Hacker News new | past | comments | ask | show | jobs | submit login
Why it’s so hard to fix banking: An interview with Simple’s exiting CEO (slate.com)
158 points by jseliger on May 19, 2018 | hide | past | favorite | 157 comments

I've been using Simple for close to 5 years now and have been incredibly happy with my experience. The customer service is hands down the best I've ever come across and all updates to the app made the experience much better. Simple being a partner bank instead of a stand-alone bank has definitely held them back. I'd wager they lost quite a few customers when switching from Bancorp to BBVA. Even I considered leaving due to lengthy switch process and generally thinking that such a hard change is not acceptable, but I stuck around and the entire process was exceptionally smooth. I'm still somewhat surprised they haven't made strides to become an actual bank entity, but having experienced regulations working at a banking SAAS company myself I can imagine the monstrous effort required here. Either way, it's sad to see the original founders leave. I really hope this doesn't change the vision and direction.

Huh. I had exactly the opposite experience, simple was mostly fine when I used it but the web experience of chase these days is also fine. A clear, simple UI for seeing statements and setting up credit card auto-pay, deposit checks in the app. Plus, having branches if you absolutely need to use them is nice, and finding atms in most us cities for a big bank is much more straightforward than finding the partner atm brands that work with simple, or whatever you have to do there.

When simple goes wrong though, the leaky abstraction of being a thin wrapper around another bank makes it much more painful. I forget the details now, but some fairly straightforward things broke for me a couple of times. And as friendly as their support might be, they were completely useless for fixing the problem because it was due to the underlying bank they built on top of. Canceling my account was also somewhat opaque.

So I can’t really relate to this article or most of these comments at all.

The underlying money transfer infrastructure in the US (between banks and merchants or banks and other banks) on the other hand really needs an upgrade from the arcane ACH system, that’s the last thing that sucks about consumer banking as far as I can see.

I agree Chase's web UI is solid now. Except for the part where I have to spoof the user agent on Chromium (Linux) otherwise I'm stuck with the abysmal mobile UI...

ACH between large banks is mostly getting replaced by Zelle. Don't use it with people you don't know but otherwise it's fine.

I like the idea of an online bank, so I signed up for Simple. They sent me a credit card with my first name and middle initial, instead of first initial and middle name, as I had filled out their form, and like every other credit card I have ever had. I asked for a card with my "name" on it, and they told me that was impossible.

For the bank that was supposed to be the future and all high tech, that was an utter fail. I never bothered funding a dime into the account.

Business pro tip: Don't mess with customers' names. We take it kind of personally.

That's such a strange edge case that I frankly don't blame Simple for turning you down.

Well, here's my strange case: I go by my middle and last name, not my legal first name and last name. My credit cards have Middle Last. Many of my paychecks have gone to Middle Last. The freakin' IRS knows me by Middle Last. And when I first signed up for Simple, my debit card said Middle Last.

And then they changed "partner banks," and reissued my debit card with a new number and new bank account number...and changed the name on my card. And when I asked them to change it back, they said no.

And, yeah, I kinda take it personally. Because now, whenever I pay for anything using Simple, I'm called by a name that I don't consider mine. I have to stop and think, "Oh, they just called out an order for 'John,' and that might be me."

I love Simple in theory, but this was an infuriating regression. After a decade, they still can't accept e-bills, either -- that is, American Express can't send a bill to them and have it automatically deducted. I've kept my Bank of America account around in part because for all the crap BoA gets, their online banking system can receive e-bills and pay them from my account at Simple. For a "technology first" bank like Simple, that should really be kind of fucking embarrassing.

Last but not least? Bank of America also calls me by the name I asked for.

> I'm called by a name that I don't consider mine

Why not legally change your name and get rid of this problem for good?

Because I don't feel like this should actually be that difficult for businesses that aren't the TSA to handle. If your legal name is "Foo Bar Baz" and you prefer to be called "F. Bar Baz" rather than "Foo B. Baz," I don't see why anyone should be throwing up their hands and going, "Woah! That's crazy!"

Because legal name changes are a non-free in both upfront and downstream costs, and not something a customer should have to bear because a business is either to ignorant or too unconcerned with customer experience to accommodate different preferred vs. legal names, and to use the right one for the right purpose.

Changing your name is a hassle and you're stuck with an extra document you have to keep around and copy every time you do anything important like open an account or buy a property.

I tried desperately to sign up for a Simple account when it was brand new. I had an invite, I signed up, and I was denied. That was confusing to me, so I followed up and they indicated that something on my ChexSystem report was the reason. I was confused even more - I'd never written a bad check or did anything that I've heard would typically do this, so I ordered a report and waited. Got it back and read it over and saw nothing negative. I followed up again and asked what the deal was, and they gave me some kind of weird answer about how many accounts I have had (or had at the time? it was never clear). It was at that point that I kind of just decided that if they didn't want my business that badly, then maybe I should take the hint. :-)

I liked Simple, but changed over to Chase when the account migration stuff came up, because they couldn’t “verify my identity” enough to create my new account.

