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Comment by adamtaylor_13 | Hacker News Reader

I don’t think disrupting banks is even possible. The time, money, and energy required is simply not realistic. There’s so many disrupt-able industries out there and I’m not even sure banking is the most beneficial one to tackle.

It’s a realistic Star Wars story where the Empire always wins because… well it’s the fucking empire. They didn’t get there by losing.

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They've "lost" a few times by now. Government has propped them up.

The other side of the innovator's dilemma is the fact that the market leaders who don't stick to their current winning formula, instead risking big on a new technology, will sooner or later get it wrong and fail on their own. That's why it's a dilemma.

JP Morgan Chase and Wells Fargo would have been fine in '08 had they been left alone.

Not all of them were on the loosing side of that situation JPM had sold off most of risky mortgages in prior years taking a sizable haircut while other banks were supposedly raking it in. There was a ton of pressure on Jamie Dimon not to do it because JPM numbers looked bad compared to peers in those years.

I guess that’s my argument as to why it’s not losing.

If the government bailed you out, you didn’t lose. They have yet to really lose. Thus no incentive to disrupt such a “steady” industry.

Right. Banks are boring. The whole industry is based on very simple math. Nothing much to disrupt.

> don’t think disrupting banks is even possible

They’ve been disrupted on multiple sides massively in the last twenty years. Blackrock, Vanguard and Fidelity are disruptors to their deposit and savings-account models. Quicken et al a disruptor to their lending side. Private credit, securitised lending—all taking away their balance sheet operations.

Retail banking hasn’t changed inasmuch as people like branches. But the moment you go branchless the banking options radiate, and that’s more people every day.

The government is very conservative in handing out banking licenses.

There was a famous scandal with an Icelandic bank that was disrupting the market with higher interest rates.

It is basically impossible to license a new bank in Germany and the financial regulations have become stricter over time, with a full banking license being mandatory for more and more things. It's kind of disturbing.

If you are a big bank, you already have all the licenses and can do everything so what difference does that regulation make in practice?

N26 did it but creating a new bank attracts money launderers and scammers. The legal department costs are infeasible and half a century-old systems are not easy to adapt to new banking concepts. The government and regulation side of the system needs serious improvements in Germany to bring them to 21st century first. However, there is little economic incentive to do so. With an aging population and deeply conservative culture, there is little political incentive to improve any infrastructure. The current governing parties will probably lose the election next month because they made costly infrastructure fixes.

But you don't necessarily need a banking license, right? My understanding is that there's a handful of bank-as-a-service banks that have a license and will let you do your thing.

I'm sure the aging population doesn't help, but to me the primary inertia comes from how difficult it is to switch. You can take your phone number with you while changing providers, you can't do that with your bank account. They have "services" that are supposed to handle that, but having dealt with their investment arms and moving a broker account from one bank to another, I wouldn't trust them to not mess it up, and suddenly my rent isn't getting paid. So I'd have to do it myself, which will make me deal with lots of stupid systems and processes and cost a hours upon hours. I'd need to save 100% of my banking fees (which are way too high) for a decade or two to make that worthwhile.

Make switching banks as easy as switching phone providers and you'll get some competition going.

To be honest, in Germany even the brick and mortar banks provide transfer services. They will detect and move your automatic payments. You usually fill a form, login to each bank and they send automatic requests to move stuff. Similarly my broker also supports moving accounts for me.

Moreover, especially after the Wirecard scandal, I wouldn't trust any company that doesn't have a banking license. Without a banking license they can nuke my entire account and I will be the only responsible idiot for that.

Btw, the US system is exploitative and decades behind what the worst European countries have. NFC payments became a thing after Apple brought them to the US. Europeans, heck, Middle Eastern countries were already using NFC EMV payments for 5 years by then. The technologically best and most trustworthy banks are usually from Northwestern Europe so look for Nordics and the Netherlands, if you would like to see a modern but not totally exploitative banking looks like.

Yes, they do offer transfer services. But do you trust their services to be flawless?

Like I mentioned, I've dealt with their brokerage-arms, and it was a disaster. Numbers being wrong between two large banks, the transfer taking _months_, and nobody knowing anything and everybody shrugging their shoulders and going "maybe call the other guys again?"

They have no incentive to make that seamless (in fact, they have every incentive to not make it seamless), and it isn't.

The same isn't true with your phone number. Once you've moved, it just works. You never have to tell anyone you're switching providers. The old provider is out of the picture and you no longer need to rely on their good will after your business relationship ends.

> The current governing parties will probably lose the election next month because they made costly infrastructure fixes.

Germany is heading / has bet on a completely different direction than actual real world out there is moving to. The unability to admit massive failures and adapt is glaringly obvious even from outside, and literally fucks up whole EU left and right. Germany and its population has tremendous potential, we all know it, yet it looks like headless chicken running around yard with no positive future that I can see.

I don't care who will rule there, nobody outside understands nor cares about detailed internals of Germany. But, for a change, please put there somebody competent who can steer country and a bit whole continent as a consequence, has respect of peers and adversaries and can do necessary changes to keep it all afloat. Current and past leadership was and is... don't have a nice name, so better not describe it. Massive damage across whole EU. Weak EU then invites dictators to try to test its strength.

There comes a point where a reverse merger makes more sense. You want to be a bank? Buy one. You want to be a “different” bank? Buy one that’s at a tipping point and make your agent of change pitch.

>here’s so many disrupt-able industries out there

If you could name a couple that you think stand out more usefully than banking, i'm curious.

Isn't that usually indicative of a winner-takes-all sector running on pretty thin margins?

all empires eventually fall

And when they do, the banks and “innovation” are the least of anyone’s concerns.

As long as the USA stands, banks won’t change, and if the USA doesn’t stand, I’m not sure banking will even matter anymore.

When the USA doesn’t stand you can go to China for the banking.

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