Starting a Disruptive Bank
Over at Clusterstock, we give a lot of thought to the future of banking. So many banks have gone bust this year that there seems to be an opportunity for starting a bank that would run very differently.
One obvious strategy would be to radically change the online banking experience. Most bank websites are clunky and unfriendly. The user experience could be vastly improved. Having, for instance, something like a Microsoft Money application would be nice. Between credit cards and ATMs, my bank knows where almost all my money goes. So why isn’t it tracking this for me, displaying it graphcially, and allowing me to consider what would happen if I shifted money from one activity to another?
Over at Continuations, Albert has been trying to conceive of a disruptive bank. There are some good ideas being discussed, particularly about how to make customers happier with the fees. But the main idea seems to be to separate the functions of a deposit bank and a lending bank. What he seems to have in mind is a 100% reserve bank that wouldn’t lend out the money of its customers. This would mostly mean eliminating interest, which is a substantial cost for customers. It’s not clear at all to me why this would benefit customers, especially since deposits are covered by FDIC insurance.
Albert suggests allowing customers who want to earn interest be allowed to select various lending schemes with part of their money. This would make participating in fractional reserve banking more transparent. But, again, its a lot more work for bank customers without much upside. I could see a certain type of libertarian being philosophically attracted to this kind of bank but its clearly not for the general customer.
Still, it’s good to see smart people trying to rethink banking.
Three words: Zappos of banking. Put everything into customer service.
