No one is disrupting banks – at least not the big ones
335 comments
·January 26, 2025bArray
wussboy
I'm not worried about the government doing these things, I'm worried about corporations colluding to do these things.
jncfhnb
The other thing stopping it is the law and the fact that the US dollar is the global reserve currency and that would be a pretty great way to ruin that
dr-detroit
[dead]
herodoturtle
In South Africa the "big" (historically incumbent) banks were indeed disrupted by a "startup" bank relatively recently (in the last 20 years) - and this startup bank went on to in turn become one of the big banks.
There is an excellent book called "Stalking Giants" [1] that covers this story nicely. It's a fun read (especially for South Africans) and was published recently.
[1] https://www.amazon.co.za/Capitec-Stalking-Giants-T-J-Strydom...
ranger207
The products being pointed out in this article as an attempt to disrupt banks seem to be basically the same product for a different price. Like, a high-yield savings account is just a savings account with a better price, right? How do you disrupt an industry by selling the same products? The advantage of startups is that they're more nimble, can pivot to fit the market better, and can adapt to customer requests faster. None of that applies to "selling the same product at a lower price", especially for savings accounts where stability ("the company not suddenly disappearing") is an important part of the pitch anyway
ikr678
This is a very US centric article, a lot of the disruptions listed are incumbent 'big bank' products in other jurisdictions. I feel the lack of adaptability is likely a result of US market conditions/regulations rather than lack of innovation.
dathinab
The EU also has put pressure on Banks for decades now to either "innovate" or "get innovated" by regulations forcing them to implement innovative ideas not coming from them.
With both having happened over time.
They also at least somewhat try to compete with Paypal on online payment on EU specific shops (not they they have much success, not just because of network effect but because a combination of their products being sub-par and them realizing that various other even less competitive/ux friendly competitors would make them more money if anyone would just be using it..., so they are in the process to "get innovated" again by forcing impl. of certain ideas related to person-to-person money transfer which have proven to work/being useful in a few countries where they/their banks did adapt them years ago.)
biohcacker84
US Banks are much worse at serving common people than many other old big banks around the world, certainly compared to Germany's banks for example.
And yes it is thanks to a byzantine system of history, regulations and very few Americans travelling abroad to experience radically better systems.
ty6853
FATCA makes Americans pariahs at foreign banks. I would love to store cash outside US jurisdiction but it is a compliance nightmare usually only worth it for high net worth clients. We know better systems exist, we just often can't use them even when we live overseas.
Crypto is the last offshore banking for the middle class. It essentially took over right when FATF eliminated banking privacy and bearer shares -- which IMO is no mere coincidence.
WeylandYutani
I think it could also be cultural. In my country people are perfectly happy to have a video chat with a bank employee about mortgages but in other country's you still need to go into a branch office for that kind of thing.
some_random
I (American) didn't need to go to a branch office for my mortgage. In fact, I don't think my mortgage provider has branch offices.
netdevphoenix
Just curious, why do you need a video chat? Can't you just have a phone call? I don't get the need to see someone's face
lotsofpulp
I don’t even need to have a video chat in the US for a mortgage. I have long been able to shop from any number of lenders and close the deal via email. The lender might send out an appraiser.
Joel_Mckay
The US crash of 2008 exposed the nature of their banking system leverage ratios, and worker 401k vulnerability to dubious ETFs.
The incoming market volatility will likely have winners and losers... but historically it was mostly losers (>6.4 million families and counting.) =3
throwaway2037
> worker 401k vulnerability to dubious ETFs
abdullahkhalids
One datapoint: On /r/PersonalFinanceCanada a very common advice is to save money in WealthSimple or Questrade type of online financial institutions. And people seem to be very happy with doing this.
Any financial institution that makes the act of investing money simple and legible will win some market share. I have some savings accounts in RBC Canada, and the UX seems to be designed by monkeys throwing around crayons.
smnrchrds
Wealthsimple is a subsidiary of Power Corporation, a gigantic financial services company that has existed for 100 years. Its success is more an example of insider innovation rather than outsider disruption.
dlenski
As I understand it, Wealthsimple was founded independently but then quickly bought by Power Corporation.
