The Hacker News discussion revolves around several key themes concerning the banking and fintech industry, with a strong undercurrent of frustration regarding innovation, access, and regulation.
Critique of Traditional Banking and Financial Systems
A central theme is the perceived stagnation and inefficiency of traditional banking. Many users express frustration with the lack of innovation, citing outdated systems and a resistance to change.
- "Banks suck so goddamn hard and are allowed to operate without any real competition and don't innovate at all. They are the definition of regulatory capture." - zaptheimpaler
- "The entire banking industry is the most backwards, outdated and barely functioning sector in the whole world. I have no clue how we have not yet collapsed the financial system via some hack or basic data loss." - gethly
- "Sometimes not moving fast and not breaking things has its advantages." - blitzar (This comment, while seemingly counter to the general sentiment, is used here to highlight the contrast in approaches, suggesting that the slow pace of banks can, in some ways, be a safeguard against catastrophic failure, directly responding to the "hack or basic data loss" concern).
The Ineffectiveness and Misleading Nature of "Open Banking"
The concept of "Open Banking" is frequently brought up, but the sentiment is largely negative, with many users finding it to be either not truly open or overly bureaucratic.
- "I just want to easily pull bank/card transactions into my budget app, and the glacial pace of open banking really annoys me." - zaptheimpaler
- "It's really just f**king ridiculous that some of the earliest and most important digital systems we have are allowed to wall in their data with no API access." - zaptheimpaler
- "\"Open Banking\" is just… not open at all. Misleading name." - 11mariom
- "\"Open Banking\" just gives me opportunity to show in my Bank A part of data from Bank B." - 11mariom
- "I was really disappointed by that. I still can't easily retrieve a list of my transactions." - nicbou
- "No mention of how open banking works outside of the US, where (in the UK) bank transfers are basically instantaneous and free, and I can happily retrieve my payments list to my budgeting app." - AndrewDucker
- "Is this a UK thing? I've been searching for something like Mint/Quicken in the EU and haven't found anything worthwhile because there doesn't seem to be a standard for budgeting apps to connect to banks." - rkomorn
- "However, it's not aimed at users but rather at companies in fintech building applications." - elric (referring to PSD2 in the EU)
- "Currently you need permission from an institution like The National Bank to gain access. It's expensive and bureaucratic." - elric
The Role of Regulation and Gatekeeping
A significant portion of the discussion centers on how regulations, intended or otherwise, create barriers to entry, stifle innovation, and lead to what some perceive as "bullshit jobs" or rent-seeking behavior.
- "Well of course. That’s how most gatekeepers act." - EGreg
- "Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information? ... But in USA this creates many “bullshit jobs”.” - EGreg
- "To open an LLC in NY you must announce it in a specific newspaper they tell you. And that newspaper charges $700. Same thing — they lobby to keep this going." - EGreg
- "I discovered I needed permission from the goddamn central bank to do this." - matheusmoreira (referring to accessing own bank data)
- "I discovered I had to create a corporation to even ask the government for API access to my own data." - matheusmoreira
- "It's not really the banks' fault. They're all stuck leasing expensive information systems from entrenched third-party technology shops. They don't have software development dollars and they are extremely risk averse, to a paranoid degree. Thank the regulatory environment for that (state and federal)." - politician
- "Everything is also constantly regulated to death (and not the good kind) and banks wait until the very last day... and you then need to rush implementing it in the last month." - sunaookami
The Utility and Limitations of Business Plans and Bank Lending
The necessity and nature of business plans for obtaining loans are debated, with differing views on their purpose.
- "The business plan is not about the business plan. It's only even half about the business. Instead it is about the businessman making the pitch." - Danieru
- "The bank isn't so interested in whether it's a good idea to open a shoe store or not, but in whether you as the person asking for lending has the skillset to actually execute on that plan. Asking the person who wants lending to write the plan is the easiest way to check this." - omcnoe
- "If someone is good at baking bread that suggest they are qualified to to bake bread. Running a bakery is a super set of that skill. The business plan request is a fantastic method to give such a person a chance to show they have the right resources, enough experience, and reasonable expectations and strong commitment." - Danieru
Decentralized Finance (DeFi) and Cryptocurrency as an Alternative
Cryptocurrency and decentralized ledgers are presented as potential solutions to many of the problems discussed, although their practical uptake and perceived safety are also debated.
- "The idea that I’d need anybody’s permission or a regulation to allow me to give my money to somebody else is the problem." - toenail
- "My actual problem is that the central bank devalues the money I earned." - toenail
- "I use a decentralized global ledger and can make instantaneous peer to peer payments to anyone on the planet. I'm not just my own bank, I participate in a system that replaces central banks and provides a money that isn't constantly devalued. It's called bitcoin." - toenail
- "HN anathema: crypto and blockchain — can and does trivially solve the issues Patrick writes about. You can easily make sure the account has enough money, without knowing whose account it is." - EGreg
- "Crypto is \"buyer beware\". The traditional fintech system is \"seller beware\". But crypto is programmable and in theory you could easily make use of arbitration, resolution of disputes, and periodic payouts etc. All without being forced into the bundle of services you don’t control, that banks saddle you with." - EGreg
- "Bitcoin can not yet be deemed currency by commonly understood principles for a currency: You can not pay your taxes, it is not a store of value (it is volatile), and it can not generally be used to transact (Good luck getting trader joe accepting bit coins)." - tossandthrow
- "Crypto and blockchain by itself does not solve any of these problems. It's merely a payments system that happens to be on a computer natively." - ranger207
- "While the traditional banking system has problems with its regulations making things too hard to do, many people prefer it to the easier to screw up wild west of crypto payments. Lots of people like the FDIC making sure their savings aren't wiped out if the bank lies on its balance sheet, or the ability to claw back money transfers if someone breaks into their account." - ranger207
- "If only we could store financial data on a globally distributed immutable ledger with strong cryptographic guarantees." - thrown-0825
Internal Industry Challenges and Legacy Systems
The discussion also touches upon the internal operational challenges faced by banks and fintech companies, including reliance on legacy systems and the critical role of a few knowledgeable individuals.
- "We wrap shiny new apps over 30 year old legacy systems written in C++ and bank employees need to constantly correct data manually." - sunaookami
- "I know from a bank that has only one employee that knows about the whole system and nobody knows what happens when they retire (is already aged >50). Generally, banks rely on a very small number of (overworked) people that prevent the whole system from collapsing and they will all retire in a few years." - sunaookami
- "That is what happens when a fintech startup has authority to manipulate customer bank accounts but is not financially strong enough to handle problems." - Animats (referring to Synapse/Yotta/Evolve collapse)
- "A sizable fraction of what bank employees do involves error conditions and fraud. The happy path has been automated for decades. One of the big discoveries when PayPal started up was that they were not in the money transfer business. They were in the fraud prevention business." - Animats