What a bummer! I banked with them for 4 years, and then they can’t verify I exist?

I’ve had a similar experience. Would never go back to The nickel and dining nightmare that was Citibank.

> dining nightmare

bad food? :)

If someone wants to fix banking they should figure out how to do it in Japan. For all of the supposed idea that Japan embraces the future Japan's banking system must be among the worst in the 1st world.

A couple of examples

No interest: A typical interest rate is 0.015%. No that is not a misprint. It's X * 0.00015 annual interest rate (https://www.boj.or.jp/en/statistics/dl/depo/tento/te180516.p...)

No checks: Not sure about other countries but in the USA sending a check to someone usually costs nothing. In Japan checks really don't exist. Instead to send money you do a bank transfer which costs anywhere from $3 to $8 per transaction. For a regular person they might only have 1 payment like that (rent). But for a company that adds up quick. Electronic payment (sign in to your bank, send payment) uses the same $3 to $8 per transaction system.

Byzantine hours: I recently got a business bank account and signed up for the online banking (costs extra). I'm only allowed to send payments from 8am to 3:30pm.

ATMs are still not 24hrs. 7/11 (Shinsei Bank?) and a few others open 24hrs. Most ATMs still close at some point ever day. MUFG ATMs are currently 7am to midnight.

Japan is still a very cash oriented society. They do have things like Felica (digital cash) but getting around with paper cash is not easy. Note, I don't mind the cash thing since cash = anonymous but I know lots of foreigners east and west that are surprised as they can generally get by cashless in their own countries but not here.

I'm not even scratching the surface. I'm sure the people in power and regulations in place make it nearly impossible to fix the system but someone one out there must have a way.

From a European point of view, checks are just a thing of the past. The solution to expensive bank transfers is not using checks (which has its own issues) but just make it cheaper (free) and real-time like in the rest of the world.

Sorry I should have been clearer. My point was not that checks are amazing. My point is checks have been free my parents times in the 60s and 70s. Checks switched to electronic checks in the early 90s. My father hasn't sent a paper check since 1991 when billpay first started and quicken started supporting it.

Free since at least the 70s is in contrast to Japan today which is still $3 to $8 per transaction.

Arguing about whether checks should be free or not is silly.

In many parts of the world, checks are outdated, and can be difficult and expensive to use. That is not a mark of being backwards.

The question is, what services exist to pay business and private citizen in lieu of having cash on hand.

In Denmark you have mobile pay, free bank transfers from your free online banking account. Business can setup monthly payment plans via your debit/credit card.

In such a society, who needs a check, digital or paper?

I'm not arguing checks should be free. I'm arguing sending money should be free. It's been free in the USA longer than my entire life. It's not free in Japan, in fact it's very expensive. Sorry if that wasn't clear. I only brought up checks because they were an example of one way to send money for free and they've been around a long time. That other countries have other ways is great. So has the USA. Japan still has no ways to do it so as I pointed out at the top there's an opportunity.

Interest rates are basically zero all over the world. Its not a banking issue thats an economic issue.

As others point out, checks don't really exist outside the US, but electronic money transfers are usually mandated to be free. Most countries are starting to have some sort of mandated "basic banking" to allow anyone to have and use a bank account as a replacement for cash.

Government bonds in Brazil are paying an interest rate of 6.5% per year, which is considered very low by Brazilian standards. Inflation for the past 12 months has been below 3%.

> Interest rates are basically zero all over the world

Interest rates for savings account in India is usually 4% p.a. It’s higher for term deposits.

Is that real (adjusted for inflation rate) or nominal?

I’ve never lived in Japan, and judging from your username it seems you may have. But, I’d like to point out that on the low interest point you make, this isn’t necessarily a good thing: https://www.theguardian.com/world/2016/aug/26/japans-deflati....

The interest rate available to consumers is directly related to the rate that banks can borrow from the central bank. The BOJ has had to operate at the ZLB for quite a while: https://www.boj.or.jp/en/announcements/press/koen_2016/data/.... The low interest rates available to consumers are a function of macroeconomic factors and monetary policy, not anything that consumer lending banks themselves do.

Cheap ( < 0.50 ), instant or near instant transfers have completely replaced checks in most of Europe about 20 years ago. I haven't seen a check until I moved to NA.

Every time I use the banking system here I see the same problems I've experienced in the 90's in EU.

There's already a solution for what is wrong with banks: credit unions. They just don't waste money on advertising so they get less visibility than they should.

Credit unions advertise in their local markets, mostly through traditional media. They also contribute to national campaigns to raise awareness of credit unions and drive audiences to credit union finder websites. Also, some with federal charters who excel at specific products (like PenFed) advertise on websites that aggregate information about that product, like BankRate.