It is indeed quite interesting that its innovation and competitive pricing (https://news.ycombinator.com/item?id=42838063) in the last couple years has happened under old, established Power Corp.
Any educating theories about why this is happening now?
abdullahkhalids
Interesting. I did not know that. But not surprising in retrospect.
But I think the point still stands. WealthSimple is probably not perceived by the median customer as a traditional bank. So people using it is a counter-example to GGP's point that people won't use "startup" banks.
BenoitEssiambre
Ah that's an interesting tidbit. I have a Wealthsimple account through my (YC company) employer. The Desmarais (Power corp folks) gave me a scholarship back in the day. I hadn't made the connection.
dlenski
Glad you're not the only one to point out Canada's comparatively stodgy financial industry. https://news.ycombinator.com/item?id=42838063
The account management interfaces of Canadian banks are pretty universally terrible. Even the neo-banks like Tangerine.
AdamN
Come to Germany and try Deutsche Bank. Those monkeys are just throwing !@#$# at the wall. Moving from the US to Germany is like taking a time machine to another era when it comes to online banking.
lazide
Finance is heavily regulated.
Disrupting a heavily regulated market is usually called ‘racketeering’ or ‘organized crime’.
ty6853
Regulation is the racketeering. The central ringleader is the fed, who 'ease' money into thin air, bypassing the pesky annoyance of going around and collecting taxes to fund their private and public benefactors.
lazide
Hey, you can assert cops are the real criminals all you want - but one of them is thrown in jail, and the other (typically) isn’t.
xwolfi
Plus hum, would you deposit large money amounts in a small fintech company ? The advantage of giant banks is that you sort of trust their size will make them able to weather a crisis, if only because so many taxpayers are involved that the government has no choice but to help.
A fintech with 1M users screwing up loan rate timings being unable to finance savings accounts and facing a run, would not have much runway and the government would simply slowly try to make people get 50c on the dollar and tell them to go back to a big bank if they want better...
nradov
It's not just size. Real banks maintain customer deposits in separate named accounts. They don't co-mingle funds like fintech companies. This makes a huge difference in the case of insolvency or any sort of fraud.
netdevphoenix
Ideally, financial regulation should be there for you in terms of bank failure without you having to trust old players and further making disruption harder. And no matter how big or small the bank, you should never put all your savings in the same bank.
SpicyLemonZest
I considered doing it a few years ago with a company called Yotta, and thank God I didn’t, because they pivoted to a gambling app before losing track of user funds when one of their providers went bankrupt.
jiggawatts
I can tell you right now what I want from a "bank" as a consumer: Putting the consumer first, not seventeenth or whatever I typically experience with retail banks.
As a random example, I had $3,600 stolen from one of my accounts by transactions labelled "Microsoft Online Services" or something like that. The bank reversed most, but not all of the transactions, and then had the nerve to lecture me -- an IT professional more than a bit knowledgeable about security -- about how somehow this was all my fault.
Turns out that banking security and reliability from a customer's perspective is absolutely insane. It's totally ass-backwards. It's the opposite of the Apple experience that made that particular company the biggest in the world.
1) Every field in a credit card transaction is attacker-controlled. They can put down whatever business name they want, whatever text they want, etc...
2) Every field in a transaction history is either an alias ("operating as xyz pty ltd"), an abbreviation, or just outright confusing.
3) Transaction histories and "you paid $ to X" notifications often turn up hours or days later. There's no geo-location or any other strong identifier linking these to the actual business because of (1) and (2).
4) There's no receipt details in the transaction history. "XYZ pulled $123 from your account... for reasons. It's a mystery!"
5) You can't see who's got recurring subscriptions on your account. You can't trivially cancel or block someone from pulling money from your account.
6) Some banks now show categorised graphs of what you're spending your money on, but they're guessing. They don't actually have the info of where the money went, so this is useless. You can't figure this out yourself either because of the tiny amount of info available to you.
7) You can't use your transaction history for warranty purposes, or any similar thing. You have to keep tiny pieces of paper that fade rapidly... which is I'm suuuure is just a coincidence, right? Right?
