PayPal should not exist

December 11, 2009 4:44 AM

Might the consumer banking revolution be coming? "Yodlee is the engine behind the online banking operations of most banks in America — and, for that matter, of mint.com... and it's now going to open up that database to software developers around the world." With mobile internet adoption soaring, the birth of iBanking may not be that far behind. An upgrade of payment and financial information systems could be closer than you think.

BONUS
-now imagine if if the health insurance exchanges were like Amazon.com (and you could rank insurers by their medical loss ratio)
-or there was some accountability in higher-ed: "all that's really needed is a bit of sunlight on data which is already being collected, but largely kept secret. The problem is a higher-education lobby which is secretive, powerful, and which won't let change happen"

posted by kliuless (33 comments total)

Wow... comment 334 on MeFi. Sorry, just thought that was neat.
posted by Civil_Disobedient at 5:06 AM on December 11, 2009 [2 favorites]

And on a more related note...

I don't want to begrudge them their success, but I don't think this is going to revolutionize iBanking for the American Consumer any time soon. Most of the real banks I know roll out their own systems in-house. So while Yodlee might be the engine behind most online banking operations, that's still a fairly small sandbox we're talking about.

And it's brought up in the comments, but I think it's important to emphasize that the Reuters article is dead-wrong in its claim that they make most if not all of their income from fees. Banks make their money from interest. Fees are gravy for lavish salaries and marble-wrapped corporate office bathrooms.

PayPal is raking it in only because the individual losses in fees for each bank are simply not worth fighting for. Those are scraps, anyway. Most big-ticket loans (mortgages, automobiles, etc.) are done through brick-and-mortar banks; find a way to lure those wallets and you'll have your banking revolution.
posted by Civil_Disobedient at 5:22 AM on December 11, 2009

Will this allow developers to build an app that automatically takes money out of my account without me knowing about it?
posted by MtDewd at 5:34 AM on December 11, 2009 [2 favorites]

This would be better way to start a consumer banking revolution.
posted by larry_darrell at 5:48 AM on December 11, 2009 [2 favorites]

As opposed to I-Banking, which is what got us into this mess in the first place.

Yeeeeah... you might want to rethink that name.
posted by Eideteker at 5:53 AM on December 11, 2009

You pay with....cheques? The USA is such a puzzle.
posted by Lleyam at 5:57 AM on December 11, 2009 [2 favorites]

This would be better way to start a consumer banking revolution.

And this would be an even better way.
posted by killdevil at 6:08 AM on December 11, 2009 [4 favorites]

You pay with....cheques? The USA is such a puzzle.

Getting there... getting there..

(grumbles about having to dig out a checkbook for a vendor yesterday)
posted by cavalier at 6:11 AM on December 11, 2009

You pay with....cheques? The USA is such a puzzle.

Cheques, hell. I had to go to the Post Office to buy a money order yesterday to pay for my fingerprinting and criminal background check for the K-12 teaching cert I'm adding. Talk about fucking stone age. And ghetto. I have a stub in my pocket that I'm supposed to write my own receipt on, like the IRS will really fall for that.
posted by toodleydoodley at 6:44 AM on December 11, 2009

the amount of time I've spent recently dealing with low-level bureaucrats in the school district, post office, and local and state government offices leads me to believe that the real reason so many otherwise apparently sane and sensible people are opposed to universal health care is because of their perception of the people who'll be in charge of delivering it.
/derail
posted by toodleydoodley at 6:48 AM on December 11, 2009

You pay with....cheques? The USA is such a puzzle.

Even better, we go to a web page, pay online, and then the bank prints out a paper check and sends it via the post.

And you try and tell the young people of today that ..... they won't believe you.
posted by srt19170 at 6:55 AM on December 11, 2009

Even better, we go to a web page, pay online, and then the bank prints out a paper check and sends it via the post.

Yup, although my bank will send electronic payments to some of the larger companies, who took the time to get electronic payments setup.

And a lot of places will let you pay by sending them your bank account/routing number directly onto their website. But there is no way to say "take $X out". You just give them the account/routing number and they take out whatever they want. Usually it's what you agree too.
posted by delmoi at 7:02 AM on December 11, 2009

And then the bank will *scan* your check and display it on your web client as a gif. That's a lot of DA/AD conversions.
posted by readyfreddy at 7:04 AM on December 11, 2009 [1 favorite]

You know frankly I think there's a bit of a government roll here. After all the government mints currency. Why shouldn't they be responsible for electronic currency as well? Of course, that would mean that banks couldn't take their cut from online transactions, so they would lobby against it.

If the banks had their way they would print money themselves and then charge you 3% to get your hands on it. And then they would hire lobbyists to prevent the government from printing it themselves.
posted by delmoi at 7:05 AM on December 11, 2009

We use USAA. Any checks I have to deposit, I can do so via a scanner or with my iPhone. It's still analog to digital conversion, but it saves on stamps!
posted by matty at 7:09 AM on December 11, 2009

And it's brought up in the comments, but I think it's important to emphasize that the Reuters article is dead-wrong in its claim that they make most if not all of their income from fees. Banks make their money from interest. Fees are gravy for lavish salaries and marble-wrapped corporate office bathrooms.

PayPal is raking it in only because the individual losses in fees for each bank are simply not worth fighting for. Those are scraps, anyway. Most big-ticket loans (mortgages, automobiles, etc.) are done through brick-and-mortar banks; find a way to lure those wallets and you'll have your banking revolution.

Uhhh...

