Community

I was amazed at the seamless connectivity across different modes of public transport in different cities of Germany. I could buy a single ticket for the full journey from my home in Frankfurt to my customer's office in Munich, a trip that straddled three companies operating a sum total of one long distance train, one U-Bahn, one S-Bahn and two tram connections. But, the way the ticketing system operated, I had to do some guesswork about zones and estimations of fares, which could go wrong. 

I was then very impressed with tap-in-tap-out Oyster Card, which did the fare calculation by itself. But it was not useful beyond TfL public transport.

Assuming it's based on the Oyster Card paradigm, the Dutch ticketing system takes public transport payments to the next level.

Kudos to the folks who have made it possible.

PSA: Not sure why the OP missed out such a big point but none of these alternative products enjoy deposit insurance, which is a major advantage of bank savings account. Deposit insurance currently stands at $250K, £80K and  ₹500,000 per person per bank in USA, UK and India respectively.

It won't be hard for banks to hide behind this proposed rule and delay payments and go back to the good old days of at least T+1 to earn float income. (If it were the USA, some banks might even use it to prevent bank runs.)   

I can bet that this rule will never come into force in its present form by 2024. Instead, what will come into effect is my Three Strike Rule To Eliminate Cybercrime in some form or the other.

Sorry but I predict exactly the opposite effect of funding winter. Back in the days of ZIRP, fintechs got truckloads of funding and could run on losses for a long time so were able to eliminate overdraft protection and other fees that customers hated about traditional banks.

With funding cratering, fintechs will need to make revenues and profits from their core operations. While they can build more frictionless workflows to attract more customers, they probably need to do what banks have been doing all along to monetize those customers. That's not something that customers are going to love.

To cite a personal example, a leading mobile wallet supported free-of-cost credit card topup for 10+ years whereas, since the middle of last year, it has started slapping a 2% surcharge for the same transaction. Obviously, as a consumer, I'm not thrilled about this fees and I've jettisioned this product.

Hail VC Subsidy.

I'm amazed how SEC approved the public listing of CoinBase a few years ago when it knew that CoinBase's business model was illegal. If it's a question of jurisdiction, one would expect some other US govt agency to vet the legality of a business before it's allowed to sell shares to the man on the street. 

Learning that other companies in illegal businesses like cannabis, gaming and rideshare were allowed to go public in USA only increases my wonderment. 

Without regulatory mandate, Open Finance in USA garnered 80M users in five years. With regulatory mandate and huge amount of buzz, Open Banking in EU hasn't reached a fraction of that number. No end game is fine but is there a start game?

Open Banking: EU v. USA

This could be BIG! Hope this movie has a better ending than other blockchain-based settlement systems that somehow fizzled away e.g. ASX. 

If crypto / DeFi firms put the same controls in place as banks, how will they achieve their charter to disrupt banks / TradFi?:)

Most banks in USA - including SVB - offer virtually 0% interest on checking accounts. Moving money to term deposits will increase their interest outflow, which will dent their profits, which will hammer their share price, which will cause crisis of confidence, which will end up causing more-or-less the same problem as we have now, just from a different angle. 

To cite Matt Levine, the key disconnect is that banks believe that banking is a Theory 2 business in practice even though it's contractually a Theory 1 business. In the past, their belief has been vindicated.

Only time will tell whether they will see the failures of SVB et al as proof that banking is really a Theory 1 business in practice or they will shrug those failures off and continue to believe that banking is a Theory 2 business.

Sorry but "... those products ... don't bear this risk of immediate liquidation" is wrong.

A bank can invest customer deposits in a lot of places but, according to the basic principle of DDA, it MUST let the customer withdraw it ON DEMAND (subject to business hours, functioning of online banking, etc.). It's the bank's job to arrange for liquidity. 

SVB did invest customer deposits in 10 year T-Bonds but it couldn't refuse customers to withdraw their money when they wanted. If only SVB could have told customers "Hey we've invested your deposit in 10 year T-Bond, wait for 10 years to withdraw it", it would not have failed in the first place.