
Ask HN: Sick of your bank? Want to build a open source, non-profit, online bank? - niallpaterson
Hey there, I&#x27;m Irish, and here our banks are shady and private. The government owns most of them (through bailouts) yet still there&#x27;s little to no transparency - they act as the please, grabbing as much profit off their customers as possible. Most people here hate their bank and would gladly move to a half decent alternative, but of course there is none. It&#x27;s identical in most countries nowadays, including the US. I think we can all agree that fundamentally, the finance industry is backward, greedy and corrupt. It needs to change.<p>Here&#x27;s the idea: An open source, upfront, transparant and <i>humane</i> bank driven not by profit but by the passion to simply create a bank that people like and enjoy using.<p>A few key ideas or keystones might include:<p><pre><code>    * Transparant&#x2F;Open Source
    * Non Profit
    * Great Customer Support
    * Few and fair fees
    * Great User Experience
    * Mobile First (cliche I know..)
    * Open API

  
</code></pre>
This wouldn&#x27;t just be a projects for fellow developers. We&#x27;d need designers, lawyers, and people involved in banks who are dissatisfied at the current status quo (after all we&#x27;ll need a partner bank in every country we want to operate in to avoid logistical nightmares). I really think it could be a project anyone could help out in - Think of it as a generation coming together to drag one of the biggest industries in the world into the 21st century.<p>By partnering with a local bank in each country, it would cut out a lot of issue logistically, making the project a lot easier to implement than just building a new bank from the ground up.<p>Any thoughts?<p>By the way, my email address is npaterson1 [at] gmail [dot] com if you&#x27;re interested&#x2F;want to know more :)
Niall<p>P.S Regarding Credit Unions, I can see why people are bringing them up but mcuy issue with them is that they don&#x27;t offer stuff like checking accounts, atms etc, aren&#x27;t really open that much, are exceptionally slow at allowing you withdraw and are completely offline. That&#x27;s just my experience, but I don&#x27;t think you could actually <i>bank</i> with a credit union, which is what I&#x27;m trying to get at.<p>P.P.S I think if you were to look at the three things I mentioned - online, non profit and open source, non profit is the one I think is least differentiable if that makes any sense. I think an online open source bank is the real innovative part, not the non profit part.<p>EDIT: A lot of people are asking something along the lines of &#x27;well this works when it comes to banking, what else is there to it?&#x27;. I think banking is a really really backward system, there&#x27;s so much you could do, simple tiny things that would make experiences so much more pleasant. Here&#x27;s an example: Imagine if your bank account had a profile, almost like a social network, and you could go to someone else&#x27;s profile and quickly see recent transactions you&#x27;ve had with them. I&#x27;m not thinking of something like a credit union, rather something quite different, and I really feel there&#x27;s lots more that can be done with banking from a tech pov. I don&#x27;t get why we have to assume banking is as advanced as it can be, it&#x27;s clearly not.
======
pessimizer
>Credit Unions [...] don't offer stuff like checking accounts, atms etc,
aren't really open that much, are exceptionally slow at allowing you withdraw
and are completely offline. That's just my experience, but I don't think you
could actually bank with a credit union, which is what I'm trying to get at.

I'll chime in with a bunch of the other people in the thread and say that none
of these things are true of my (US) credit union. Their online banking could
use a design refresh, but fulfills all of my needs pretty well.

Plenty of atms and free checking, also a few convenient physical locations in
case I need to look someone in the eye. Been with them for 10 years.

edit: branches close at 6, but the drive through is open until 8. Also open on
Saturday and Sunday mornings.

~~~
niallpaterson
I think like always, the US is a bit different. As I think I mentioned, I'm
not thinking of something like a credit union, rather something quite
different.

~~~
pessimizer
The only differences from my credit union seem to be mobile-first web design
and an open API.