8) My bank claims I get notified if a transaction occurs on my account. This is a lie, they only notify me of some types of transactions, and not reliably either.
9) Trivial impossible-travel protections are not put in place. If my phone is used for a payment in a "physical store" while the GPS says it's in a different continent, pop up an "Approve Y/N?" prompt at a minimum!
10) You can't generally limit a vendor's access to your account if they have your credit card details. You can't restrict them to a single transaction, a fixed amount, or no-sneaky-subscriptions.
11) With shared accounts, you can't generally tell who made a transaction, even if they have individual cards and/or mobile devices. (You can sometimes, depending on the bank and the type of account, but it's not consistent. This is what happened to us: Both of us assumed the other partner set up a valid subscription.)
Etc, etc, etc....
I could go on for hours.
Unfortunately, like many people of said, the inertia of the incumbents and their moat of regulation makes this kind of thing nigh impossible with backwards compatibility.
Some org like Apple or Meta with very wide reach might be able to force vendors to jump through their hoops, which then will drag the traditional banks kicking and screaming into the future.
I'm not holding my breath.
foobarian
Why involve banks in day-to-day financial transactions? The way debit transactions work is batshit insane. One of the reputable credit card providers is much better. Amex, Chase, or Citibank are very good. Citibank offers virtual account numbers with adjustable expiration date and daily spend limit.
PeterStuer
"You can't see who's got recurring subscriptions on your account. You can't trivially cancel or block someone from pulling money from your account"
This is because any company that has the potential for creating recurring subscriptions can do so to anyone at any time with nothing but an account number.
There is no pre-verification of authorization whatsoever. The only thing you can do is continuously monitor your bank statements and dispute the charges when you see something turn up, then hope for the best.
This system is croocked by design. Most people can't even believe it is this way , but presentations by budding fintech to small companies tout this 'feature' as the greatest thing since sliced bread.
vel0city
> There is no pre-verification of authorization whatsoever.
There actually is a way they can sync up to say this is an authorized regular transaction and they get the ability to keep charging even when the old number expires and a new card gets issued.
I forget what it's called, and I don't believe it's supported everywhere.
mu53
If these things bother you, consider a service that offers virtual credit cards. Privacy.com or Revolut.
Dalewyn
>Like, a high-yield savings account is just a savings account with a better price, right?
Most if not all the big banks have a high yield savings account or an equivalent under different names.
And yes, it's just a savings account with an actually noteworthy interest rate. It's usually a bit below the interest rate of money market funds.
Joel_Mckay
Most people have zero notion of what money is... let alone what banks offer as a business.
Indeed, the entrenched investment industry has become less fair (or an outright liability) to customers, but casinos are at least honest with their customers. Gambling with other peoples money was not a real financial service until relatively recently.
There is a market for a fiscally sustainable savings/investment industry, but most people with under $2m in cash can't afford the bonded fiduciary services.
Good luck, I kind of admire their ill fated ambition. =3
throwaway2037
> bonded fiduciary services
JumpCrisscross
> never saw this term before
They’re mixing up a securities term (irrelevant to banking per se and cash management totally).
What they mean is getting an adviser who is bound to act as your fiduciary versus as a counterparty [1]. If you’re trusting your portfolio management entirely to a third party, they should be a fiduciary.
That said, people outside finance seem to make a bigger deal out of this than it is—in America if you’re a retail investor and you have a problem with a FINRA-member broker, FINRA arbitration will almost always side with the retail investor. Fiduciaries will tend to cost more (it’s riskier) and say no to you more; after all, you’re asking them to take decisions for you. I work in finance and couldn’t tell you which of my managers and advisers are fiduciaries because I double check what they say and limit what they can do. And this, again, has to do entirely with investments. Not banking.
More pointedly, this part is nonsense: "most people with under $2m in cash can't afford the bonded fiduciary services." What you want for cash management is yield (reward) and sweep (risk management).
[1] https://www.investopedia.com/financial-edge/0912/5-misconcep...
Joel_Mckay
It is a legally enforceable relationship with your investment managers: "A fiduciary financial advisor is a financial advisor who is legally and ethically bound by fiduciary duty to serve in your best interests"
This detail becomes important when various cons come around to bleed off your assets. Could be as simple as a "friend" hyping worthless pump-and-dump stocks, or a fund manager with ballooning fees.
