
On Friday I sat in a bank - kumarski
http://kumar.vc/2013/09/03/i-sat-in-a-bank-on-friday/
======
simonw
As a Brit who has spent some time in the US, the US banking system is
bafflingly backward...

* No chip and pin. You still sign credit card slips.

* You have to interact with the branch where you set up your account for a bewildering array of things.

* Sending a wire transfer overseas involves sitting in a branch and filling in reams of paper work.

* Wells Fargo branch staff (who I've found to be excellent) seem to actively conspire with you against their own bank. I have an account with a $150 sum that automatically cycles back and forth between chequing and savings, configured by the bank staff to avoid fees being charged on the account.

* Bank account numbers are treated as secret information - they are starred out in the online banking interface! Apparently, it I know your bank account number I can take your money?

* People still use cheques for things! Which you have to pay extra for (you actually buy cheques from your bank). And "electronic banking" incorporates mobile apps that scan cheques.

* As a general rule, paying someone some money (for rent, for example) is fraught with difficulty, especially if you hold a non-US bank account.

* No obvious equivalent to the UK direct debit system for automatic bill payments.

Coming from Europe, It all feels decidedly third rate. I don't think the
solution is bitcoin, I think the solution is fixing regular banking.

~~~
evgen
As someone coming from the US to the UK I can say that the feeling is mutual.
Some things are suboptimal in the US system but

> * No chip and pin. You still sign credit card slips.

There are two systems at work here, the credit system and the ATM system. The
latter uses a PIN (no chip, so basically online verification) but the primary
difference is related to chargebacks and fraud. Like in the UK, in a PIN
system if I know your PIN and get your card I can loot your account and you
are SOL. In the US a credit card transaction with a signature but no PIN means
that the merchant is on the hook for fraud. If I get your card number and go
on a spending spree you are not going to take a hit for any of the charges,
the merchants are.

> * You have to interact with the branch where you set up your account for a
> bewildering array of things.

You can, but you seldom need to. I have several online-only accounts that I
still maintain for making US payments and except for cases where I was taking
out a loan to buy a house or car I think that I did not actually step inside
my bank (any branch) for over ten years.[ _]

OTOH, I have needed to note down the exact UK branch in which I opened my
account in on at least five different occasions in the last month as I opened
various business relationships or established services. In the US no one ever
asked for the name of my bank let alone the specific branch.

> _ Bank account numbers are treated as secret information - they are starred
> out in the online banking interface! Apparently, it I know your bank account
> number I can take your money?

ACH (automated check handling) is the pseudo direct-payment system we have
over here. It kind of sucks, but it is basically an electronic form of the
silly checques that you mention later. With the bank routing number and your
account number I can write a check on your behalf. OTOH, with a couple of
clicks online I can also order paper checks for your account and start making
payments. They will eventually (and hopefully pretty quickly...) fail out as
fraud, but when you get things set up between your account and companies you
deal with on a regular basis there is a fairly seamless flow from your
paycheck direct-deposit to your rent/mortgage and utilities, etc. It is just a
crufty legacy system that gets tweaks every decade or two but will lumber on
for a while because there is so much infrastructure built around it.

> * As a general rule, paying someone some money (for rent, for example) is
> fraught with difficulty, especially if you hold a non-US bank account.

And why should the system optimize for non-US bank accounts when the
percentage of people a merchant will interact with who fit in this category
are 0%? Part of the thing to consider here is that the US retail/merchant
payments and banking system does not need to interact with anyone outside of
the US; yes, there are some exceptions but they are so dwarfed by the internal
transaction volume that they effectively do not exist and if you do need that
rare service you can use a third-party like western union or the admittedly
onerous wire transfer process. The goal is to make internal transactions easy
and limit the exposure to fraud (except when it conflicts with the first goal)
with the bonus of all operations being under what is for all intents and
purposes a single legal jurisdiction.

Everyone has thoughts on how to fix the system or what cool ideas should be
applied from other countries but most of these people fail to grasp the
concept that for most people the system is not broken and so you are fighting
consumer indifference and an entrenched incumbent that makes telcos look like
pushovers.

[*] One interesting thing about US banking is that the local branch
interactions that you complain about are actually one of the few things that
most bank customers want more of. Specifically, if you press people on what is
wrong with retail banking it is that there were a huge set of mergers in the
past twenty years that effectively eliminated the local retail bank where
people knew who you were, cared about you, and looked after you in a way that
is simply not possible in a modern world of retail banking giants.

~~~
pisarzp
> There are two systems at work here, the credit system and the ATM system.
> The latter uses a PIN (no chip, so basically online verification) but the
> primary difference is related to chargebacks and fraud. Like in the UK, in a
> PIN system if I know your PIN and get your card I can loot your account and
> you are SOL. In the US a credit card transaction with a signature but no PIN
> means that the merchant is on the hook for fraud. If I get your card number
> and go on a spending spree you are not going to take a hit for any of the
> charges, the merchants are.

That is absolutely true. However thanks to chip, cards cannot be copied or
forged. Therefore merchants are paying lower commissions on debit/credit card
payments as there are fewer fraudulent transactions. Some merchants are even
declining to accept non chip-and-pin cards (not sure if is legal though).

~~~
evgen
Be careful about using works like "cannot" in terms of what is possible to
trust regarding hardware that is in possession of a potentially adversarial
party and systems that assume said cards are secure. There are a variety of
attacks that are possible (pre-play, attacks that can make a stolen card work
without a PIN, etc.) and it is likely that in the future it will be easier to
perform these attacks. It is a standard risk/convenience continuum and
everyone has staked out a different portion of that zone. In the US the
merchant pays a lower commission on debit card (e.g. with PIN) transactions as
well for the same reasons, which is why they will tend to suggest that option
or offer it up as the default when you use a card that can be either debit or
credit. When I suggested that there were only two systems I was simplifying a
bit too much and you definitely caught me on that one.

In most places it seems that there are two (and sometimes three depending on
how mobile phone payments are cleared) dominant e-payment formats, one which
puts the fraud burden on the merchant and one that puts it on the customer.
The size of the burden is usually set by regulation and the level that this is
set at tends to inform the nature of the security at the endpoints vs. what
happens at the middle when clearing and reconciling transactions.

------
jedunnigan
'Sweetest' use cases? Well that depends on who you ask, of course.

IMO, the value proposition of Bitcoin's underlying protocol is enormous. You
can strip away the coin and manipulate the protocol for alternative use cases,
such as carbon dating (voting, prior art, etc...) [1], carbon emissions
trading platforms [2], the preservation of open data [3], reputation scoring
for TTPs [4], messaging systems [5], decentralized asset exchanges [6], etc...

As for more traditional use cases Bitcoin obviously shines in bankless states
with weak national currencies. In the same vein Bitcoin offers protection from
seizure of funds during bail-ins and the like. In the context of donations
Bitcoin is awesome as well; without Bitcoins wikileaks would have some trouble
accepting donations. The list is endless, really. Every use case is powerful.

[1] CommitCoin:
[http://eprint.iacr.org/2011/677.pdf](http://eprint.iacr.org/2011/677.pdf)

[2] CarboCoin:
[https://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=64683...](https://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=6468350)

[3] [http://btcgsa.info/wp-
content/uploads/2013/07/Decentralized-...](http://btcgsa.info/wp-
content/uploads/2013/07/Decentralized-Hosting-and-Preservation-of-Open-
Data.pdf)

[4]
[https://ieeexplore.ieee.org/xpl/articleDetails.jsp?tp=&arnum...](https://ieeexplore.ieee.org/xpl/articleDetails.jsp?tp=&arnumber=6550483)

[5] BitMessage

[6] BitShares, MasterCoin, Freimarkets

------
lmartel
Completely off-topic: I enjoy when automatically generated blog urls give me a
window into the writer's thought process.

I agree, Kumar, "On Friday I sat in a bank" sounds better as a post title than
"I sat in a bank on Friday"

~~~
kumarski
What?

Wow. Thanks for pointing that out. It's frustrating to be manipulated like
that. I used that syntax with purpose.

------
salmonellaeater
Ungepatched: Yiddish for "all mixed up."

~~~
kumarski
Sorry about that.

My vernacular is lazily eclectic at times. Added your edit.

------
varunkho
In India online banking is awesome:

1) Most (all?) banks have net banking which is a feature to pay money directly
from your bank account (and not via credit card) to online merchants those who
integrate it (most of them do).

2) Many banks provide utilities payment (electricity/phone/cable ETC) feature
which can be set to autopay.

3) there's a three factor authentication system – username and password to
login and look around, transaction password to pay to your registered billers
and finally for online shopping (net banking), you are asked to input 3 random
numbers from the grid printed at the back of your debit card in addition to
login and transaction password.

4) For any decent amount of payment received / paid (I think Rs. 5000 or
above), you get an sms briefing the transaction.

5) Auto deduct feature – there's an ECS form you can sign and give it to
businesses which can then automatically deduct money monthly from your bank
account. Good for auto mortgage payments et al.

Checks have almost disappeared from internet savvy people's lives – I have
hardly used them in years.

------
prawn
Very slightly related (given stored value and less-than-safe areas): would it
be possible to create a system for travelling safely with money? Let's say I
want to ride across Africa, but I'm worried about being robbed. Cash can be
taken, credit cards can be stolen and abused or even just skimmed and abused.

And even if credit card abuse is rectified, you're still stuck waiting for a
replacement. A pin-only card for ATMs with a duress code that limits a
transaction?

~~~
jacques_chester
The old way was these babies:

[http://en.wikipedia.org/wiki/Traveler's_cheque](http://en.wikipedia.org/wiki/Traveler's_cheque)

These days, you can buy prepaid travelling credit cards. I picked up one
recently ahead of a trip to the USA. They actually send _two_ cards, a primary
and a secondary, so that you have a backup if the primary is lost or stolen.

~~~
ewood
And put your secondary card in a pair of these: [http://gearjunkie.com/zip-it-
gear-socks-with-zippers](http://gearjunkie.com/zip-it-gear-socks-with-zippers)

~~~
jacques_chester
... or I could leave it at the hotel.

~~~
prawn
Which assumes you're staying in a trustworthy hotel with trustworthy staff,
and doesn't cover situations when you're between hotels.

(I've had money stolen from my bag in Vietnam and my card skimmed in Italy.)

~~~
jacques_chester
True. I'm actually staying in some rental apartments -- no staff.

The secondary card is inert until I contact the provider to activate it.

Bigger hotels also have secure boxes or lockers for customers.