I usually deal with my cu through my phone, and I do have to click "Mobile" to
get the mobile site - but it doesn't bother me very much.

~~~
niallpaterson
I assume your credit union isn't open source though? It's great that you're
happy with your bank, but I suppose what I'm trying to get at is that banks
can improve a lot, and just because it you're happy now, doesn't mean we can't
try to do better. It's kind of along the lines of Ford's Quote:

“If I had asked people what they wanted, they would have said faster horses.”

------
blumentopf
There are so-called "sustainable banks". The largest in Europe is Triodos,
they also have a British subsidiary. Globally they are networked through the
Global Alliance for Banking on Values ([http://gabv.org](http://gabv.org)).
Key features of those banks are transparency as to how much money is lent to
whom (there's a Google Maps based tool on Triodos' website to discover their
borrowers), non-financing of certain industries (e.g. weapons), non-
participation in food speculation, etc.

~~~
panarky
I would be very interested in a bank that is open source, radically
transparent, and run for the benefit of the community.

The code for the website, backoffice systems, credit scoring, and fraud
detection could be open-sourced and continually improved.

Data on credit decisions would be available to any member to scrutinize and
challenge, thus reducing fraudulent or unwise loans and identifying
opportunities to expand profitable lending.

The bank's individual loans and investments would be public, perhaps lightly
scrubbed of personal identifying information. Regulators, journalists, and
motivated individuals could see if sweetheart deals are being made at the
expense of the membership or the deposit insurance fund.

The bank could publish a public "blockchain" of transactions similar to
Bitcoin so financial statements could be reconciled down to the transaction
level. This might make it much more difficult to hide fraud and abuse.

Incidents of fraud and default would be published as they occur. The resulting
social pressure should reduce the bank's costs, and the data could be used to
improve credit and membership decisions.

------
taybin
I think you'll need to define "bank" first. What services does a bank offer
that you could replicate? Would it offer interest?

I strongly believe that this will go nowhere unless you spec out exactly what
you want to accomplish. Just saying "we should make a better bank. Let's talk
about it" won't progress much.

~~~
niallpaterson
Agreed, I think it would make most sense to keep it really simple for now. So
like a checking account at heart. No loans or anything like that. I think
that's what most people would need - if you need a savings account you don't
need an accessible online back.

~~~
stephenbez
So what does the bank do with all of this money that people deposit if they
don't make loans.

From [http://money.howstuffworks.com/personal-
finance/banking/bank...](http://money.howstuffworks.com/personal-
finance/banking/bank1.htm): Banks accept deposits and make loans and derive a
profit from the difference in the interest rates paid and charged,
respectively.

------
davidw
My Credit Union (in Oregon)

* Offers Checking accounts

* Has ATM's

* Are open as much as most banks are.

* Are exceptionally friendly.

* Have an online presence that... well it's not exceptional, but it's not that bad either as far as these things go.

That's why I've always kept my personal and business accounts there over the
past 20 years.

~~~
niallpaterson
That's cool. Business accounts aswell? CU's seem much more developed in the
US. I think if you were to look at the three things I mentioned - online, non
profit and open source, non profit is the one I think is least differentiable
if that makes any sense. I think an online open source bank is the real
innovative part, not the non profit part.

~~~
davidw
Yes, my business account as well.

I love open source software, but from a bank...I just want them to give me a
good deal and be helpful.

~~~
niallpaterson
interesting. Why would you be against an open source bank? Would you agree
that banks aren't exactly cutting edge? If so, wouldn't it be better if they
were? (More features, easier experience)? Thanks :)

~~~
erichurkman
Most businesses are probably running the majority of their banking through
banking software -- so long as the bank integrates with their package of
choice (Peachtree, etc), most won't care beyond basic friendly business
banking practices.

Banks are not cutting edge in general, at least not in the US. If you look at
other markets, like Europe, they adopted a lot of technology must faster than
US banks: two-factor auth tokens, sending money via SMS, for example.

~~~
davidw
My bank here in Italy has a pretty good web interface, and very easy money
transfers with IBAN. Other than that though, I prefer the low fees in the US.

------
stratigos
My credit union (in USA) is awesome. It offers all "other stuff" like checking
accounts and atms. They are open "normal business hours" which doesnt matter
to me since I live out of state anyway, theyre exceptionally fast at allowing
me to withdraw, and are 100% online. I mostly interact with my credit union
via my iPhone, and have no problems.

Yes, Im way out of range of my credit union's ATMs. No biggie, they pay me $20
a month to cover any ATM charges! In fact, just yesterday, I got a free $80
long term member award (its been more than a decade).

Basically my credit union kicks all kinds of *ss. If they ever grow huge and
get pwned by big bankery, Ill likely change my mind.

Im totally down for the open source non profit bank though.

------
joshwayne
As other people mentioned, most of what you described is offered through
credit unions. But most credit unions are small and don't have the capacity to
offer great online/mobile experiences. I would be interested to see a project
to open source a solution for credit unions to customize and use to offer a
better user experience.

