Banks are terrible. They make their business charging you to use your own money. To most people, they offer a weaker and weaker value proposition. Having them around doesn’t make people’s lives better, and that’s only going to become more and more the case.
The basic things that people do with a bank are nothing more than the bare minimum functions that are a part of having money in the first place. You store money there, because it’s safer than keeping it under your mattress, and easier to keep track of.
Ok, big deal. It’s your money. Being able to keep it without it randomly getting lost or stolen is part of the basic premise of what it is. And sure, banks can help spend money with electronic transfers, debit cards and credit cards, but again, that’s just spending your money.
The whole point of money existing in the first place is to be spent. Essentially, what banks are providing here is the absolute bare minimum.
That’s why I think it’s funny when a big-time traditional bank executive like Jamie Dimon tries talking down at crypto, calling it “pet rocks,” as he did in recent CNBC video, I don’t see a titan of finance exposing guarded weaknesses in the crypto world.
What I see is a decaying old relic of an industry that’s been coasting on its size and momentum trying to shout down a challenge so that he can go back to getting paid to do nothing.
You want to see how useless banks have become these days, you just have to take a look at their business model. According to Forbes, the big banks of America pulled in $11 billion in overdraft fees. This huge chunk of revenue comes from engaging in what basically amounts to piracy against their own customers.
The banks claim to provide “overdraft protection,” but it’s just a sick and twisted game where banks punish people for accidentally trying to spend too much money by charging them even more money that they obviously don’t have (or else they wouldn’t have accidentally over-spent in the first place.)
I get the impression that most people would rather just be told that they don’t have enough money for a purchase and leave it at that, but, of course, then they bank doesn’t get to rob them.
According to a Bankrate survey earlier this year, overdraft fees may be down year over year, but the average fee is still almost $30. For people barely making ends meet (in other words, the kind of people who end up getting stuck with overdraft fees), that can mean a day without food.
And that’s before even factoring in out-of-network ATM fees, another arbitrary cost imposed by banks, which that same survey rated as averaging about $3.14 per transaction. That’s a record high, so those pirates might be planning on pushing them even higher
The thing is, both of these so called “services” exist in a context where they are totally unnecessary.
Easy (To Use) Money
Let’s imagine the alternative, a government stablecoin. I mean a scenario where the government totally supports a digital version of the dollar that we already have. You’d have your own wallet or account. Since there are no physical dollars, they aren’t “deposited” anywhere. They are just yours.
They exist only in cyberspace, and the blockchain recognizes that you belong to you. You could spend them through an interface. Maybe a phone app. Maybe a card. Doesn’t matter. What you’d be doing is transferring the digital ownership whenever you buy something.
There would be no overdraft. If you try to send money to a vendor, and you don’t have enough, it could just tell you, “sorry, that’s not enough” and decline the transaction. There would be no ATM fees, in network or otherwise, because the currency would be purely digital. It would be “with” you everywhere, and could be transferred to any destination address whenever you want.
No predatory policies, no extortionate fees.
Adapt Or Fade Away
To make it exactly clear how useless banks are becoming these days for the average consumer, let’s look at loans and credit as well. If you had to look for a new place to live this past summer, than please accept my deepest sympathies, because housing prices went absolutely insane.
And according to a piece from NPR, mortgage applications declined by more than 20%, year over year. Now, that was just in one particularly bad year, but it helps us see a bigger picture.
Younger adults are having a harder and harder time finding the capital to even be able to afford their own houses at all. That means that home ownership loans are also not measuring up to their supposed purpose.
So, I gotta ask Jamie Dimon and all the other big traditional bank executives calling crypto useless; Who are you to be talking?
I’d much rather use a crypto created and backed by the U.S. government than deal with their nonsense. I mean, the money we use is already created and backed by the government. This would just get rid of all the unnecessary graft-seekers.
And who knows, maybe once they face this kind of real, disruptive competition, the banks will have to try and provide some real value to their customers.
They can either do that or just fade away from . Either way would be progress.
Banks – Fees and inconvenience
- Interest is so small that it’s useless. You need to be in some kind of market to keep up with inflation anyways
- Mortgages don’t matter, since younger generations have less and less financial freedom and can’t afford major life purchases.
CBDC – all the benefits of electronic banking
- Convenient. You can hold money in an online account, send it use, hold it, all just as easily as online banking.