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jerryking : unbanked   4

Technology will hurt the banks, not kill them
October 15, 2014 | FT.com |John Gapper

Does Silicon Valley really want to blow up retail banking and create an entirely new financial system, or would it prefer to ride on the existing one?...Mr Andreessen, a partner of the venture fund Andreessen Horowitz, added in an interview with Bloomberg Markets magazine last week: “To me, it’s all about unbundling the banks. There are regulatory arbitrage opportunities every step of the way. If the regulators are going to regulate banks, then you’ll have non-bank entities that spring up to do the things that banks can’t do.”...There is no doubt that the infrastructure of retail banks is antiquated, and is built in a way that invites competition from peer-to-peer networks. Nor is there a doubt that banks make themselves vulnerable by how they price – offering core deposit services cheaply or free while squeezing customers on ancillary products such as overdrafts and currency exchange....what is the best way to compete with an industry that makes little from a capital-intensive, regulated service with formidable barriers to entry, and a lot from less protected add-ons? The question answers itself, which is why Silicon Valley focuses on payments while talking about disrupting lending....US laws made it impossible to establish a national credit union open to any customer....One growth area in UK finance has been online payday lending by companies such as Wonga, which promised to extend banking to the underserved. ... tech companies can improve on credit scoring by scanning search histories and social network data...The biggest barrier to competition is that the core business of taking in deposits and keeping them safe is not very profitable in a low-interest world....A start-up bank that has no branches and spends less on patching up legacy software might do this more efficiently – and good luck to those that penetrate the regulatory thicket and try. But it is much less risky to attach a new service to the existing banking infrastructure, and it absorbs less capital....Technology may eventually change the infrastructure of banking but it will not happen soon....“is a long-term threat that will play out over decades, not months or years”...Silicon Valley will compete at the edges, where banks make their best profits.
banks  Silicon_Valley  Marc_Andreessen  Andreessen_Horowitz  disruption  fin-tech  start_ups  Bitcoin  financial_services  underserved  unbanked  regulators  P2P  payday_lending  credit_scoring  low-interest  branchless  capital-intensity  legacy_tech  regulatory_arbitrage  financial_system 
october 2014 by jerryking
Minorities possible unfairly disqualified from opening bank accounts | mathbabe
August 7, 2013 Cathy O'Neil,

New York State attorney general Eric T. Schneiderman’s investigation into possibly unfair practices by big banks using opaque and sometimes erroneous databases to disqualify people from opening accounts.

Not much hard information is given in the article but we know that negative reports stemming from the databases have effectively banished more than a million lower-income Americans from the financial system, and we know that the number of “underbanked” people in this country has grown by 10% since 2009. Underbanked people are people who are shut out of the normal banking system and have to rely on the underbelly system including check cashing stores and payday lenders....The second, more interesting point – at least to me – is this. We care about and defend ourselves from our constitutional rights being taken away but we have much less energy to defend ourselves against good things not happening to us.

In other words, it’s not written into the constitution that we all deserve a good checking account, nor a good college education, nor good terms on a mortgage, and so on. Even so, in a large society such as ours, such things are basic ingredients for a comfortable existence. Yet these services are rare if not nonexistent for a huge and swelling part of our society, resulting in a degradation of opportunity for the poor.

The overall effect is heinous, and at some point does seem to rise to the level of a constitutional right to opportunity, but I’m no lawyer.

In other words, instead of only worrying about the truly bad things that might happen to our vulnerable citizens, I personally spend just as much time worrying about the good things that might not happen to our vulnerable citizens, because from my perspective lots of good things not happening add up to bad things happening: they all narrow future options.
visible_minorities  discrimination  data  data_scientists  banks  banking  unbanked  equality  equality_of_opportunity  financial_system  constitutional_rights  payday_lenders  Cathy_O’Neil  optionality  opportunity_gaps  low-income 
december 2013 by jerryking
Immigrants Make Up Big, But Ignored, Niche
Nov 2002 | American Banker | Davenport, Todd Davenport.

Bank of America Corp. and Wells Fargo & Co. are among the banking companies that now let Mexican immigrants open bank accounts with a matricula consular, a form of basic identification offered by the Mexican consulate. Bank of America's pilot program to accept the matricula was so well received that it extended the program to all states on June 1. "The word is definitely out there among the immigrant communities," said Gillian Breidenbach, a spokeswoman for the Charlotte company.

Wells Fargo said it has opened 60,000 accounts since it started accepting the matricula a year ago. It now recognizes a similar card from the Guatemalan consulate and is "in conversations with other Latin American countries" to expand the program, said Wells spokeswoman Miriam Galicia Duarte. The San Francisco company is also talking with officials in the Philippines about the program, she said

The programs are popular, but it may be too early to say if they are profitable. Maintaining low-balance accounts is a costly proposition for a bank, and the means to recoup those expenses could deter consumers. Checking accounts with limited transactions, perhaps tied to a remittance product, could be a solution. Banks apparently need to be creative (in providing services) and patient.
immigrants  remittances  ProQuest  Mexican  niches  underserved  unbanked  pilot_programs 
june 2012 by jerryking
Do Believe the Hype - NYTimes.com
Nov. 2, 2010 |NYT| Tom FRIEDMAN..."the single most important
trend in the world today: globalization — the distn of cheap tools of
comm. & innovation that are wiring together the world’s citizens,
govts., biz, terrorists — is going to a whole new level."....EKO India
Fin Services' founders, Abhishek & Abhinav Sinha , began with an
insight — that low-wage migrant workers flocking to Delhi from poorer
states like Bihar had no place to put their savings & no secure way
to remit $ home to their families. India has relatively few bank
branches for a country its size, so many migrants stuff $ in their
mattresses or send $ home through traditional “hawala,” or hand-to-hand
networks...The brothers' idea: In every neighborhood there’s a
mom-and-pop kiosk selling drinks, cigs, candy & groceries. Why not
turn each one into a virtual bank? They created a s/ware prgrm allowing
a migrant in Delhi using his cellphone, & proof of identity, to
open a bank acct. registered on his cellphone txt system.
India  entrepreneurship  start_ups  Tom_Friedman  banking  mobile_phones  low-wage  globalization  flat_world  insights  text_messages  urbanization  remittances  microfinance  fin-tech  underserved  unbanked  kiosks  neighbourhoods  internal_migration  mom-and-pop  the_single_most_important 
november 2010 by jerryking

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