~~~
niallpaterson
Interesting.. but I think you can go further.

------
ceejayoz
The US has credit unions, which (generally) address the non-technical things
here - they're owned by their depositors and any profits beyond what's needed
to operate get returned as dividends. I've had very good experiences thus far
with Simple, as well.

~~~
niallpaterson
I can see why you're linking credit unions with the non profit thing, but I
think the non profit thing is there, for me at least, as more of a statement
to show aims, so not nessecarily the same reason why a credit union is non
profit. My experience with CU's here is that they are even worse than banks
(almost impossible to withdraw, no current accounts, no atms, rarely open) is
that similar in the US?

~~~
ceejayoz
Very different here in the States. They have ATMs, are open about the same
hours as banks, checking/business accounts, offer credit, mortgages, car
loans, etc.

------
Zigurd
> _I 'm not thinking of something like a credit union, rather something quite
> different_

I'd guess from reading the comments that US-style credit unions are not common
outside the US.

If you came up with a radical new banking product that has the characteristic
of, say, reducing fee income, credit unions might be the best place to launch
it. As you can see from other comments, transparency tools probably fit this
category.

Generally, however, I think there is a lot of potential in organizations
outside the "investor owned corporation" sphere. A co-op ISP, for example.

Anywhere there are perverse incentives for investor owned enterprises there is
room for different structures.

Adding open source client software and high transparency in operations for a
credit union could provide an incremental improvement over the basic idea of
depositor-owned banks. But features like a "social investing profile' if
that's what you are getting at, would be applicable to any bank's customers.

------
parkman
I was just musing about this too ([http://domitable.com/content/it-time-
protocol-renaissance](http://domitable.com/content/it-time-protocol-
renaissance))

The enabling technology of the outcome you are after will likely be a protocol
rather than a service, as a service only succeeds if it can outdo the
competition, which leads to more fracturing rather than unity.

Just as HTTP enabled the document Web, the development of a Hyper Payment
Transfer Protocol (or Hyperfunds Transfer Protocol, or something along those
lines) could enable the financial Web.