In general, the lack of impulse control shown on YC seems to indicate this information is not that useful for many readers. Some people like being poor apparently lol =3
nine_k
> fiscally sustainable savings
Buy gold bullion, rent a bank safe deposit box, store it there. I suspect this is what comes closest to that, as of now. (Sigh.)
JumpCrisscross
> Buy gold bullion, rent a bank safe deposit box, store it there
This is the worst of all worlds. You have a high-transaction cost volatile asset in a box which provides you with less legal protection than crap stored in a home with renter’s or homeowner’s insurance [1].
[1] https://www.nytimes.com/2019/07/19/business/safe-deposit-box...
Joel_Mckay
Precious metal prices rarely track with inflation, but 1.7% of a portfolio should contain such leaky holdings.
While it is currently legal for US citizens to own gold bars since 1974, if the tax man gets hungry... the old rules may come back into popularity.
Best of luck, =3
elric
US banks are weird [1]. Archaic. Slow. Filthy rich. Incompetent. And yet they're nearly impossible to disrupt due to the benefit of size. Starting a new bank is expensive, unless you want to pretend at being a real bank and letting another bank handling all of the nitty-gritty details. In which case you've now become a reseller of that bank, and will likely be even worse.
The only thing that can disrupt US banks is consumer outrage, of which there seems to be very little.
[1] Source: I've consulted for some of the largest US, European and African banks.
GuB-42
What about Japanese banks? They have a reputation of being terrible, justified for the little experience I had with them.
Lots of fees, bureaucratic, inconvenient opening times,...
In Japan, cash is king, and loan sharking is very prevalent. Not a very good sign for the banking system.
Note that it is now becoming increasingly possible to go cashless, though cash is still the most widely accepted option. And I think it is mostly thanks to foreign banks like Citibank.
throwawaysleep
And trust. Fintech in the US has had a bunch of spectacular implosions and scams.
jefurii
This is probably a good thing. I don't want disruption in my bank.
Developerx
Take a look at Russian bank apps and ecosystems. How fadt they transfer money etc. I hate every time I'm in America. So stupid and ugly bank apps. It's funny they still not have portable card readers so I don't give my card to the waitress
openrisk
Both "disruption" and "banks" are very broad terms. The three common subtypes of banks (retail, commercial, investment) live in different planets as far as infrastructure, products, business models etc.
So called "fintech disruption" typically concerns just retail banking and is basically just: use an "app" instead of physical branches to cater to the mobile-native generations. Nothing that any old bank cannot also implement as an alternative channel.
Real disruptions do happen every once in a while and involve new financial products and business models (securitisation, derivatives etc.). But these are typically driven by legal rather than digital innovations.
Spooky23
Exactly. Apps can be differentiators.
Also, large banks fundamentally work. People with money want excitement and disruption away from their money.
Red_Comet_88
No one is disrupting banks because the mega banks have the sole power of creating credit out of thin air, and no upstart fintech company has this power. To gain this power requires the creation of a bank, which as you can imagine, is probably the most gate-kept activity on earth.
Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat to the banking cabal which runs the American Empire.
kasey_junk
Everyone has the power to create credit out of thin air.
What the banks have (now, due to long history) is a regularly regime where we expect the government to fix that credit when the bank gets those credit decisions wrong. In trade for that extraordinary treatment governments demand banks comply with a variety of regulations.
I’ve worked for a long time in the banking and credit space, no one I know in that industry thinks Andreeson did a credible job explaining modern banking. To knowledgeable people he came off as either fundamentally ignorant or extremely deceptive depending on your cynicism levels.
scarface_74
Yes and crypto doesn’t have any inherent risk like a sitting President creating a crypto currency where he has 80% of the currency, will probably make a half billion dollars and then do a rug pull.
https://fortune.com/2025/01/22/donald-trump-net-worth-memeco...
Waterluvian
That’s the thing I can’t ever come to understand about crypto. It’s purely about perception of value. At least with some precious metal, it has a floor value as a function of its practical uses and abundance.
Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.
PeterStuer
And fiat currency isn't purely about perception of value?
Just as not all crypto is equal, the Zimbabwean dollar isn't remotely like the Swiss frank, just as bitcoin isn't remotely like hawktua.
tenthirtyam
> At least with some precious metal, it has a floor value as a function of its practical uses and abundance.
I don't really give this argument much credence any more. If the value of, say, gold or diamonds were to drop their practical-use-floor-value, they'd be valued at probably less than 1% (maybe much less) of current value. I mean, how much gold is actually consumed by industry? And we even have industrial diamonds now.
A friend argued to me that crypto is "A Terrible Thing" because its just used to fuel the (illegal) narcotics industry. At this point, I'm doubting that too - the market cap of all crpyto, and the value being transacted e.g. daily volume, has increased massively recently. Are we to believe that narcotics have caused that? I can't imagine so - more likely to me it's around 90-99% speculation which, you might well argue, is "Another Terrible Thing."
henry_bone
That's true of everything we use as money, including precious metals. You can't eat them, live in them, use them as weapons, walk down the street in them. They have value bacause we all agree that they do and we all agree to use them as a means to exchange that value. Also, and this is important and I should have said it first, they have value because their supply is restricted.
The same is true for crypto. It's fungible, private, and limited in supply. It's also independent of governments although they are doing their level best to correct that.
WinstonSmith84
You're mixing up a bit everything. Bitcoin is totally different from Ethereum or Solana and these 2 networks are different from all the NFTs and meme coins launched on these Ethereum and Solana.
By the way, if you thought that Trump was doing something illegal, which certainly sounds suspicious, well it isn't. This guy gives a good overview of the why https://x.com/wassielawyer/status/1881995797245600248
AnthonyMouse
> At least with some precious metal, it has a floor value as a function of its practical uses and abundance.
Suppose the price of gold is 80% perception of value and 20% utility for making electronics etc. Then if you buy it, 80% of what you buy is perception of value. You could get the same result by buying 80% Bitcoin and 20% commodity rock salt. Is someone who buys the latter any more of a sucker? What about somebody who then decides to divest the rock salt because it has a below-market rate of return when they have no direct use for it?
dumah
There’s at most a zero floor value on holdings of government debt, corporate equities, bank holdings, and any asset held by a custodian.
The floor value of physical commodities with significant storage costs is negative.
The market is aware of these possibilities and these risks are generally recognized as being embedded in asset prices as premiums.
catlifeonmars
Precious metal floor value is not immune either, since (1) it is dependent on supply and (2) specific technologies/industries that require their use may become diminished or obsoleted. Definitely a lot less volatile than something not bound by reality though.
__MatrixMan__
Are you proposing that "value" is meaningful in the absence of some perceiver? All value is the perception of value. The only difference is that it's easier to find people who value precious metals, but that sort of thing always depends on where you look. One can easily imagine situations where a position at the front of a queue is more valuable to the people nearby than a gold coin. Finding value in a blockchain is no different.
It's just that none of the blockchains have yet managed to situate themselves such that people are likely to value their effects. Instead they're focusing on scarcity, which is kind of silly because all of the competition is equally empowered to create artificial scarcities. I think they'll figure it out eventually.
WinstonSmith84
it's a ... memecoin - a category of crypto assets.
pavlov
It’s a funnel for foreign bribes. That’s literally the only utility of these Trump coins.
buyucu
[flagged]
manquer
Are we really free not to be part of it ?
This administration is also creating a sovereign wealth fund, which trump will exercise significant control over, I would be shocked if crypto and his coins specifically are not included.
We are paying for it all one way or another, either with taxes or more likely higher inflation.
malfist
You and I are free to not buy it, but that doesn't mean Russia or b Saudi's or China or Zuckerberg isn't going to buy a bunch to influence our president
hiddencost
A sitting president profiting off the presidency is a hall mark of a corrupt state. Doing it so openly suggests there's nothing stopping from doing so in much subtler ways too.
