It's about time they started innovating in this sector.
The banking industry as of late seems like nothing but fraud and arcane outmoded banking policies (i.e. Why the hell do banks still close on Sundays???)
I hope WePay branches out into other services. It'd be a miracle if I could manage my bank account like I manage my other web 2.0 services.. It'd also be nice if the bank I was with gave a shit about having me as a customer.
Banking hasn't fundamentally changed for over a century and as the article points out, Paypal has been pretty lackluster in terms of innovation as well..
Banking is screaming for innovation and I can't wait to hear about more startups innovating in this space..
I'm confused. Does your ATM stop working on Sundays? Does your home banking stop working on Sundays?
The closest branch of my bank is 3000 miles away. The last time I stepped inside a branch was probably 4 or 5 years ago. I call them on the phone a couple times a year. The fact that they aren't "open" on Sundays is a complete non-issue for me.
My online banking really does close between 2 and 6. No joke.
But I don't want a web 2.0 bank, I want a bank as boring as you can get it, one that only hires people with absolutely no life, with a plain boring website.
In want that because they are not a new and exciting thing, they are a place that should only ever do one thing: take my money, lend it extremly reliable people and give me an interest in the return.
To be clear, I don't have a "web 2.0" bank. The only thing non-traditional about my "bank" is that they are actually a credit union. However, they are able to do pretty much everything I need either online, over the phone, or via mail.
Actually, mine does (in Japan). I have no internet banking, although I think I could have it set up. For most banks it's possible to use an ATM at a convenience store after hours, but you have to pay extra fees on nights and weekends...
* transfer money between my accounts (one-time or repeating)
* bill pay (electronic or physical check, one-time or repeating)
* request a wire transfer
* request an electronic transfer to an account of mine at another financial institution
* apply for a loan
* open a new "club" savings account
* and more, but that's about all I recall ever making use of
If you're looking for an actual bank, BankSimple is going for this. The founders are smart ex-finance dudes, and Alex Payne is the guy in charge of the web app.
I had a conversation with the best banker I know about BankSimple. This is a guy that founded a bank in a major US city that had absolutely -0- non-performing loans, through the crisis. That is amazing when you compare it to the rest of the banks in our nation. The only one that come close in terms of performance/size is First Long Island. Here's what the banker said about these online bank start ups:
"One of the main problems with "online" banks is how do they make money. Most if not all have loan volume from somewhere else and are trying to find deposits to fund it - ING is an example. They try the internet route instead of opening expensive branches. ING has kind of dropped off the radar lately because they have credit problems (and I think it is a Dutch bank and you have
read about the European problems).
If these people want to start an internet bank with no fees and make it up on the NIM, they need to invent a way to get people to borrow on the internet. No one has been able to do that yet with the exception of some payday lenders. Also,
most of the internet banks so far have competed on price. They offer higher rates - which tend to attract "rate-shoppers". If they are not the highest rate, the rate-shopper will go wherever the highest rates are."
For a start up, I'm not sure if they will be able to compete on price. Banks like Wells Fargo benefit from their economies of scale because they are able to gather cheap deposits by cross-selling products (which is attributed to their success).
I'm anxiously awaiting for them to come out of private beta. I've been following them for a little while now. It's exactly the kind of thing I hope to see more of..
As far as awesome bank experiences where you feel like a valued customer, etc, I couldn't be happier with ING Direct. They are amazing and worth a study for entrepreneurs looking to innovate in a very old space.
there is still a 48 hour window for transactions to be returned because of insufficient funds. and same day ACH will only be supported by a small subset of banks (and none of the big ones, at least for a long while)
the network is based upon nightly batch file exchange. it's a terrible system for 2010. but it was not bad for its time, and hard to change the system implemented by thousands of banks.
also, there is a risk component of it. holding transactions for longer decreases risk.
The banking industry as of late seems like nothing but fraud and arcane outmoded banking policies (i.e. Why the hell do banks still close on Sundays???)
I hope WePay branches out into other services. It'd be a miracle if I could manage my bank account like I manage my other web 2.0 services.. It'd also be nice if the bank I was with gave a shit about having me as a customer.
Banking hasn't fundamentally changed for over a century and as the article points out, Paypal has been pretty lackluster in terms of innovation as well..
Banking is screaming for innovation and I can't wait to hear about more startups innovating in this space..