Decentralizing transactions and capital is something Ripple and the various
cryptocoins hope to achieve, so whether the protocol emerges along those lines
or as something that doesn't require a peer-to-peer network, I don't know,
only that it's a good conversation to be having right now.

~~~
rouan
I agree that the protocol is the key. Its quite useful to think of the
protocol for transactions to be similar to a transaction in the realworld. A
discussion on terms of the deal, a transfer of goods/services, perhaps a
lingering of a favour owed. Perhaps in the future every person will have their
own "currency", with their own exchange rate with every other person they ever
meet or deal with.

------
LeoSolaris
There is a new credit card in the US that has crowd sourced policies set by
the customer community. The incentive is that the card profit shares.

Article -
[http://www.businesswire.com/news/home/20120305006339/en/Barc...](http://www.businesswire.com/news/home/20120305006339/en/Barclaycard-
Introduces-Crowdsourced-Credit-Card-Driven-Online)

Main Site - [http://www.barclaycardring.com/](http://www.barclaycardring.com/)

A similar approach may be feasible for an online world bank to generate enough
income to pay employees.

------
salfield
Banks have 2 key functions: 1\. Taking deposits and lending them out again.
i.e. creating money through the credit creation process. 2\. Providing money
transfer capabilities.

positvemoney.org runs a policy campaign which makes a compelling argument for
a separation of these two functions as a response to the financial crisis. One
of the arguments is that when the investments of banks fail, our ability to
transact fails with them. Not exactly a resilient system.

There are a number of existing open source projects to create libraries and
protocols to generically provide money transfers.
[http://opencoin.org](http://opencoin.org) (disclaimer: I am involved with
this project) [http://opentransactions.org](http://opentransactions.org)
[http://opencoin.com](http://opencoin.com) \- open source but very much
commercial

Those who say bitcoin is addressing these functions are misguided. Bitcoin is
arguably a currency tightly integrated with a transaction technology. In
theory the bitcoin transaction technology could be re-worked to be useful as a
library for money transfers (non-anonymous). I imagine that would be a
significant amount of work.

------
bushrang3r
I've been reading through this thread and find it very interesting. I really
don't know much about banking systems in general but I'm all for an open-
source, transparent banking system; one that isn't controlled by a central
body that can fail spectacularly and have consequences for everyone around the
world. I think what I'm getting at is that we have to stop thinking of this in
terms of "my bank does this, my bank does that." This is the current system
and one that has proven to be elitest, corruptable and fallible. As I said,
I'm not very knowledgable about the specifics of banking but what do people
think about this idea. I was checking out stripe.com and I had the idea: What
if everybody was their OWN bank? I have some kind of server that hosts my
account, I can accept and make payments and connect with anyone else to do
transfers. I can be paid directly from my job etc... I know it sounds a bit
like bitcoin but why would it not work with our current currencies? Why do I
need to put my money in one of the 'approved' banks? I guess there are
standards and such but could we not work toward this kind of system?

------
lolgek
I personally think that the problem with banks is that they do so much more
than what they are supposed to do. The only thing I need from a bank is a
place to "store" my money, and possibly make transactions.

That's all, that's what a bank is supposed to do. Also no interest rate, my
dad used to be a member of a group here in the Netherlands who wanted to
create a bank of their own too. I never really understood it, I was just 10-12
when it was most active, but what I understood from it was that there would be
no interest rates. You might try searching for it on google, it was called
CMN. There is a Dutch book about it written by Hank Monrobey. You'll have more
chance of finding that than anything else about it.

Here is a link:
[http://books.google.nl/books?id=2uTzrLOGfGwC&pg=PA104&lpg=PA...](http://books.google.nl/books?id=2uTzrLOGfGwC&pg=PA104&lpg=PA104&dq=%22CMN%22+bank&source=bl&ots=gmpjzWGkxZ&sig=QDp05QzaJSiPMKdlb26S19p-h_I&hl=nl&sa=X&ei=rdLOUuehB4TI0QX_84HwBw&ved=0CGUQ6AEwBA#v=onepage&q=%22CMN%22%20bank&f=false)

------
patmcc
Here's what I would do if my country needed this (Canada has very strong
Credit Unions already, that accomplish nearly all of what you want. I actually
work for them, on online banking software):

1\. Form a credit union, or partner with an existing one. This is a very good
structure for a financial institution that is open and non-profit. You don't
need any physical branches, you can be online only.

2\. Read up on
[http://en.wikipedia.org/wiki/ISO_8583](http://en.wikipedia.org/wiki/ISO_8583)
, check out a project like [http://www.jpos.org/](http://www.jpos.org/) \-
this is the standard all financial institutions (and ATMs, debit terminals,
etc.) use to talk to each other.

3\. You'll also need the actual banking database-of-record software (banking
system, banking host software are commons terms). There are some open ones
already out there, I can't speak to their quality.

4\. If you just want retail banking (ATM cards, current accounts, etc.) you're
pretty much done. If you want to offer loans/mortgages, things get a lot more
complicated.

------
rouan
That's great and all, but I think just starting a new bank is not good enough.

In my opinion if we can combine some of the good ideas behind bitcoin with
those in your list. Im not saying bitcoin is the right model. I think we need
to think hard about what enables trade, growth and a society that enables not
just a good standard of living, but also makes collaboration easier on large
(think planet wide) projects. Automatic auditing should be built in from the
ground up, transparency will allow trust between parties both private and
public. Community voted policies that reflect in specific functions/code that
can be made part of the transaction system to collect taxes that we can use to
fund schools, infrastructure and other projects communities decide are worth
funding.

------
tuned
In Italy we have [http://www.bancaetica.it/](http://www.bancaetica.it/) it's a
'popular' bank, it means that collects money on the local district to borrow
to local/italian entrepreneurs. And it's ehical, it borrows only to projects
with high levels of sustainability: green economy, innovation, alternative
energies etc. Now it's quite up also the concept of 'social banking'
[http://www.social-banking.org/the-institute/what-is-
social-b...](http://www.social-banking.org/the-institute/what-is-social-
banking/)

------
digitalzombie
I have a CU in USA an it's pretty good to me so far so I'm satisfy with it.

I can get cash from any participating atm or just cash back at a groceries. I
have a saving and a checking account. I had two loans with them. First loan
was a 15k one I paid off and currently I have a 25k loan with them. The
interest rate is pretty low.

I usually just pay via credit card to get points and use my CU to pay the
credit card bill.

I think my CU addresses every single point on your bullet list except for
mobile first. But I usually just use a credit card by proxy.

One negative thing about CU is just the fact that they're selective on
membership.

