I’ve bought one with a credit card in the US.

I wouldn't expect Shelby, Mercedes, and their sisters to be held for cash every day myself, but if you really want to bring them home one of the most worthwhile options is cashthedayofthesaleasiswhereisnowarrantiesofany kind.

http://www.classic-carauction.com/featured-cars?auctionid=10...

If you're buying a classic car with funds directly from your emergency fund, then more power to you I guess but maybe you should be less impulsive with money set aside for emergencies.

Personally, if I'm expecting to make a large cash purchase I have more than a few days notice.

Many people plan poorly and have to sell collectibles quickly for immediate cash. I know people who buy and sell cars purchased from folks who need money quickly (matter of hours) and will get crazy deals simply because they have cash on hand on eg a Sunday evening.

That particular auction is coming up in a few days.

Much more within reach to bid on a regular used car at the common auctions that regular used car dealers buy from.

Or you could purchase more leisurely from the dealer on his terms.

Either way their offices will often display a tattered old sign: _Cash Talks and BS Walks_.

You should see how easy it is to do these things in the Netherlands. No charge to wire money to an individual or business. No transaction cost for paying by card. Pay online with ideal for 0%, just scan qr code with bank app. Simple and easy.

Europe in general would be my example for how banking should be done.

Would you be willing to go into more detail on why banking is better in Europe? They seem to have their own problems, too.

If France is part of Europe, then no f’ing way. It’s a nightmare: arbitrary limits on debit cards, large transfers have to be done in person at your specific branch. The security requirements are Byzantine. For example, to get a new pin code, they actually mail you paper, you can do it in a branch. International money transfers require permission (only obtained at your specific branch.) They charge a monthly fee to have a Visa debit card and to get a “Gold” version with higher limits, you have to pay them more. Paper checks are still vastly preferred in France (for paying school fees, etc.) Banking in France is just one step above banking in Korea or China. French bank fees make American fees look positively discount by comparison.

That you have to go into your specific physical branch to do certain things is ridiculous. I can go into any Chase in the US and do anything I could do at my normal “home” branch.

N26 (a German bank) was vastly superior but even that had limitations, especially with moving money around internationally.

The grass is always greener on the other side.

YMMV I guess. I'm in France too and none of those points apply to my experience (except the monthly fee for the debit card and the snail mail for the new PIN). I have not set foot in my physical branch in 10 years, and have not written a paper check since 2011.

I'm from France and I'm using an online bank. Almost none of these apply to me - yes the pin code and the card come by mail but I can transfer arbitrary amounts online, I have a free gold card, there are basically no fees at all: the account is free, the card is free, transfers are free, I don't think this account cost me anything at all. I had to open the account with a significant amount to get the gold card but you can open it with a much lower amount or by receiving your salary there, and the only difference is that you get a regular card instead.

The only downside is that you don't have a physical branch you can go into but you can do basically anything online without ever interacting with anyone, or at worst you can always call them. Those are real banks btw, not pseudo-bank fintech companies.

I think what you are looking for is a direct bank. It's weird to complain about having to go to a branch when you sign up for a bank account at a bank whose primary selling point is the availability of a local branch.

So curious how he banks there make money?

With the pile of cash they hold for clients.

I'm sure they do in North America too, and make orders of magnitude more from it than for charging monthly or transaction fees. But if everyone else charges those, why not make that bit extra too?

It just needs some 'disruptor' to do it for free and drive the rest of them down, as is happening both there and here in Europe with trading accounts (where most money is made from order flow, but traditionally, why not make a bit extra from commission too?).

For individual mass market the big driver is loan margins, both for home mortgages and various short-term loans.

But the improvement in payments was mostly driven by legislation (e.g. the Payment Services Directive from 2007 with most of implementation at 2012) without which banks were quite happy to offer payments as slow and expensive as they could as it was too profitable for the industry to voluntarily agree to disrupt this, especially since most payments are cross-bank and so a single "defecting" institution can't simply offer cheap&fast payments if others don't want to play ball.

So I don't think that there's any way how USA financial industry might get to a similar point if gov't doesn't decide to force them (which might be taboo for many USA politicians) - I'm certainly convinced that European financial institutions would not have reached this point currently if they weren't forced to do so despite all the lobbying.

With 1.6% interest rates for mortgages... I don't know how dutch banks make money.

They sell insurance and offer consumer investment accounts -- which are not permitted for us citizens!

