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4 Responses

  1. when you read in the WSJ that banks don’t want corporate deposits because they can’t “plant” them long term because the corporation might want to pull them out, then you have to believe that banks are moving to the transaction world (and have been for years) on the corporate side and this will be the new change in banks in the future. Look for others standing in for banks on the corporate side only. As far as the consumer goes, I see it as a continuation of what they have always done (help the consumer pay for goods and services). Remember, most banks don’t get involved in credit card transactions as that is concentrated in a few issuers. However, all are engaged in debit card transactions and they are half of consumer transactions for purchases. I see the ‘trusted and regulated’ nature of the banks becoming the mantra and I see them helping their customers efficiently manage their inflows and outflows while keeping the consumer monies safe. I don’t see the consumer stepping away from the regulated safety of the bank and I see the bank charging them to facilitate their day to day needs.

    1. Pascal Bouvier

      true, but it will become an awfully hard world for banks once there is ease of flows in and out of a checking account (both money and data). banks will have to do more than facilitate day to day needs.

  2. There’s a lot more to banking than meets the eye. It is not so difficult to create a Dwolla type setup and have a single master account for USD at Veridian Credit Union and Compass Bank. You then offer new customers a sub account (they see it as an account) and settle with accounting entries in the master account. Oh yes, the party you are paying or receiving from must have an account with Dwolla. It is the same if you have two accounts at Citi or BofA.

    It gets more complicated across two different organizations, and if you introduce going from one currency to another with its 2 day settlement protocol, it gets risky and complicated. This is what blockchain promises to help with, but there’s a problem with scale currently. Bitcoin, even after the 2015 run-up has a market cap of $6.5 billion. Citibank settles between $3 and $5 trillion per day. Yes, that’s a “t”. The largest payment volume is FX settlement. To get a glimpse at some of the “guts” behind this, take a look at the Swiss National Bank description of CLS as a peer-to-peer FX settlement system started in 2002. The piece was written Nov. 2009. http://www.snb.ch/en/mmr/reference/continuous_linked_settlement/source/continuous_linked_settlement.en.pdf It currently handles over 50% of the world’s foreign exchange settlements. Its sort of a jury-rigged central/distributed ledger system.

    Checking accounts are a loss leader to get a relationship for cross sell. Schwab doesn’t want you to just have a Schwab One account with sweep to money market and write checks on it either.

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