Cthulhu_
> and no upstart fintech company has this power
Most of the cryptocurrency companies prove that this statement isn't entirely true though, unless I don't get it. That is, they generate cryptocurrencies out of thin air (credit) and say it has a certain value, then people pay them fiat money for those. They just generated value out of thin air and some compute cycles.
danielmarkbruce
Getting a banking license in the US at least is totally doable and lots of banks are created de novo every year.
As another commenter noted, anyone can create "money out of thin air". Come to my corner store and buy an apple on credit. Poof!
Credit was the original money, made out of thin air, and can be by anyone.
jdminhbg
There used to actually be lots of new banks, now there are some: https://www.statista.com/statistics/193052/change-in-number-...
owenversteeg
Huh, from about 150/yr from 2000-2008, not one from 2011-2016, 10/yr 2017-2023. Interesting.
jgilias
Buying an iPhone on credit is not making money out of thin air. Unless you can fractional-reserve create iPhones.
danielmarkbruce
Sure it is. In fact, it's fractional banking where the fraction is 0.
Consider how much business can be done on credit, and what constrains it. Infinite, and nothing. My corner store is not required to hold reserves against it's receivable. Apple (or a telco) is not required to hold reserves against it's receivable for a phone on credit. Their suppliers aren't required to hold reserves against credit on them. And so on all the way back to the folks digging stuff out of the ground.
Red_Comet_88
Can your corner store credit be used to pay taxes? How long will your corner store survive if the IRS found out you were processing transactions in your own currency?
danielmarkbruce
No to paying taxes, mostly because the asset you'd have is an apple... The corner store at least has a receivable, but the IRS still won't accept that from them.
But, at least in the US, before the national bank acts in the 1800's, various taxing entities specified which bank notes (or other assets) they'd accept and not accept. It was basically whichever bank notes circulated the most with no/little discount, some gold/silver coins, some government bonds. Ie acceptance by a taxing entity isn't really a clear line on "is/is not" money.
Trading receivables has been going on forever, happens today, is totally legal. The corner store could sell the receivable, and many businesses to sell their receivables.
snitty
>How long will your corner store survive if the IRS found out you were processing transactions in your own currency?
Offering someone credit in USD isn't making your own currency. The closest widespread version of that are community currencies[0], which the US doesn't seem to particularly care about -- I'm guessing because they're generally pegged to the dollar and promote local economies.
[0] https://en.wikipedia.org/wiki/List_of_community_currencies_i...
kcatskcolbdi
Everyone has their own opinion of "lots" I suppose, but the quickest info I could come by in a quick search was 8 de novo created in 2021.
danielmarkbruce
Yup it's in the ~10's every year more or less.
snitty
>The banks and gov brought the hammer down on crypto because it was a legitimate threat to the banking cabal which runs the American Empire.
Price instability, confiscatory and variable transaction fees, several high profile frauds -- including in a so-called "stable coin".
Crypto is its own worst enemy. Not the government.
Cthulhu_
Yeah, that "banking cabal" includes a heap of checks and balances that at least on paper stop financial crimes like scams, money laundering, market manipulation, insider trading, and they add guarantees like the relative stability of value, interest rates, and compensation if your bank does end up going bankrupt.
You get none of those protections with cryptocurrency, which is exactly what scammers, criminal organizations, and financial libertarians want.
csomar
You don't need a bank to create money out of thin air and creating a bank won't allow you to do that.
I can create money out of thin air with you, if you are willing to accept my credit worthiness.
null
adamtaylor_13
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.
absolutelastone
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.
adamtaylor_13
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.
qaq
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.
danielmarkbruce
JP Morgan Chase and Wells Fargo would have been fine in '08 had they been left alone.
JumpCrisscross
> 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.
rco8786
Right. Banks are boring. The whole industry is based on very simple math. Nothing much to disrupt.
Neonlicht
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.
imtringued
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?
okanat
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.
hinkley
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.
null
lxm
Isn't that usually indicative of a winner-takes-all sector running on pretty thin margins?
ninetyninenine
all empires eventually fall
1a527dd5
They might not be disrupting them, but they are definitely causing competition in the market place again.
My main bank account is with Halifax, everyday spend is with Starling. Then Monzo for anything risky.
Before Starling/Monzo the Halifax app was _crap_. Barely got any updates and was very basic.