They are less visible than large banks because their budgets are smaller and the pooled campaigns suffer from committee problems. They aren’t any less visible than local/regional banks, though.

(I worked at a credit union.)

Edit: A credit union wouldn’t consider advertising a waste, either. Their thinking: 1) A certain number of members is needed to keep yields and rates competitive by reducing fixed costs per account or loan. 2) Growth makes new services possible; banking is competitive. 3) Marketing makes it more difficult for new entrants to expand into an area; local credit unions in particular believe there is a level of competition above and below which a community is not served as well as they could be.

Come to think of it, I have seen a few DCU ads.

I'll second this. I used to do a good bit of work for credit unions. Every one of our clients were great folks who genuinely were trying to do the best thing for their customers. I'm a happy customer of USAA and Simple. If they didn't exist, I'd use a credit union. Without question.

Usaa is the single best “bank” in the USA. Unfortunately their charter prevents lots of places from using them.

I’ll note they are much different than a “small” credit union in terms of reach & technology.

i have a zero fee, zero minimum account with schwab that also gives me access to their ETFs with no trade commissions or monthly limits, and the ETFs themselves have extremely low expense ratios. also they reimburse any ATM fees in full every month. what advantages does Usaa have over this setup?

USAA is one of the most progressive banks in the country technologically speaking as well. They had 2FA deployed long before everyone else, app money transfers, picture check deposits and lots of other things long before any of their competitors.

USAA also usually has very competitive personal loan rates and mortgage rates. Their insurance rates are usually unbelievable. Their customer service is top rated as well.

I keep checking in with USAA on auto insurance, and they consistently quote double my current premiums... they may have a bias against quick cars, though.

They almost certainly do due to their population of 19 year old customers with more money than they’ve ever had before. It’s a cliche joke at this point...

*not a joke the military death rate on motorcycles...

I will defend Schwab to the death. I belong to a credit union as well for physical cash depositing purposes, but use Schwab for every other banking need. I can pull out currency from any ATM that supports Visa in the world for free - that's worth its weight in gold. Their customer service has been top notch as well - I've called them to ask questions about services that they don't even offer and gotten informative answers about how and where to go about it.

i've never actually tried this, but i believe you can deposit relatively small amounts of physical cash into a schwab account at an ATM. i am lucky to have a branch near me, where i have only ever received excellent service, but i could imagine that a credit union could have better customer service overall.

Among others, USAA doesn't require a brokerage account to bank with them. I don't think it's really a comparable situation.

In their competitor comparison[1], you'll note they don't list USAA or any credit unions, because it would look basically the same as the Schwab account. Low or no fees, low or no minimum balance, decent interest rates, etc.

There's no reason for you to switch, either, but not everyone needs or wants a Schwab brokerage account too.

[1]: https://www.schwab.com/public/schwab/banking_lending/checkin...

Schwab refunds unlimited ATM fee, whereas USAA refunds up to $15. Schwab also has worldwide no foreign transaction fee, something that USAA doesn't have.

IMO Schwab is still the best because I travel a lot. There's no downside to keeping an empty brokerage account

They open the brokerage account when you open a checking account with them, but you're not required to fund or use it. I use it for my personal investing and love that when I overdraft my checking it just immediately takes it from cash in my brokerage (rather than savings which has a limit on monthly withdrawals or charging me a fee). There have even been times when there wasn't enough cash in my brokerage acct and it just went negative.. I didn't let it stay that long enough to find out if there were any consequences but for the few days it was like that there weren't any.

What's the issue with their charter?

USAA is the next best thing, an employee-owned cooperative.

Early in 2008, on principle, we switched from a 'Too Big To Fail' bank to a credit union. It was a pain, and is occasionally inconvenient, but that pain is outweighed by the satisfaction in reading the headlines and being glad I'm not funding them anymore.

Could you explain to a non-american how using a credit union differs from using a bank in the US? And how it's more painful?

Credit unions are non-profit member-owned cooperatives. You as a customer/member are the owner of the credit union, thus the credit union has an onus to have lower fees/loan rates but higher savings rates. Banks on the other hand are owned by shareholders. This can lead to a race to the bottom in terms of customer service in the name of keeping expenses low.

Full disclosure: I serve on the board of a credit union; although, I also hold accounts at banks.

No difference, apart from the credit union being local and beholden, primarily, to people in the community. Using the credit union wasn't the painful part, closing our old accounts and opening new ones was. We had too many accounts at one time, a function of having recently married, running my own business, and having a group of investment accounts.

> that pain is outweighed by the satisfaction in reading the headlines and being glad I'm not funding them anymore.

The lack of simple usage (account, transaction) fees, better interest rates, and better account security features do it for me.

I banked with Washington Mutual before it was swallowed by JP Morgan Chase during the financial crash. I was so disgusted by the entire thing that I switched to BECU, a credit union in Washington State. I like them so much that despite moving across the country I continue to use them.