~~~
niallpaterson
That's pretty nice. Is there some kind of online/mobile setup for
adminstering? Also actually, do they do business accounts?

------
nollidge
Other people brought this up, but it's strange you don't mention credit
unions, since according to the Irish Examiner [0], 75% of Ireland's citizens
have a credit union account, which is the greatest proportion of any country
[1].

[0] [http://www.irishexaminer.com/business/75-of-irish-adults-
in-...](http://www.irishexaminer.com/business/75-of-irish-adults-in-credit-
unions-187549.html)

[1]
[http://en.wikipedia.org/wiki/Credit_union#Global_presence](http://en.wikipedia.org/wiki/Credit_union#Global_presence)

~~~
niallpaterson
My issue with Credit Unions is that they don't offer stuff like current
accounts, atms etc, are really open, are exceptionally slow at allowing you
withdraw. That's just my experience, but I don't think you could actually bank
with a credit union, which is what I'm trying to get at

~~~
ProAm
What is a 'current account'?

~~~
Tomdarkness
In the UK a Current Account is basically equivalent to a US checking account.
So your average day-to-day account normally with a debit card, cheque book and
easy access. It might also offer an overdraft facility. Typically you'll get
zero or very little interest on any money in the account.

------
rodrigosetti
\+ A nice, well documented, and secure API for developers to create all sort
of applications to integrate with the bank.

I'm a software developer, glad to spend some of my time in this project:
rodrigosetti [at] gmail [dot] com

~~~
niallpaterson
You read my mind :) Was one of the ideas I had. I think that'd be really cool.
Will let you know thanks!

------
rthomas6
This sounds like a US credit union. Many people belong to them, and they are
fantastic. That said, I do not know of any credit unions with open source
software. It would be very interesting to see.

------
rickdale
If you haven't watched "Bank Of Dave" you really should check it out.
Basically this guy setup a 'bank' and the show documents all the troubles
throughout the process and the hoops he had the jump through to open. Check it
out.

[http://www.channel4.com/programmes/bank-of-
dave](http://www.channel4.com/programmes/bank-of-dave)

~~~
niallpaterson
Will do. Is that setting up a bank from scratch though? Partnering
would/should remove a lot of the logisitics.

~~~
rickdale
Yes, I guess he is starting from 'scratch' but the show aligns really well
with your ideas and I think it will help you at least see someone go down that
path and what comes up and what you might need to get started. Anyways, check
it out, pretty interesting.

------
jessaustin
I've heard good things about Simple and Ally, but for myself I find my local
podunk bank supplemented by Amex Bluebird is enough.

~~~
TarpitCarnivore
Simple is still incredibly restrictive to me. Ally or Schwab would be my first
choices if I ever moved off my current bank.

------
jason_slack
My credit union is in the US and I have 2 checking accounts, savings accounts,
auto loans, etc through them. I can use any shared branch ATM for no fee too.
I have had several credit unions in the past and they have all offered
everything you said they dont in your posting.

~~~
niallpaterson
That's pretty nice. Is there some kind of online/mobile setup?

~~~
jason_slack
Yeah. They have web banking and a mobile app. I can even deposit checks from
my phone.

I have to ask though, is this seriously not the case for CU's in Ireland? I
think here in the US this is totally common place and nobody would use a CU if
they didn't offer these services.

------
stephenbez
What do you mean by open source? Do you want the banks website to be open
source, or all of the back office code that talks to ancient mainframes and
proprietary 3rd party applications?

What will draw customers (other then fellow developers) to a bank with open
source software?