Now? The Halifax app is on par with the newer banks, and sometimes even release new features before (e.g. scan cheque in to deposit).
alt227
Halifax is owned by Lloyds banking group, and their current app is just the exact same Lloyds app with a different logo. I know because I bank with both and the apps are identical.
Previous to the merging of online services, you are correct that Halifax had its own app and it was terrible. But at that time Lloyds had a great app, they just hadnt unified the back end tech of all the different bank brands they own.
It wasnt disruption from startups that caused the improvement, it was the parent company taking its time to merge the decent tech it had developed for itself.
jsemrau
That exactly. Fintech forced Financial Institutions into Digital Transformation. Now they have caught up, there is no "next big thing" for Fintech. Crypto might have been it, but it killed itself by terrible UI and a never ending stream of scams and frauds. I believe there is an AI Agent Internet of Money to end Ad Revenue, but haven't found the arbitrage model yet.
danpalmer
Yeah I feel like Monzo and Starling really forced the high street banks to level up their game. A friend of mine was a PM on an app at one of the big high street banks and they said the instruction from the top was explicitly to be like Monzo, and they did iterate, get better at app development, and ship a bunch of features that people like (spending notifications, in app card freezing, etc).
kylecazar
Interesting... We've had scanned check deposits at Chase (US) for at least 15 years, I think.
stevesimmons
Bear in mind that's a measure of how backwards US banking is, not how advanced.
In the UK, I can't remember the last time I wrote or received a cheque. Maybe twice in the 17 years I've been living here, and certainly not in the last decade.
So with UK cheque usage being a tiny fraction of the US rate, there's simply no demand for it in banking apps.
Symbiote
Cheque use in the UK is now around two per year per person. (This includes business-to-business cheques.)
The over-65 age group is most likely to use them, and least likely to use an app, so you can see why it wasn't a big priority for most banks.
It's been at least 15 years since the banks stopped giving account holders chequebooks by default. If you want one you have to ask.
spacebanana7
I get a couple of cheques a year from family in the UK. It's an infrequent transaction but an important one, and cheque scanning is actually the only reason I maintain my legacy bank account.
1oooqooq
most countries abandoned checks at least 15 years...
Finnucane
"Nobody is going to put their money in Fred's Bank."---Steve Martin
phendrenad2
Banks are the most immune to disruption, because they function so closely with government, and they are nothing without the blessing of government. And the hurdles to create your own bank are very high. Check out this great Netflix documentary "Bank of Dave": A moderately successful businessman decided to start his own bank, just to see if it could be done (and to lower fees for his local community). The results are... pretty much what you'd expect. "You can't start a bank... nobody starts a BANK!" (They just kinda... have always existed!)
phatfish
It depends of the services the bank offers, because there are plenty of smaller regulated banks with deposit protection that offer savings accounts in the UK. I assume running a current account has a lot more regulatory requirements than savings?
dalyons
UK specific maybe? ~10 banks get started every year in the US, there are ~5000 US banks.
What does "disruption" look like in the banking space? Banks want the perception of immovable, confidence, reliable, resilience, etc. It's what gives them the credibility to move big money. They don't want to "move fast and break things". Some may think about digital currencies.
My warning is this: Be careful what you wish for. If we were to switch to a full digital currency, there are significant concerns that money could be allocated like a voucher, where it could be sent and only spent in a certain way. Suddenly the government decides those receiving some kind of social care allowance must spend different parts in different ways, i.e. a minimum of 50% MUST be spent on rent (an extremely enticing proposition in a recession). Perhaps there is a tax for not spending enough, or on the correct thing. Perhaps there is a micro-tax for moving it around. Maybe the micro-tax is dependant on your social credit score. The slippery slope goes on.
The only thing currently stopping this is that you can withdraw your entire wage each month and spend it however you want, without such a tax. The government or banks cannot be certain of precisely how you spend your money when using cash. The very moment cash is gone, such implements can be created and there is nothing you can do about it.
Maybe I am behind the times, but I don't like the sound of "disruption" in the banking industry. That last time I saw "disruption" was in 2008, and many people lost their homes.