Navy Federal has been so good. Their Web UI is enjoyable, their branches are nice to visit, and their auto loan rates are quite competitive.

"Why it's so hard to fix <X>?"

Very easy question. There are people who profit from how <X> fails. The reason it bothers you is because you are not one of the people who are profiting. You might not be profiting from <X> but you are likely profiting from some <Y>. And when it comes to <Y> you are probably not recognizing how it fails on the cost of others and are not really bothered by it. So good luck convincing the people who profit from <X> to change it.

I read somewhere, probably Nietzche, the following statement (paraphrasing):

There are only 3 types of people: the poor that wants to be rich, the rich that wants to continue to be rich and the idealist, that using his ideals, wants to be rich.

edit: I always read it figuratively. Getting rich meaning to improve position in whatever hierarchy the person cares about.

> There are only 3 types of people: the poor that wants to be rich, the rich that wants to continue to be rich and the idealist, that using his ideals, wants to be rich.

This is great. It resonated with me because I guess subconsciously I've always had the intuition that this is true. However, I can't really find the original quote. Help?

And do you think that’s true? Why category do you think - say- Tim Berners-Lee falls into?

He's worth tens of millions. Is it really hard to understand?

I've spent some time around Tim, my impression is that he's a nerd, who got very lucky with a side project. You are correct that he has not avoided getting wealthy off that, but high level meetings with Tim tended to get distracted by fixing whatever is not working on Tim's laptop or playing with some demo he's built that (Newsflash) doesn't change the world and is soon forgotten. He's now simply a wealthier nerd.

I chose a poor example. Do you really believe there’s no such thing as altruism?

Altruism exists, but it very rarely makes you money. And that's really only ok if you already have a good amount of money and can afford to give some away, or work for nothing.

The last one obviusly.

So.... 100% down to entrenched interests, nothing to do with complex regulations, a complex and expensive space to operate in or anything else?

Can we assume that the complexity and expense are inherent to the situation? Perhaps they have been created and "entrenched" by... interests?

I don't think so. See, for example, Wells Fargo. It's hard to imagine an institution that has abused their customers in a more ridiculous way and suffered fewer consequences.

People just don't seem to care how many times they get ripped off by WF. They don't move to the competition. They just stay there and take it over and over again. There is absolutely no incentive for banks to improve. Indeed, it is against the interests of big banks to improve the customer experience.


No, but neither can we discount that they may be. Financial regulations in particular usually come about in response to failures and abuses.

...usually come about...

That's the just-so story they tell children, but in living memory the only function of new financial regulations has been to exempt rich assholes from consequences of already-illegal things they already did and decided they want to do more of. One wonders if one went back in history far enough, would this aetiology ever be correct?

This is just wrong, sorry.

Lots of measures have been put in place in the last decade to prevent '08 style crashes happening again.

The entrenched interests want less regulation, not more.

Are the big banks smaller? When they screw up again, will their ironclad control of the relevant political entities fail to bail them out as it has before?

In some ways yes, they are smaller. Here in the uk the investment and speculation parts now have to be separate from retail banking. They also have to keep much larger reserves to reduce the risks.

I'm sorry if you don't want to hear it, but some regulation is good and put in place to protect the consumer.

I'm going to write a few words I always do this in the bank topics. In Poland (post-soviet EU member, 36M people) we have many banks. Inter-bank transfers are free for personal accounts. $0.50 for businesses in my case. We have free transfer for phone number of up to $1000. Instant. We use mostly debit cards tied to accounts without any fee with wireless payments. Our goverment reduced transaction fees so you can pay as low as $.10 bill without complain. Of course this moves us closer to cash-less full-control mode but who cares ;)

"post-soviet EU member"

Poland was never part of the Soviet Union.

Poland was a Soviet satellite state, so I'm guessing "post-Soviet" here means "post-Soviet controlled" vs. being an official member of the Soviet Union.


We came to many of the same conclusions.

This is why my co-founder and I decided to relocate to the UK in order to set up our bank. The friendlier regulatory ecosystem here is just a huge advantage compared to the US.

Plus, there's still a pretty clear path to getting a national US banking license - it just requires you to expand in from abroad, rather than trying to build it within the US.

> but the reality is that most millennials, like most Americans, bank at the top four banks.

I suppose I'm willing to believe this claim, but I find it pretty surprising. In my social group, the commercial banks are viewed negatively almost to the point of stigma against using them. Everyone uses credit unions for their checking, and several credit unions in this area (Nusenda, Rio Grande, USEagle) are at least as convenient as the major national banks.

I think a large part of the perception of convenience comes down to the Credit Union strategy of federating services. An ATM network jointly operated by many of the credit unions in the region (CU Anytime) has a large fleet and has focused on placing ATMs in high-convenience locations like offices of major employers and college campuses. Co-Op Shared Branching means that you can walk into a branch of almost any credit union and they can access your accounts at your own credit union. And as for avoiding ATMs and branches at all - the online and mobile services offered by most credit unions are perhaps a bit behind aesthetically, but they work just fine, and the credit unions seem to have been offering free and easy person-to-person transfers for longer than the commercial banks have.

