It's hard to understate the degree to which digital-only fintech companies have made banking far more competitive and consumer-friendly.
FX fees used to be a big source of revenue for credit card issuers. Now, there are plenty of cards with no annual fee offering 0% FX fees and 2%+ cash back. Basically, fintechs are giving up the majority of their interchange revenue in the hopes of making money off interest.
100% the competition was warranted! Don’t even get to old brokerage models and fees across the whole banking stack. Nuts we were paying $10-15 per trade up until quite recently, regardless of volume
The banking industry is almost as hated as the insurance industry; neither is justifiably so. There are books written on the supposed insurance tactic of "Delay, Deny, Defend," for example, but anyone in the industry knows that precisely what insurance companies do not want to do. The mantra is quite the opposite: pay what is owed and do so as quickly as possible.
The challenge is determining what is owed. If that were easy, insurance would be a lot cheaper, and claims would be processed much quicker. It's not easy because it's in the interest of everyone to take as much from the insurer as possible, leading to inflated bills, false claims, exaggerated claims, etc.
Like the banking industry, the insurance realm is regulated to death, which makes it difficult to adapt and respond to customer needs. Staff at all levels require licensure that varies from state to state, adding huge compliance costs. Each US state has a say in, and often delays or rejects, the wording of policies, creating a massive administrative burden and policy complexity. States must also approve rate hikes, and mostly are hesitant to do so, often forcing the insurer to cut back in other areas, like customer service, raising deductibles, or narrowing coverage, to the detriment of their own constituents.
Thank you for the kind words and so true about insurance! You would think this would have created an opportunity for disruption long ago but we still need to put up with an awful model for consumers
Nice piece, Ben!
Thank you Paul! Appreciate you taking the time to read and comment!
It's hard to understate the degree to which digital-only fintech companies have made banking far more competitive and consumer-friendly.
FX fees used to be a big source of revenue for credit card issuers. Now, there are plenty of cards with no annual fee offering 0% FX fees and 2%+ cash back. Basically, fintechs are giving up the majority of their interchange revenue in the hopes of making money off interest.
100% the competition was warranted! Don’t even get to old brokerage models and fees across the whole banking stack. Nuts we were paying $10-15 per trade up until quite recently, regardless of volume
Nice piece Ben,
The banking industry is almost as hated as the insurance industry; neither is justifiably so. There are books written on the supposed insurance tactic of "Delay, Deny, Defend," for example, but anyone in the industry knows that precisely what insurance companies do not want to do. The mantra is quite the opposite: pay what is owed and do so as quickly as possible.
The challenge is determining what is owed. If that were easy, insurance would be a lot cheaper, and claims would be processed much quicker. It's not easy because it's in the interest of everyone to take as much from the insurer as possible, leading to inflated bills, false claims, exaggerated claims, etc.
Like the banking industry, the insurance realm is regulated to death, which makes it difficult to adapt and respond to customer needs. Staff at all levels require licensure that varies from state to state, adding huge compliance costs. Each US state has a say in, and often delays or rejects, the wording of policies, creating a massive administrative burden and policy complexity. States must also approve rate hikes, and mostly are hesitant to do so, often forcing the insurer to cut back in other areas, like customer service, raising deductibles, or narrowing coverage, to the detriment of their own constituents.
Thank you for the kind words and so true about insurance! You would think this would have created an opportunity for disruption long ago but we still need to put up with an awful model for consumers