According to a February report in the Wall Street Journal, revenue from fees increased from $17.1 billion in 2006 to $18.1 billion in 2007. "In 2003, the revenue from fees was $12.8 billion. That represents a 41% increase in fee revenue in just four years," says Bill Hardekopf,CEO of LowCards.com. "During this time of lower interest rates and more defaults, fees provide a steady income for issuers."

Fees now account for 39% of the revenue for credit card issuers according to RK Hammer, a bank card advisory firm.
posted by jckll at 7:16 AM on December 11, 2009

Yes I know that is Credit Card issuers but that was the only stat I could find quickly, and I imagine it's very similar as the vast majority of banks are credit card issuers and debit cards incur many of the same fees as credit cards.
posted by jckll at 7:17 AM on December 11, 2009

Surely credit card issuers are a different kettle of more shark-like fish?
posted by Artw at 7:21 AM on December 11, 2009 [1 favorite]

The fact that the US doesn't/can't have (true) national banks still blows me away every time I visit. I do appreciate that I can use my old bank (TD Banknorth/TD Bank/Commerce Bank) in New England though. Canadian banks are also the local banks in Jamaica too, which is handy when traveling.

The inter-state banking restrictions are, I think, one of the biggest impediments to modernizing the US market---lots of little banks in regional markets. With no real benefits to the banks to have national standards for money transfers, things plod along they way they are.
posted by bonehead at 7:57 AM on December 11, 2009

Mint's competitor Wesabe just launched Springboard, a turnkey solution for banks and credit unions to provide Wesabe service to their customers. It's pretty amazing, I'm hopeful it will start being used by banks to provide a humane user interface for their customers.
posted by Nelson at 8:15 AM on December 11, 2009

The inter-state banking restrictions are, I think, one of the biggest impediments to modernizing the US market

What are you talking about? Interstate banking restrictions were mostly removed in 1994. There are several huge, inter-state banks. Such as Wells Fargo, Citibank, Bank of America, etc.
posted by delmoi at 8:18 AM on December 11, 2009

revenue from fees increased from $17.1 billion in 2006 to $18.1 billion in 2007

Revenue from fees for all banks? The revenue for just one bank (CitiBank) was ~$53 billion in 2008.

Fees now account for 39% of the revenue for credit card issuers

Maybe for places that only issue credit cards. Again using CitiBank as an example, they're divided up into four divisions (Consumer Banking, Global Wealth Management, Global Cards, and Institutional Clients Group). Credit cards are strictly Consumer Banking, which is itself divided into four divisions (Cards, Consumer Lending Group, Consumer Finance, and Retail Banking). The Consumer Banking division made $17 billion in revenue in '08, 40% of which was from their credit cards division. That's just 12% of total revenue, and doesn't even address the percentages from this portfolio that are coming from CC interest, which I am guessing is decidedly non-trivial.
posted by Civil_Disobedient at 8:28 AM on December 11, 2009

Not exactly on topic, but saw this spectacularly doom-and-gloom piece on the UK banks: Why the next banking crisis could be even worse.

The more you look at the numbers, the scarier it gets. Fifteen European banks now have assets - and liabilities, too, although bankers don't like phrasing it that way - larger than their home economies. That compares with ten such lenders three years ago. In Britain, for example, Barclays' balance sheet alone is bigger than the country's entire annual output.

In a nutshell, the number of lenders that are 'too big to fail' has risen sharply. And that means that the scope for something else to go drastically wrong is growing, not shrinking. We haven't learned a thing from the blow-up of 2008. "What we have been doing in the last two years is making banks much bigger", says David Lascelles at the Centre for the Study of Financial Innovation. "We are sowing the seeds for the next crisis".

posted by Abiezer at 9:54 AM on December 11, 2009

The fact that the US doesn't/can't have (true) national banks still blows me away every time I visit.

And yet checks still clear faster in the U.S. than in Canada.
posted by one more dead town's last parade at 10:21 AM on December 11, 2009

Even better, we go to a web page, pay online, and then the bank prints out a paper check and sends it via the post.

Are you serious? I can't even tell if you're kidding.
posted by Lleyam at 11:07 AM on December 11, 2009

Are you serious? I can't even tell if you're kidding.
posted by Lleyam

Hell yeah, my credit union will do that if that company hasn't set up electronic payments with them. They don't even charge me for it (not directly anyway).
posted by marxchivist at 11:23 AM on December 11, 2009

Don't you guys have something like this?
posted by Lleyam at 11:26 AM on December 11, 2009

Not being able to set up Direct Debits for everything is definately one of the things that weirded me out about moving to the US from the UK. You mean now I have to remember shit? aiie!
posted by Artw at 11:28 AM on December 11, 2009

Would be nice if Yodlee.com's front page actually worked in Firefox.
posted by scruss at 12:07 PM on December 11, 2009

Would be nice if Yodlee.com's front page actually worked in Firefox.

Works for me.
posted by zsazsa at 12:31 PM on December 11, 2009

And yet checks still clear faster in the U.S. than in Canada.

Well yeah, since they never need to use them.
posted by delmoi at 2:07 PM on December 11, 2009

I have this dream where someday, all online content and services work on a micropayment system, and we can finally chuck advertising and data mining into the septic tank of history, where they belong. Perhaps this will bring us one step closer.

Fuck Chris Anderson -- "free" is NEVER free.
posted by Afroblanco at 3:26 PM on December 11, 2009

Well yeah, since they never need to use them.

They still use checks in Canada, even if it's less common than in the U.S.
posted by one more dead town's last parade at 3:31 PM on December 11, 2009