

Bank economists warn of disruptive threat from mobile and crowdfunding - Irishsteve
http://www.finextra.com/News/FullStory.aspx?newsitemid=24986&topic=internet

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oofabz
For now, banks continue to profit from crowdfunding. They get a percentage of
each credit card transaction.

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.

~~~
jjoonathan
They already force retailers to not give discounts for using cash. If they've
figured out how to make _that_ legal, why do you think BTC would be any
different?

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.

~~~
spc476
I suspect that's more or a contractual thing than a legal thing. I know gas
stations around South Florida are now advertising cash and credit prices (so
my thought is---the gas companies have enough pull to get favorable terms from
the credit card companies).

~~~
rayiner
To date it has been contractual. However, as a result of an antitrust lawsuit,
Visa and Mastercard changed the provisions that ban merchants from charging a
credit card surcharge. But states are now trying to bad adding those
surcharges:
[http://www.cnbc.com/id/100485094](http://www.cnbc.com/id/100485094).

~~~
ams6110
Funny though, if you pay your taxes with a credit card there is ALWAYS a fee
for that.

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rossjudson
The easiest way for banks to deal with this disruptive threat is, of course,
to make it illegal. Watch the lobbying efforts first; that's where you'll see
"helpful" investor safety rules be proposed that begin the erosion of
kickstart models.

~~~
jaydz
The casinos did this with online poker and it worked.

~~~
cinquemb
On which side of the Atlantic?

~~~
vermontdevil
On the USA side.

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mmahemoff
I've been consistently disappointed by UK retail/commercial banks' online
services.

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!

~~~
IanCal
What I'm really after, which doesn't feel like a hard thing for a large
company to add, is a read-only api. Give me an access token and a set of
endpoints to get my data out and I'll be a happy bunny, because then I can
build my own tools on top.

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?

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aggronn
Everyone in the comments here seems pretty pessimistic about what this is
implying. I got the opposite impression--I think this report is actually very
progressive, and that we should commend the economists at BBVA bank for
identifying a trend so far in advance.

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.

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ballard
Article seems to be inventing a need in the banking set for yet another
crowdfunding meets YC knock-off. For them I also have a bridge for sale, low
mileage and runs great.

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christiangenco
Looks like Simple[1] is perfectly positioned for the future of banking.

1\. [http://simple.com](http://simple.com)

~~~
radicaldreamer
That's complete nonsense, Simple is simply a front-end for one of the worst
banks out there:
[http://en.wikipedia.org/wiki/U.S._Bancorp](http://en.wikipedia.org/wiki/U.S._Bancorp)

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.

~~~
parsnips
They are not a front for US Bancorp. They're a front for Bancorp Bank
([http://www.thebancorp.com/](http://www.thebancorp.com/)), which is in fact a
completely different and unrelated small bank.

~~~
radicaldreamer
Ah, thanks for the clarification!

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dreen
> To what extent crowdfunding platforms will displace commercial banks in the
> retail and small business segments remains to be seen.

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.

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pathy
BBC's Bottom Line did a podcast on alternative banking earlier this year,
which might be of interest when discussing this topic. Especially about
M-Pesa, which is truly disruptive in Africa.

[http://www.bbc.co.uk/programmes/b01qkmwl](http://www.bbc.co.uk/programmes/b01qkmwl)

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apineda
The government doesn't have to though cause it has our money anyway ( and our
communications information ).

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aet
Which investment has more risk? A typical market neutral hedge fund or a
typical crowd-funded type start up. Obviously there are tons of
idiosyncrasies, but I'm thinking on average. I noticed that I am allowed to
invest in companies via crowd funding, but, since I'm not an accredited
investor, I can't invest in a hedge fund. I would also venture to say that
most people investing via crowd funding are not accredited investors.

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Apocryphon
How are credit unions affected by mobile and crowdfunding?

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aet
I think crowd funding competes with investment banks more so than credit
unions.