So what's limiting adoption of credit unions? I'm skeptical that it's awareness because the branches are everywhere and some of the larger ones around here purchase billboards and TV advertising regularly. Is there a feeling that they're more limited in their service offerings?

As a card-carrying millennial, I've found my friends to be woefully ignorant of how to bank, despite (or because of?) their often well-off upbringings. People often tend to follow the lead of their parents when it comes to banking decisions. They don't really explore the market for themselves or have strong opinions on what's efficient or ethical.

I don't think other regions have as strong credit unions as your area. Certainly not in my area. I tried a credit union but the website was so bad I switched back to my big bank.

I very rarely even use ATMs anymore; mostly cashless. So ATMs don't even matter.

I wanted to like Simple. But the budgeting and money tracking features were never really that useful, I needed checks, and my card number was stolen and used to purchase groceries in another state even though I had only used it for a couple of transactions. Their customer service handled the transaction but it really seemed like the card leak was probably on their end. I pulled my money out then.

They picked the worst possible time in 80 years to start a new bank. It meant they couldn't actually get a banking certificate. This constrained every technical choice & feature they wanted to offer.

I mean....I'm not sure there's a lot to learn from the Simple story beyond that.

Why do you say it's the worst possible time in 80 years to start a bank?

He's referring to the time Simple started - in 2009, in the peak of the financial crisis and right after the Office of the Controller of the Currency initiated what is now nearly a 10-year moratorium on the granting of new national bank charters.

I've been using Simple for around 4 years now, and one thing I really hoped to have was a very good system for tracking and managing my money. They had a good start 4 years ago with their "envelope savings system" and goals and their web interface. It had a few warts, and was only ok, and really didn't do a very good job of categorizing the transactions. But, they were new and surely it would improve, right?

4 years later I can say it is basically unchanged. It really isn't very usable. I do still like how it implements the envelope savings towards your goals, but for managing and tracking money it really isn't useful. Mint is better for tracking.

I like Simple, but I wouldn't say I love Simple.

Agreed, I tried them for a while but now I've switched to Capital One 360. Excellent app and web, savings account with 1.6% interest, free ATM worldwide, no foreign transaction fees, etc. I tried Schwab as well but IMHO Capital One is above and beyond the others when you look at everything offered.

What’s the future of simple, though? With all the founders leaving, does it have a future?

Surely, a company that requires the presence of its founders to function has way less of a future than a company that doesn't? A great company should not be dependent on any one person.

Ugh. Looking at their info:

- I can get same deals from Ally bank. No fees.

- Ally bank reimburses 100% of all ATM fees I pay.

- Ally bank savings account is 1.60% at the moment. It is no investment account but better than any other bank period.

- Ally's customer support is pretty darn good

I don't see ally going crying around about how hard banking is.

Simple was just sub-par.

I was with Simple from the start and generally liked the app and the customer support (based in Portland IIRC) was very helpful and friendly.

My problem was that I had a large check to deposit and before they cleared it they insist I not only specify the source of the funds but also what I was going to use the monies for! I understand they need to ask the former (per IRS regulations and "Suspicious Activity Reporting") but the latter is frankly NOTFB and no other bank has asked me that question. I told them as such and closed the account.

They're supposed to ask both actually per AML laws. Which may be completely overbearing but are not within their control.

Eh. This is not a mystery. Banks have tremendous lock-in and inertia working for them. The only way to fix the industry is complete account portability. Anybody should be able to wander into any competitor to their existing bank and initiate a transfer of their account to that competitor. The transfer should freeze the account and take no more than 48 hours. Do this and let the free market work its magic. Just like American celluar providers used to suck until number portability kicked in, American bank providers will suck until account portability is a thing.

P.S. Banks should also be required by law to provide minimal services to every American citizen. It is absolutely beyond stupid that there are 10 million American households that don't have access to a bank account [1]. These households are then forced into dealing with the Check Cashing/Payday Loan businesses who are pure, unmitigated fucking evil. These firms charge outrageous fees that trap many people in poverty.

[1] https://www.fdic.gov/householdsurvey/

That'd make US law contradictory.

The reason the number of unbanked keeps going up is that post-9/11 the USA kept tightening anti-money laundering requirements. These require banks to refuse to bank with clients who they suspect might be criminals, on pain of the banker becoming a criminal themselves. That means once people fall out of the banking system for whatever reason and have to live in the cash economy for a while, they cannot prove where their income came from and are thus presumed guilty by default.

To fix that you'd need to make US AML laws much less punitive. No political appetite exists to do that.