I don't know anything particular about the Dutch market, but some rough estimates:

Current 3m euribor is -0.4% so 1.6% interest rate means 2% margin. Assuming that your initial costs of selling/assessing/processing the mortgage are covered with fees, something like 0.5% would be enough to cover the main (non-systemic) risks and expenses for decent quality mortgages, so you get 1.5% of pure profit; for every billion in your portfolio you'd get 15 million profit each year; Dutch banks have 500B of housing loans so that's a capacity of something like 7-8 billion of profit per year from housing loans alone.

And various short-term loans have lower volumes, but much higher interest rates and room for profitability.

Looking at the stats in https://www.statista.com/topics/3442/the-banking-sector-in-t... it's clear that the net interest income dominates, it's something like 5x the fee income.

Banks usually add a flat percentage fee on top of the current interest rate. Lower interest rates mean people are willing to borrow more so low interest rates are beneficial to banks.

All of Europe, afaict. It's often so baffling to read about finance/payments in North America, ahead in other ways of course somehow that sector has just completely stagnated, from a consumer perspective anyway.

There is no transaction cost to pay with a card in the US either. ACS transfers are free and, if you have the right account, wires can be free as well. I bet at that Netherlands bank a non-SEPA wire isn’t free. There are plenty of options for “good” bank accounts in the US, they just aren’t always obvious.

What do you mean, no transaction costs? What are ACS transfers?

Can you share a "good" bank account?

I've moved after 36 years in the states -- and was shocked at the quality of ING Bank.

If you have a checking account with the same bank you keep your emergency fund in then you can access the funds at any time with an online transfer and a check. (Discover & Ally offer checking accounts) It doesn't have to be your main checking account.

Same with Alliant Credit Union.

I thought wealthfront and the like aren't exactly the same type of insurance. They don't put your money in a single account, and if you ever needed the insurance you have to go through a third party that made a deal with the actual banks.

With Robinhood, I understand cash is SIPC insured once it hits their systems, and then it is a couple of days until it is deposited in underlying accounts at their program banks, where it is FDIC insured. So it's something to consider when moving large amounts of money.

Another thing is that these neobanks have withdrawal amount limits and ATM limits, and so they aren't a great choice for storing emergency funds.

> Another thing is that these neobanks have withdrawal amount limits and ATM limits

Every French bank has these limits. I once had a French bank account that limited my debit card to €2500 in purchases in a month — for no good reason other than trying to limit access to my own money. Cash purchases over €1000 are also illegal in France. For the most ridiculous banking rules and limits, France is the place. My chase account in the other hand, I could withdrawal $100k in cash if I wanted. Still have a (high) debit card limit, but I can call them and immediately get it lifted for a specific transaction (such as buying a car.)

Yeah, but for the neobanks, it's even more strict. You simply can't access all your money instantly. As far as I can tell, anyhow.

> They can terminate your account suddenly for opaque reasons.

Isn't one of the requirements for being a "bank" that you can't do stuff like that?

No, not at all, banks do that too.

https://money.cnn.com/2014/05/07/pf/bank-account-closing/

I once had a bank account closed for "suspicious behavior." The suspicious behavior was making too many transfers to one of my other bank accounts.

If you open a new bank account and deposit a lot of money, say over $10,000, then they almost certainly will freeze your account and you'll have to call up to unfreeze it. Sometimes you even have to go to a branch to unfreeze it.

Chase, specifically, is really bad when you're trying to transfer to/from new accounts

https://www.doctorofcredit.com/psa-dont-use-ach-pull-for-cha...

I open (and close) a lot of bank accounts to collect those signup bonuses. If you read forums dedicated to this then you hear stories of people getting their bank accounts terminated suddenly for opaque reasons all the time.

> If you open a new bank account and deposit a lot of money, say over $10,000, then they almost certainly will freeze your account

I have done this multiple times with zero issues whatsoever. With larger sums than $10k, and with global-sized banks. Sorry to hear about your issues but you're over-extrapolating.

> I open (and close) a lot of bank accounts to collect those signup bonuses

This, I think, may be your issue. For one thing, as the recent NYT piece on customer scores shows, these companies do exchange information on their customers- you may come up flagged or even blacklisted specifically because of this

On the contrary, doing this is practically a requirement for being a bank.