~~~
niallpaterson
Good Question. Lets take the scenario where we are partnering with another
bank. So then we have two main applications or systems - 1) Integration with
their api (I'm assuming this would be a fairly big thing considering the
complexities) and 2) Our API/App i.e what people would actually use. I would
see the second one there being open source, but not the first one, for obvious
security reasons. Furthermore, apps and other smaller services would be open
source. I think if you can portray an image that you are transparant and in a
non technical way, have it as part of the brand as such, it might interest
people. Get me?

------
justincormack
You might be better off by starting to develop open source software for
existing banks that align with the other values. just to get started. The
regulatory side is hard and expensive.

Banks to look at are Metro (UK), Handelsbanken (Sweden and elsewhere),
Triodos.

------
jasdeepsingh
Isn't Bitcoin already addressing most of your concerns? I think the solution
is not open centralization (Open source Banking) but de-centralization, which
is what Bitcoin addresses by giving the power and money of the people back to
people.

~~~
niallpaterson
I think 99% of people aren't going to bank with an unregulated, fluctuating
currency that they don't understand or control.

~~~
jasdeepsingh
_..99% of people aren 't going to bank with.._

People won't "bank" when it comes to Bitcoin - There's no need of a Banking
system really. And as per your concern around fluctuating value of Bitcoins,
It's just a matter of how you look at it and standardization.

Assuming everyone tomorrow agrees to standardize that Bitcoin is the de-facto
currency and decides to transact in BTC only, I don't think anyone will be
concerned about fluctuation anymore. Item X which retails for 2BTC, will
retail for 2BTC today, tomorrow and day after tomorrow. (Assuming no price
change, offcourse)

~~~
niallpaterson
Consider John Doe. John is an ordinary internet user who's heard of bitcoin,
but has no iota of how it works and 0 control over it. Will John trust his
life savings with it? No. I think that's pretty obvious.

Let's face it 'Assuming everyone tomorrow agrees to standardize that Bitcoin
is the de-facto currency and decides to transact in BTC only' is a crazy
assumption right now.

~~~
JazCE
>Consider John Doe. John is an ordinary internet user who's heard of bitcoin,
but has no iota of how it works and 0 control over it. Will John trust his
life savings with it? No. I think that's pretty obvious.

err consider John Doe... He doesn't give a damn if his bank is open source or
not. John Doe is not your target, people who use BitCoins (and I don't mean
lemonade selling girl scouts) are your target.

------
guyinblackshirt
I really like @photomatt's ideas on this topic from four years ago :)

[http://ma.tt/2009/08/starting-a-bank/](http://ma.tt/2009/08/starting-a-bank/)

------
jmillikin
How would this be different from
[http://www.creditunion.ie/](http://www.creditunion.ie/) ?

~~~
niallpaterson
\- Open Source \- Online (no physical presence) \- Available 24/7 \- Checking
account \- Debit card

I think people have seized on the non profit word here. I think credit unions
and this would be non profit in different ways if that makes sense.

------
tlongren
I've really liked simple.com.

~~~
blentrop
Simple.com is only in the US

------
ishener
some people will tell you bitcoin is going to be that online non-profit open-
source bank

~~~
jasdeepsingh
I might be one of those people. :P

------
carrja99
Isn't this the idea behind bitcoin?

------
antocv
Perhaps its the legislation or financial overseer institutions that make
banking pure hell?

Banks are required to for example know their customers before giving them
accounts, and can be held responsible for money or shady laundering.

Im all for the idea anyway but lets talk real, how would it work? It has to be
for profit else its not a business but a welfare whixh the banks will go to
for bailouts next. Owned by all members?

We had such discussions before on hn conclusio was that current laws and
requirements dont make that possible.

~~~
niallpaterson
See how simple do it in the US? They've a partner bank, which handles that
side of things. I'd be optimistic the same could work.

~~~
notahacker
But then it isn't really "non-profit", it's "doing work for a big shady
corporation without making any margin on it"...

~~~
niallpaterson
I think it's unavoidable to have a partner bank (at least for now) but
considering they wouldn't get as much, that would surely be better? I
completely get what you mean, and agree in many ways, but is there any other
way?