US AML laws are already contradictory in and of themselves. The problem is that they serve two contradictory goals. From a sanctions and geopolitical perspective, Washington wants to shut bad actors out of the US banking system, which means they punish banks that retain "bad" customers. But from a law enforcement perspective, typically investigators much prefer accounts be kept open, as that is effectively a running financial wiretap on a target. When you close the account, you give up on new information and potentially alert the target (a good example was that without even closing the account, Paul Manafort walked away from his Bank of Cyprus accounts after merely being questioned by a bank officer). So the contradiction exists not just between AML and other US bank laws but within AML regulations themselves.

Frankly as someone who used to work in the field I found this insanely frustrating and would constantly hate that I was forced to get rid of customers who I wasn't positive had done anything wrong to protect the bank, and if they HAD done something wrong I was basically destroying law enforcement's lead and possibly alerting the target. But that's the current effect of the laws. They definitely need to be fixed not just for broader goals like banking inclusion but to effectively do what they're supposed to do in the first place.

It's not only that, the entire concept of anti-money laundering as an anti-terrorism tool is basically a farce.

The anti-money laundering laws came out of domestic organized crime. After the feds got Al Capone on tax evasion the mobsters started paying their taxes but the feds still wanted to go after them that way, so the concept of "money laundering" was created from whole cloth.

The problem is it never really worked once the crime bosses had an accountant on payroll. And organized crime itself was primarily an artifact of Prohibition and the Depression and has been on the decline ever since. The WoD is probably the only reason it still exists at all, but unlike Prohibition, that is international. Which means the criminals can export the money from the US as cash or precious commodities and don't have to deal with the US banking system at all.

With terrorism it's even worse. If some prince in the middle east is using oil money to fund terrorism, the money is never even in the US to begin with.

It's the textbook example of a law whose costs outweigh its benefits but no one wants to fix it because they don't want to look soft on drugs/terrorism.

It still happens a lot: https://www.justice.gov/usao-edny/press-release/file/1003201...

Old school mafia are using check cashing places to launder money.

> It still happens a lot

What, charging mobsters with tax evasion? It might still work on the occasional mid-level guy who was dumb enough to not pay his taxes. When was the last time a top-level crime boss was charged with it?

> Old school mafia are using check cashing places to launder money.

Of course they are. That's why the laws against money laundering are harmful. Most of the people you're trying to catch with them are adept at navigating around them, so all they really do is molest honest citizens/businesses and degrade privacy.

You can prove where your income comes from by just showing a couple months worth of pay stubs. The actual reason that people are most commonly denied new bank accounts is due to bouncing multiple checks on a previous account.


God cheques are an anachronism. I can't believe they persist in this day.

It feels like checks are barely hanging on. I started using Simple 4 years ago when I switched jobs, partly because it seemed like more and more places were posting signs that they didn't take checks. Since Simple doesn't really have checks, except ones you have them send by using the website, that seemed ok.

In the 4 years since, I've had a few instances where I needed checks. I have a plumber I like, but he isn't really a businessman, and so he wants cash or a check when he's done with work. The only tradesman I've dealt with that wasn't happy with me sending a check from Simple. He does good work though. I have some bills I pay via check, like the yearly pool membership, that I can just use Simple to send out.

I've been pretty happy to not have a check book. Especially after I had a $45 check I sent someone that got stolen from their mailbox and cashed for around $2,000 each, twice at different branches of my bank. Thankfully, I noticed within a day or two, and it was only a big hassle.

So, give them bank accounts without checks. I haven't used a check in... maybe a decade? Despite being a citizen of America, one of the few places where check's are still a (marginal, fading) thing.

Some people can. Some people being criminals will be told they forged all that.

Minimal banking services to every American? Postal banking.


Account portability works exactly like this in the UK. I can't say that banks here provide a much better service than I received in the US.

> I can't say that banks here provide a much better service than I received in the US.

Really? "ATM" withdraws are free in the UK, money transfers are instant, checks are dead, and account data easily downloadable as e.g. CSV.

I've had US and UK accounts and it is night and day. Who were you banking with in the US who gave you as good of an experience as a UK bank because I'd love to move to them?

Ally is Good. Schwab is another one. The problem is that you will be hard pressed to find a excellent bank that has a large physical presence.

Get a local credit union and you should be more than happy.

Another shout out to Ally. Not affiliated with them; have just used them for many, many years. They reimburse ATM fees (used to be unlimited; now capped per month); no minimum balances; and have interest checking.

The only times I get frustrated are when you need a lot of cash (think buying stuff from Craigslist). Incoming wires are free; outgoing wires are reasonably priced (and is how I submitted funds to the attorney in a different state to close on our house).

The few times I’ve had to contact customer support my wait time was in the single digit minutes.

Many other things I could add, but I already sound like a shill. Schwab is also great for ETFs. No experience with their other banking products.

I never lived in the UK but I've heard good things about Monzo and Starling.

If you look into the fintech space, there's a stark difference between Europe and the North American market. We have several players entering retail banking every year in Europe, and that's partly thanks to regulations.

