What Does the Next Generation Financial Institution Look Like?
July 18, 2010 by christine
I read a very interesting article on MSNBC, and I’m sharing it because I think the author of the article actually has some good points for a change. I think he’s saying that the financial industry may have again been left to police itself under the new financial reform bill, which he says doesn’t make sense given that the banking industry was supposed to have already been policing itself. And then look what happened. That’s a no-brainer as far as I’m concerned.
What stood out for me in this article was this comment from a guy named Richard Bove, who is a bank industry analyst for Rochdale Securities:
“My guess is there will be at least 10 million people who lose their bank accounts in the United States over the next 12 months, and they will not get banking services,” he said. “Which means that they will have to use payday loans, they’ll have to use Western Union payment services, they’ll have to use a series of other methods of handling their banking because they won’t be profitable for banks and the banks won’t keep them.”
So, you might be wondering why I find this statement so intriguing, and here’s why: for the last year or so, I’ve had an idea rolling around in my head about the future of the banking system.
I don’t want to scare anyone, but I really think the banking industry will not exist in its current form for much longer. I don’t think it’s sustainable.
However, I have been thinking about what the next generation of financial institutions might look like, because I think it’s a discussion that needs to be had.
Is it possible to set up a financial institution that is nothing like the way they are now?
Can a financial institution exist without being tied to the US Treasury?
Can we sell memberships to financial institutions like Costco memberships and include a certain level of services without charging members ridiculous fees?
What about the Paypal system? I think Paypal is brilliant, although it has it’s downsides too. Can it be duplicated? I’m sure they are using the Fed’s system to transfer money, but it’s cheaper than using a bank’s merchant fees.
Can we have a financial institution that is profitable without taking advantage of its customers that isn’t totally corrupt or built on massive profits at the expense of the public? That’s what I really want to know. I will not be a profit center for a too big to fail bank anymore. Nor will I get myself in debt using credit cards that make millions for big banks.
I know we have a lot of smart, intelligent readers on this blog (and thanks for all the excellent comments lately, by the way) and I would like to hear your ideas for creating the next generation of financial institution. Let’s forget for a few minutes about restrictions and talk about what we’d like to see in the new financial institutions and how it can be done.
The people who are no longer profitable to the big banks probably want to bank somewhere…so I’m interested in talking about meeting the needs of that sector of the economy since it will be underserved, plus the other people who, like me, are tired of being a profit center for a big bank.
What do you think? Please post your comments below.
Got questions? Send me an e-mail: Christine@desertedgelegal.com.
DISCLAIMER:
****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****
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That's interesting…if the banks don't want some people as customers, they will have to do something. Do you have a link to any stories on that happening?
Christine,
I think you need to get off my wave length. Seriously!
I have been developing and researching an idea that helps people get away from the 'big banks' and that helps people to save money for almost a year. Since, what I want to do is highly regulated; mortgages and securities (its 100% different than what is going on now, with securitized loans) its taken me a while to get all of the kinks ironed out.
I finally have them ironed out and have been working through the 39 page questionaire that is part of the application process. I am excited about it and everyone I have spoken with is excited about it as well. Its going to put power back into the hands of the people and get rid of the mortgage companies that you can't speak to someone who has a clue about your loan.
My bank account has a new 'fee' that just appears last week, have to find out what is heck is up with it – then once I figure it out I will share.
[...] few weeks ago, I talked about the banking system and that I thought it would not exist in its current form for much longer. Today I read this [...]