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The 'Neo-Banks' Are Finally Having Their Moment (nytimes.com)
After the financial crisis 10 years ago, unhappy customers were expected to flee the megabanks for smaller competitors. It didn't happen. And the big banks became even more entrenched. Now another wave of alternative banks are at it again, and they say they've learned from the mistakes of the upstart banks that tried -- and failed -- before them. The New York Times: Chime, the biggest new name to pop up, has opened two million fee-free online checking accounts and is adding more customers each month than Wells Fargo or Citibank. That has inspired a crop of newer start-ups, like Empower, which started its first fee-free online checking accounts, with lots of digital bells and whistles, in October. Venture capitalists are pouring money into American start-ups that are offering basic banking services -- known as neo-banks or challenger banks. In 2018 so far, American neo-banks have gotten four times as much funding as they did last year, and 10 times as much funding as they did in 2015, according to data from CB Insights.
Big players from outside the consumer banking industry, like Square and Goldman Sachs, are also moving in. "In consumer banking, you have what is one of the largest industries in the United States, in terms of profits, and at the same time one of the least disrupted industries, and the most unpopular with consumers," said Andrei Cherny, the founder of Aspiration, a neo-bank that has attracted nearly a million customers. "Those three things create a perfect storm for disruption." The persistent unpopularity of big banks has been a boon to the newcomers. And they are helped by a new attitude among financial regulators who have grown more comfortable with online banking and young customers who have no hesitation about cashing a check or sending money on a phone.
Big players from outside the consumer banking industry, like Square and Goldman Sachs, are also moving in. "In consumer banking, you have what is one of the largest industries in the United States, in terms of profits, and at the same time one of the least disrupted industries, and the most unpopular with consumers," said Andrei Cherny, the founder of Aspiration, a neo-bank that has attracted nearly a million customers. "Those three things create a perfect storm for disruption." The persistent unpopularity of big banks has been a boon to the newcomers. And they are helped by a new attitude among financial regulators who have grown more comfortable with online banking and young customers who have no hesitation about cashing a check or sending money on a phone.
How do you withdraw a decent amount of cash from these virtual banks? An ATM is typically $300/day.
I don't trust (or use) commercial banks. Every one that I've tried has been garbage.
I have no reason to trust these start-ups, which I'm sure will be sold as soon as they can to big banks and are selling their "customers"' data all the while.
I'll stick with my trusty, cheap, and very effective local credit unions, thank you.
I don't respond to AC's.
Revolut and N26 are geting popularity here in Europe because of ungreedy exchange rates, low/no fees and nice phone apps. Waiting on them to open up investing via app since we don't have robinhood in europe.
That was a terrible troll. It didn't even make any sense.
I don't respond to AC's.
The banks in the USA are terrible. They are far worse than any other industrialized country and often banking is easier in third world countries. American's also tend to use cash and checks more than everyone else. My kids don't even carry wallets anymore, I doubt you could do that in the USA. The banks just aren't motivated to be convenient like that.
Also I'm a white male which makes using financial services much easier. There is a certain class and race rigidity in the USA and the financial system is a big part of it.
People tried to exit the moribund US banking system after the 2008 crash. Banks responded with legislation to prevent this and drive customers back. Face it. We live behind a financial Iron Curtain. If they could justify shooting you for attempting to exit, they would.
Have gnu, will travel.
Narrow banking (http://www.narrowbanking.org) would be safe, efficient, and could be offered at a very low cost to consumers. Which is probably why the existing banking cartel doesn't want the general public to have access to it.
The Democrats and Obama specifically declared them "too big to fail" and shoveled money at them to prop them up.
Good thing Trump undid that, took the money away, and made the free market great again.
Oh wait, he didn't do that. You mad bro?
Marcus (Goldman Sachs) and Empower (J.P. Morgan) are really just large megabanks in disguise. Marketing at its finest!
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
You have to remember, we are a big country. That definitely has an influence on things, our infrastructure is huge. I looked up some numbers, and in 2017 there were 78,774 branches of FDIC-insured commercial banks in the US. So it takes a while to implement technologies, and when things change fast, sometimes it's just easier to keep using things that work. Now if you are in a big city, you'll see more things like digital payment technology. But if something works fine, why change it?
Having said that, I personally rarely have cash on me. I carry a money clip with 2 credit cards, driver's license, and healthcare card. That's it. And I get by just fine. I have been to a few places that are "cash only", and I had to find an ATM. But I don't remember the last time I wrote a check.
I haven't been in a bank branch for several years. In fact, the bank I have used since the late 90s doesn't even have any branches in the state I now live in!
My beliefs do not require that you agree with them.