+1 for Monzo. Used it since it was in beta and now as my main account. Not quite ready to shut my other account yet...but maybe in a year or two

Yeah, and when did cell providers stop sucking...?

What exactly prevents people from cashing checks at the issuing bank, or walking into a bank or credit union with their paycheck and opening an account? Or cashing it at a Wal-mart or a 7-11, which have low fees? These people may trapped in poverty, but ultimately not by the check cashing/payday loan business.

Many banks have a tiny number of branches so good luck finding one to cash a check. Low fees are rarely low when you're talking a minimum wage income. Walmart's 3$ fee for anything under 1000$ works out to 1/2 an hour of work. Picture spending 1/2 an hour of your salary every 2 weeks simply to get paid. Now make that worse by having 3 jobs...

I had no idea this was the case. That's shocking.

If I need cash, I walk into a Chase branch [Not my bank, but conveniently near a Thai Restaurant I like to visit] and just ask for cash advance against my VISA card. Done by a teller, there's no ATM fees.

Being poor is very expensive, and I think a lot of people have no idea just how crazy and awful finance in small numbers is and what that does to people's lives.

_Nickel and Dimed_[1] is oldish, but still highly relevant, if you want to read a depressing book.

[1] http://barbaraehrenreich.com/nickel-and-dimed-by-barbara-ehr... https://www.amazon.com/Nickel-Dimed-Not-Getting-America/dp/0...

Which cc does not charge interest before the thirty day grace period with cash advance?

I think the intent was to say that it avoided ATM fees, but not anything about other fees.

Use a debit card which has no fees or do us banks not offer those

Is it a cash advance if you're using a debit card? Isn't that just a withdrawal.

The op terminology must have been off.

CC cash advances are almost as bad as payday lending, why on earth would you pay a fee of 3-5% of the amount borrowed and 18-25% interest that compounds daily starting on the day the advance clears? Just use an ATM and take money out of your checking account..

Regulations cost money. Unfortunately that disproportionately falls on the poor. :-(

That's a poverty problem not a banking problem. If you keep a $1000 balance in a checking account, your bank is making $5/mo from your interest.

Like every other thing poor people can't afford, it could be solved by UBI/EITC/negative income tax, or direct service if you like big government, but banking isn't special.

High fees. I had to do that at Key Bank when I sold and bought and house due to some screw up.

IIRC, the fee was $10, I had to provide my ID, secondary id and provide a fingerprint.

You can't cash checks at the bank they were drawn off for free anymore, since about 10 years ago.

I've never heard of this. How could this possibly be true? The check is a note to the bank of a client that they want to pay someone. The bank is providing the service to their client, not the recipient. What bank?

This article is from 2004: http://tucson.com/news/local/check-cashing-fees-starting-to-... -- so it's been going on for awhile.

I remember hearing someone sued BoA(?) for "failure to honor the face value of a check" and lost. After that, fee's started spreading. I can't find an online reference to this story.

In the UK at least all the supplied cheques I've seen for many years are pre-approved crossed. That is, they are explicitly not to be paid to the bearer in cash, but only into an account held by the named recipient.

This is the case in Australia too, cheques come with “|Not Negotiable|” pre-printed on them, meaning they cannot be cashed, only deposited to the recipient’s account. The words mean something completely different in the US, and writing them actually completely voids the cheque.

I wonder if you could put “for deposit only” in the endorsement spot to get the same effect. But why would you want to dictate how the check is used?

Here’s the best explanation I’ve found:


Bank of Slumerica does this for one. It's funny because on the face of it, they're inducing their customers to commit fraud every time they write a check!

Wells Fargo et all will charge you $10 to cash even with their name on it.

Chase charges $8 to cash their own check. I asked if they’d waive it for the disabled beneficiary of an FBO (for-the-benefit-of) account. They wouldn’t.

Big banks suck.

Use credit unions or small, local banks and you likely won't have this sort of problem.

When someone needs to able to walk to a branch (bus fare both ways is even worse than most check cashing fees) only a very well placed small, local bank will do. Big banks, not to mention check cashing and Western Union outlets are much more dense on the ground. TANSTAAFL.

The credit union I am a member of (starone) charges $5 for non-members to cash checks from members.

Well, they have had that in the UK for sometime now. The system there was already far more efficient than the US one when this was introduced - which is not surprising, it´s mainly a technology issue. The only thing it really changed was that deposit accounts received a slightly higher interest rate up to a certain limit, provided that you pay your salary into them.

So based on that, Account portability is not whatever it is that is stopping the US banks providing a service to the entire population.

This is how it works in Europe, or at least the EU.

Very few people ever switch an account anyway. Something loke 0.4% of the market have evere done it.

PSD2 is supposed to make it even easier but I guess we'll see.

Where could I find more information about that stat?

I think it was 0.42%... If you look into why the EU came up with PSD2 you should find out some more about it.