US law requires banks to file a suspicious activity report if they see unusual activity in your account that may be associated with money laundering or criminal activity. What qualifies as suspicious activity is not well-defined, but can be as simple as large unexpected transfers into or out of the account.

The law also requires banks not to tell you about it. They don't necessarily have to close your account, but most will, especially after several reports, because of the risk of failing to comply in the future. And since they're not allowed to tell you why they closed the account, you end up with opaque reasons.

Don't agree and I love Chase bank. I have multiple Chase accounts and transfers between them are instant. Transfers to/from external places like my TDA brokerage account, Venmo, etc. are there the next day. They also have Zelle/QuickPay (though I don't use it). My paycheck is direct deposited the day its supposed to be or earlier.

I've had my debit card skimmed at gas stations twice and my wife has been defrauded by shady online merchants a couple times. Chase always handles it well and reverses the charges.

I have Private Client status which (granted requires a certain level of deposits) gets you a real human on the phone instantly.

I couldn't imagine getting that from Google or Robinhood.

2nd that on Chase. I'm very happy.

What you’ve just described is 100% table stakes for a bank account. Literally every major provider does all that.

I have absolutely no interest in using any of these online start-up banks, but Dutch banks tend to be pretty decent. They're well regulated and try to be aware of their social responsibility. Most of the banks I've worked for appear to the taking this fairly seriously, and try to run their software departments as real tech companies. They try to make accessing your money as easy, convenient and cheap as possible without compromising security. They're by no means perfect, but they're a lot better than most American banks sound.

Is that American banking? In the UK I can't say I've ever experienced such issues. I do bank to bank transfers fairly frequently.

Yes, the American banking system is just ridiculously bad. I remember studying abroad in New Zealand (in 2004!) and marveling at how EFTPOS was universal, everything was chip & pin, and funds transfers could easily be done online (and often clear the same day!). The cashiers would look at me strangely with my American credit card, and they would always check the signature. (Which, it may astound foreigners to learn, most American cashiers do not. How do we prevent credit card fraud? We don't, in general. Fraud losses over $50 are reimbursed by the credit card company, if you report them, which makes it up out of exorbitant interest rates that they charge people dumb enough to carry a balance.) The U.S. finally got some of the security measures the rest of the world has (chip & PIN, for example) around 2017, and in many regards is still behind.

America has the downsides of being the first-mover and of being dominant. A lot of our system was built before modern computerization and then retrofitted for the bank's convenience (not the customer's), and because the U.S. economy & military is so dominant, the rest of the world has to deal with the U.S. financial system as it exists now. That means that there's very little pressure on existing U.S. retail financial institutions to improve, and a lot of regulations and institutional inertia keeping out new entrants.

It's much the same situation with Internet access (where our consumer Internet speeds are often 2 orders of magnitude slower than in much of the rest of the world) and in health care (where we spend the most but have one of the worst life expectancies of developed nations).

I think the biggest tragedy is that most American consumers have no idea how bad American banks are compared to banks in other countries.

Moving to the US is like stepping back into the 70's, and then discovering that everyone around you think that everything is fine, their banks are fine, that US banks are somehow modern and cool.

Anecdote: I wired some money from my Chase bank account to my Swedish bank account, in USD. I made the transfer through the internet bank, but since it was "after hours" New York time, it was scheduled to transfer the next morning.

Early next morning I checked my Swedish bank account, they had received the money, exchanged it to SEK at a decent rate, and the money was immediately available for me to spend there.

A couple of hours later I receive an email from Chase, where they're telling me that they've now sent the money, and that I should expect to see the money in my Swedish bank account about three days later.

American banks suck.

That may just be Chase. A person I know uses a credit union for federal staff in Washington, DC and their wire transfers can be done in the currency of your choice, completely online. She recently did an international transfer in a non-USD currency and the email confirmation was immediate. The money was available in the foreign acct within 48 hours.

My European credit card works around the world but is blocked by default in the US for security reasons.

I need to call my bank to temporarily unlock it if I ever go to the US. Payments with PIN code are allowed by default though even in the US. So the problems seem to be with the swipe system.

Def, you are right. Everyone is building on top of legacy banks but you hope that slowly the customer orientation will change to positive largely by better tech and more competition! Thanks for reading and appreciate the comment!

> They can terminate your account suddenly for opaque reasons.

This happens more often with "bank" startups than with old, boring, regular ones.

Nice APIs = bitcoin

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