"Narrow banking" - where "liquid no-risk cash" accounts cannot be used to back loans - can work on a small scale but credit unions still need to cover their costs and for-profit banks still need to make a buck.
So, either they charge for this service, or they find some other way to make money off of customers, such as selling their personal data, sending them pad ads from third parties, or advertising their other money-making services in hopes that customers will buy enough to cover the loss from the "deposit money with us so we can loan it out" model.
On a large scale, it creates another problem:
Cash in such an account is like cash in a piggy bank: It's not available for others it use. Granted, this is the intent, but it will mean that the "useful money supply" will go down and interest rates will go up, or the fed or other central banks will have to take other steps to increase the "useful money supply." This isn't a deal-breaker but it is something that has to be thought through.
Personally, I'm fine with the rules we've lived in since the 1930s, which allow lending with small-ish reserve requirements but insurance of the first $X to cover bank failures, where $X is several years' income for the average American household. I'm fine with it as long as a responsibly-used (balance is always more than a reasonably small minimum amount) checking account not only free but earning me interest.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
I don't know what USA you've been to, but the one I've seen is dominated by debt ... err I mean "credit" cards.
And on what planet is using actual cash instead of imaginary debt for the low low price of total totalitarian surveillance of your finances a good thing?
In Germany we have a saying: "Nur Bares ist Wahres." (Loosely translated: Only cash is true/real.)
Here, you can't even use cards at many places. And the majority of us make sure you never will.
I'm also certain, that the only reason we're using fiat money is, that basically everything is fiat/relative, including the worth of gold etc, and we have no way yet, to measure real-world work in a standardized way.
Our banks suck too though. As you, by law, require somebody who managed a bank for 10 years to manage your bank, to even be able to found a new one. Guaranteeing that the same old cancerous culture and old boys club carries over for ever. Not that the state agency responsible would not reject any new request for a bank license anyway. Duh, with it being made up of people from the old banks. ... Complete madness, when you know that they did lay entirely new fiber cables across the Atlantic, just to shave off 20 milliseconds(!)) from their high-frequency trading delays. (Before just moving the servers themselves across.)
That's why we still have bank transfers that take not seconds... not even minutes... but DAYS.
I don't know whether my thoughts apply here since I live in Switzerland but...
The two primary things I'd want is the ability to pay normal bills with my credit card so I probably wouldn't even need a bank account and would collect frequent flyer miles on top of it :D.
On a more serious note, I'd love it if I could use the principle of compounded interest FOR me instead of having it wielded against me for once. I'd like to be able to pay a fixed amont of money to the bank on my mortgage each month. The bank takes what it's due for interest and the rest goes to amortization.
That way, the amount I was paying back would grow each month. Slowly but steadily. I could pay off my mortgage of about half a million by the time I'm 56 without even having to spare it any thought.
As it stands the banks keep wanting to have me amortize indirectly (I don't know whether that's a thing in the US at all...) which basically means paying into a retirement fund (which only gives .7%interest while I'm paying 1.2% on the mortgage) which I basically pawn off to the bank.
The idea behind that is to save taxes. And you do! You save easily ten percent in taxes of what you pay in mortgage interest.
Switzerland is the country where the myth that you have to have some debts in order for the state to not smother you with taxes is alive and kicking in no small part due to the fact that the banks gladly feed it at every turn. Like pigeons in Venice... and it produces about as much crap on society, too.
Time to see some heads roll
And time to bring back oh about 90% of that counterfeit currency that was injected into the system.
I have accounts at both a major, nation-wide credit union and a not-so-large regional bank. I pay NO fees to either financial institution.
Most of my "banking" is with the credit union, including my credit card. Through the Co-Op Network of credit unions, I can get cash without any fee from ATMs at most other credit unions as well as at a local drug store and a nearby convenience grocery. I can actually go into some credit unions where I do not have an account and make a deposit to the credit union where I have my account. This is through the Service Center network of credit unions. (Picture going into Wells Fargo to make a deposit to a Bank of America account.)
I write checks against my account at the real bank when I think I might need the cancelled check in the future. That is because a federal law prohibits credit unions from returning cancelled checks. (Instead of the checks, my real bank sends a page with images of the front and back of each cancelled check with my monthly statement.) Another service provided by my real bank that I have not seen at any credit union is that I have rented a safe deposit box. For that reason, I chose a bank that is nearby. The box is larger but costs less than the box I used to have at Wells Fargo. Do any Neo-Banks have physical offices nearby with physical safe deposit boxes?
You don't, end of story! While it may be "your" money, it is under the control of them.
And if you want over $3000 of it in currency, they file reports on you that you don't know about, and if it's $10000 or more, they file a report that you are forced to fill out, before you can get your money.
Now... if you adopt cryptocurrency like Bitcoin Cash (BCH) or the private ZKP flavor say Zcash (ZEC), then your money is YOUR MONEY in FULL control by you at all times and you're free to spend it, save it, give it to others, and even eventually invest it upon adoption, as you please, whenever you want, wherever you want, around the world 24x365 p2p secure with no middleman in the way trying to control, censor, surveill, or steal from you by force of jail and gun (aka tax your ass).
Banks and Government are REDUNDANT BUGGY LEGACY APPLICATIONS.
They have been eclipsed by new models.
You can do better together on your own, including recognizing your responsibility to help take care of giving to charity in your local neighborhoods, distributed p2p direct style, just like cryptocurrency. Same for local roads healthcare fire police insurance, all that, convert that LEGACY bullshit propaganda scam and power trip over you to efficient p2p directness.
Adopt decentralized private cryptocurrencies now.
I "moved my money" out of big banks (BOA to be specific) and just use a credit union. Better service, better rates, lower fees.
Second class citizen of the New Gilded Age
Sorry guys, but as sheeple you've fallen for the Government and Bank propaganda and programming.
You parents fell for it.
Your grandparents fell for it.
All of you, hook, line, and sinker.
There is ZERO reason for a now enlightened and awake person like yourself to support or use either of these inefficient legacy systems.
You can do *everything* they claim to "offer" you, by yourselves, in your own communities, and globally, voluntarily, without force of jail gun theft (tax *IS* theft) or even murder, by them, upon you.
Health care, insurance, police, roads, fire, defense of self and country, even charity....
You can do this now, all of you, worldwide, because Private Decentralized P2P Cryptocurrencies have finally given you the tool you need to start peacefully bypassing those legacy structures ruling over and controlling you like Kings.
WAKE UP PEOPLE !!!
Start adopting cryptocurrencies in your weekly lives, pay people and businesses for little things, grow the network of use cases and people involved.
BE the new voice of Freedom in the world.
Not more slavery, theft, and murder in your names.
fag
Fucking Americans are such pussy slaves.
Herrow prease!!
However that higher rate narrowed over time to be about equal and for some special promotion I jumped ship to one of the mega banks. I will say this, the big banks do a very good job with the apps and online stuff now. Checking is free, etc etc.
These alt banks will only win my business if their rates are much, much better. They might sweep up customers who have issues with budgets, overdrafts and stuff like that. The Mega banks are nearly criminal around that sort of thing, but that's not anything I need to deal with.
The Democrats and Obama specifically declared them "too big to fail" and shoveled money at them to prop them up.
The "bailout" was passed in 2008 BEFORE Obama took office in January of 2009
https://en.wikipedia.org/wiki/...
The problem was Corporatists and Rightists and Rabid Randroids at the Big Banks distorting the economy.
Bank, Credit Union or Neo Bank, TFA IS *PAYWALLED* !!
Is there any non-paywalled alternative?
Empower is a federal credit union which is the result of the merger of two other FCU's - Empire and Power. Whoever though of Empower as the name must have thought they were pretty hot feces, but it practically wrote itself. Sorry, anyway, they've been around for a couple decades so not sure why they're being referred to as a start-up...
The only reason for checking accounts is the forces system of payments that died out in Europe 40 years ago.
Giro killed them. Payments are done with a one page payment sheet. Add the payees clearing numbers on that sheet, from the bills, plus amount you want to pay and mail it it. Done.
Postage prepaid. Not even one stamp to lick. Forty years ago.
Obviously banks like to play with that overnight deposits they pay no interest for. Toughsky shittsky.
The system is rigged by the banks who typically "earn" 40% of total corporate profits.
Bitcoin isn't guaranteed by the FDIC up to $250,000 like my bank account is. If bitcoin goes bust or collapses you are SOL.
For those that like pay with money, in a very small country called Portugal, near Spain in European Union, has forbid people of paying anything with money that costs above 3000 euros (~ 3,424.43 USD / at current exchange rates). People can only pay with traceable electronic payments or for example bank checks... the Portuguese State demands to know where the money is coming from and to where... so Portuguese people must have some bank account for paying for more expensive things... is no longer optional for those cases.
They must have some excuse like say terrorism, money laundry... but is just to control everyone and everything, they want to know everything the snoops.
If you think that is bad you have to read about India's e-currency initiatives under Modi as President. 1984 here we come.
If bitcoin goes bust or collapses you are SOL.
You can use the past tense in that statement. ...
And also add in the transaction delays due to congestion
And also the fee to get accelerated processing, which should be a huge red flag to anyone considering BTC, but