Honestly can't find it now. It may just have been something I heard around the office (I am currently consulting with Open Banking in the UK but do not speak for them here or anywhere else)

Cool, I'll try find it. I'm looking into PSD2-related things for my company at the moment.

I completely agree, I've been using the same bank for about 15 years now and I'm sure if I looked around I could find better deals but I simply can't be bothered to go through with it. It's not an American issue though, as far as I can tell the situation is nearly identical in Europe.

In the UK, at least, there are switching-services which aim to make it painless to change your bank. Your direct-debits, and bills get switched to the new provider, etc.

I've never used such a service myself, but I have heard from friends that the process was pretty painless.

Interesting, I've never heard of a similar service in France but then again it's not like I've been searching.

There is. The banking portability law is even called after your president :)

Most banks offer it, or at least claim to. However there's still no penalty for banks that don't do their job properly. But it shouldn't stop you, transferring all your SEPA direct payments isn't that hard even if you do it yourself.

Thank you for the tip, I'll be sure to look into that the next time my bank annoys me, which statistically shouldn't take too long.

Get a referral or wait for a promotional offer, the big players (Boursorama, Fortuneo, ...) regularly offer 130~150€ sign-up bonuses, which is a decent compensation for the time you'll invest switching banks.

There's no need to switch "accounts". All you need is account number portability, so you can switch over your direct deposit and autobillpay. If you have a low balance, you need a way to fallback, so the number can draw from both accounts, that's the hard part.

There's no need to do it in 2 days -- take as long as needed for securr setup, then use both accounts for a month.

Wouldn’t that be relatively difficult to accomplish when routing numbers are tied to account numbers, as well? My admittedly naive understanding tells me account number portability would require routing + account numbers to smoothly change things. I’ve never setup an EFT/ACH transfer without being required to provide both.

The inter-banking transfer systems are a major source of oligopolization. And the barriers to entry imposed by the government are huge.

You won't get a competitive market if you don't solve those two. But it's not even clear if it would be benefic to lower the barriers to entry.

The crypto dream is that you leave banks all together. It is happening slowly.

I've had bank accounts in three different EU countries. No bad experiences. Never paid any fees if salary went to the account. Free money transfers to anywhere within EU. Free credit card with no interest if paid back next month. True 2-factor authentication with physical one-time TAN list. Account insured against bank's bankruptcy up to 100k.

I have zero interest in seeing blockchains enter any financial services I'm part of.

You have a very narrow world view if you are your entire sample.

I was trying to imply that blockchain is not the only way of fixing the broken US banking system, and moving to blockchain could perhaps limit your options of interoperating with other parts of the world that have managed to build a user-friendly banking system. It's possible that blockchain could form a basis of a financial system for a limited group of people, but hoping it to be a foundation for a widely accepted system is from my perspective a misguided attempt to apply a technical solution to something that doesn't need one.

I was making the point that bad experiences are commonplace throughout the world. I have worked with people that can't afford bank accounts in the Phillipines and I have had my own bank accounts frozen and had assets stolen by my banking institution, and I live in a first world country and am a law abiding citizen. This is not even to speak of central banks and the encroachment of surveillance and impingement of economic liberties that I believe to be self evident. I stand by my statement that you should widen your view point since you have not experienced the things that make Bitcoin valuable.

An alternative to to Simple is VaroMoney. Unlike Simple, they are trying to get a bank charter which should give them more control over the bank experience.

In the interview, he talks a lot about the difficulty of navigating the regulations.

Perhaps his criticisms of those regulations are valid — but those regulations exist because of previous problems.

In many cases, the same people who scream, “banking sucks” would also scream if their bank failed due to a reason that some existing regulation would have prevented.

Hey, so you are using all these expensive AND inadequate techs, could we at least use something sane for this non critical stuff? I mean you don't have to worry about this thing and you save a lot and you are using a much better stack overall. What say you?


The number of FDIC banks in the United States. Anyone working near this space can attest to the flurry of mergers and acquisitions.

2002 7,870

2003 7,750

2004 7,612

2005 7,507

2006 7,380

2007 7,262

2008 7,061

2009 6,813

2010 6,506

2011 6,263

2012 6,061

2013 5,836

2014 5,596

2015 5,330

2016 5,102

> 2016 5,102

In my country (Brazil), the bank identifier used by several banking protocols is three digits. It's hard to imagine over a thousand separate banks in a single country.

(For the curious, the full list of identifiers: http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPCNC.pdf and http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPECNC.pdf)

It’s a long hard reality that anyone who wants to operate in this space has to deal with.

You think it’s unfair you can’t cash your check for free and have to pay a $10 fee? Take a look at what the bank is required by the BSA and later KYC laws to do after accepting that check and understand it’s not the bank that’s the problem. It’s the onerous regulations that have literally almost halved the number of institutions able to survive.

So how hard is it now to open a bank with $20 million?

I am glad they came along when they did. Works great for me.

Applications are open for YC Winter 2022

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact