Bank economists warn of disruptive threat from mobile and crowdfunding
finextra.com
finextra.com
However, they could be in serious trouble if an alternative payment system becomes popular. The stage is set - NFC and Bitcoin are growing in popularity, and the federal government recently began allowing merchants to charge a credit card fee.
If a taco cost $1.50 with my smartphone, or $1.75 with my credit card, I know how I'd pay.
What we really need is for the justice department* to explicitly include the goal of making markets competitive in its short list of (un)official objectives.
* Or any branch of government. I mention the judicial because I think it is the branch least susceptible to bribery. Since competitive markets are bad for business, that makes it the most likely candidate to promote this kind of change.
It's not just Florida. Every state I've traveled to recently now proudly advertises separate cash and credit pricing.
The contracts actually say that merchants cannot add a surcharge for paying with a credit card. It's still okay to give a 3% discount off the final sale price for paying cash, or a 10% discount, or whatever they feel like. As far as I know these contracts are intended to mirror the laws about cash: you can't ask for 3% more because somebody wants to pay with cash, since cash is legal tender.
It's been illegal to prohibit stores from offering cash discounts since 2010; those contract terms are no longer enforceable. That was part of the Dodd–Frank Wall Street Reform and Consumer Protection Act.
And I know how the law would be changed in a moment's notice, if the banks found this scheme looses them money.
Now, maybe the banks are getting fat and lazy, and some new entrants will stir things up a bit. A secure token (maybe an app) could cut the costs of fraud protection, but I can't see how bitcoin can work better. Sure, you can have a 20 character password on you bitcoin collection. But there's no reason why banks couldn't give consumers the option of doing the same (a 20 character pin on a app, which validates transactions), if there was much demand for it.
My "business" bank (Cater Allen) provides maximum 13 months electronic history. Anything else you have to call and ask nicely to pay £10 for a snail-mail printout.
Fully aware this would be a problem, I tried to do due diligence before signing up and there's nowhere to get a decent comparison, e.g. see feature matrixes and screenshots of the various offerings.
They'll spend millions on football sponsorship and inane TV ads, but none differentiate on the basis of first-class online services a la Simple. Whoever is cloning Simple, please do it fast!
You see how this works? Finding a bank that doesn't operate like a ponzi scheme starts with finding one that doesn't advertise heavily.
I find it's a shame that they don't really compete on features like this. Most people still go on personal recommendations (/OH GOD AVOID THIS BANK comments from friends). Either that or who will give me a few quid a year?
Most significantly, there is this quote:
>"For banks, crowdfunding poses a challenge ... However, banks should be prepared for this trend and make it work to their advantage."
Making crowdsourcing 'work to their advantage' is very different than making crowdsourcing illegal. It would be much more profitable for them to start up their own crowdsourcing platforms. That way, people deposit money into the banks interest earning accounts, AND they get a cut. Instead of 7% interest with a non-trivial chance of default (which, if you account for ~3% inflation, means their true benefit is only 4%), they get a clean 5% fee right off the top. With no risk. At all. Its free money.
This is a no-brainer for me. Banks are built to help people get the money they need to do what they would like to do. They would only stand to gain money by doing this on their own. Shutting down the whole system would be stupid, and I think the economists at BBVA would agree.
Or maybe that's irrelevant to what you're saying, but it needs to be said.
There's a reason they're no longer called Bank Simple- because the law is very clear on what you can actually called a bank. Simple is not a bank.
Simple is killing it on user-friendliness, and has the absolute best mobile and web banking interfaces I've ever used. They also tout the "very low operating costs" talked about in this article because they don't have a physical location.
The future of banking isn't necessarily a bank.
To me, at the least, banking is taking deposits and making loans, neither of which Simple does by itself. It might provide a great front-end for another Bank which does those things, but I don't understand how that makes it the positioned for "future of banking", whatever that means to you.
If crowdfunding gives banks too much trouble, they will simply complain to governments that they are "too big to fail" and that crowdfunding websites need to be regulated to their death.