
Small Bank in Kansas Is a Financial Testing Ground - NaOH
http://dealbook.nytimes.com/2014/12/13/small-bank-in-kansas-is-a-financial-testing-ground
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davidw
> In the coming weeks, it is expecting to roll out what it refers to as a bank
> account of the future, which will make it possible to send wire payments and
> create customized debit cards online.

Or at least a bank account of a normal European bank. At least for the moving
money part. I can do that easily and with no fees here in Italy, which isn't
the leading light of banking it was 600 years ago.

Hopefully that kind of thing will finally take off in the US. I wonder what
the difference is:

> But hastening the movement of money creates risk for banks, because it
> generally means less time to catch fraudulent transactions.

That's got to be a risk in Europe, too, no? How is it dealt with differently?

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jacques_chester
> _How is it dealt with differently?_

I can't speak for Europe. I once griped about the slowness of US banking to an
Australian acquaintance who worked in banking technology in Australia and
Britain. Here follows my half-remembered, probably inaccurate understanding.

In Australia, a bank has a very high confidence of that a transfer is going
from real, physical person A to real, physical person B.

This is because of the "100 Point" identity check you need to perform when you
open account. To open a bank account, you need to present multiple,
independent forms of ID, including at least a driver's licence or a passport
and some identification showing your current residential address.

It can absolutely be circumvented, but the bar for doing so is significantly
higher than casual small-time fraudsters are interested in.

In the USA, I can find a small-town bank who will open my account without
looking at me too closely, then start issuing dodgy cheques much more easily.
In Australia, _no matter where I go_ , I will be required to prove that I am
who I say I am. So the ability for banks or police to lay hands on me or my
money is significantly strengthened, and consequently the rate of fraud is
lower.

I see this also with online shopping. In Australia I never once, in my entire
life, had a credit card purchase rejected. In the USA my Bank of America card
regularly locks up and waits until I login to assure them that it hasn't been
stolen.

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waterlesscloud
"His first discovery was that nearly all banks rely on a few big, and not
terribly agile, outside vendors to provide all the software that makes bank
computer systems work."

I worked in this industry for about 6 years in the 90s, and there were a few
small companies moving all the data center functions over to pc software from
mainframes, but most (all?) of them got bought up by the big players. I got
out of it when the medium-ish company I worked for got bought up and I got
laid off. I heard some of the people I worked with split off and started new
tiny companies.

Circle Of Life, I guess.

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mousa
From what I've in the finance industry, there aren't enough standards.

It seems like every bank/broker/data provider stores and sends data in its own
format and has different procedures for clearing. It's like the priority is to
make sure people can't switch easily.

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gaadd33
Wow, this is actually some real innovation in a stagnant industry that
actually affects millions. (And it's in the part of the country commonly
written off)

This is far more interesting/inspiring and has a much greater impact on the
world than the 'break stuff and ignore laws' mentality of Uber and similar
Silicon Valley darlings.

~~~
forsaken
Interestingly, Django also came out of Kansas :)

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PublicEnemy111
Yantra is actually located in the small town where django was created
(lawrence)

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honestcoyote
Not that small. Lawrence is the home of the University of Kansas.

I've lived all over the country, and Lawrence would rank towards the top for
me. It's much like Austin, only smaller and less expensive. And probably more
relaxed. The only drawback is that it's surrounded by Kansas.

~~~
waterlesscloud
Yeah, Lawrence is very much a cool college town. Reminded me a lot of Athens,
GA.

On another note about Kansas, I was driving from Kansas City to Wichita on a
daytrip with my girlfriend at the time. Like 1995, I think. We stopped in a
small town along the way and for some reason found ourselves in this dress
shop in a strip mall. It turned out to be a boutique type place, with the
dresses at 300-400 each. Weird. Who would have thought they had a market
there? Cattle and oil money, I guess.

That store also had a small collection of cassette tapes of Turkish pop music
for sale, totally randomly. I bought them all.

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rcarrigan87
The assertion big banks aren't trying to innovate payments because we are in a
"risk averse" period after the housing crisis is a stretch. I'm not sure if
that's something the author concluded or an argument banks are actually using.

Mortgage loan risks were motivated mostly by greed. Improving money transfer
systems would carry the risk of fraud, with a very long-term payout of
improving customer experience. Bank CEOs nowadays want there quick buck and
then parachute into retirement. There's no incentive for long-term thinking.
And if you're dissatisfied where are you going to go? Another mega-bank with
the same incentives...

Seeing as how banks just used their lobbying power to cripple Dodd-Frank, the
argument "regulations get in the way of innovation" also hard to believe. When
regulations got in the way of highly lucrative derivatives sales, it seems the
banks were able to overcome.

I really hope these small guys can make a major impact.

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markbnj
Really interesting story. I'd send the guy a resume if I thought I could get
my wife to move to Kansas.

~~~
PublicEnemy111
Well, if you're in SF you could show her the 7 bedroom mansion you could buy
in Kansas for the price of a one bedroom in the mission.

~~~
GFK_of_xmaspast
Doesn't matter how nice the house is, you're still living in Kansas.

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known
A bank in Germany has just one employee.
[http://www.rediff.com/business/slide-show/slide-
show-1-a-ban...](http://www.rediff.com/business/slide-show/slide-
show-1-a-bank-in-germany-has-just-one-employee/20130215.htm)

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frequentflyeru
These guys actually do the back-end / debit card issuing for Moven Bank.

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prbuckley
If this area is of interest you should also check
out[https://karmiclabs.com](https://karmiclabs.com). I have no relationship
with the company but the founders are friends and think they are doing some
really interesting things in the payment and debit card space.

