Lending Market Watch Personal Finance

Is it time to challenge Banks’ business model?


BankSimple motto

The crisis has had a profound impact on how people perceive banks. Because they are identified as the root of the crisis and because they have played an extremely negative role during it (mortgage foreclosure, collection, limited credit) there is a strong resentment against banks. This is especially true for retail banking activities which have been recently put under the spotlight for how they handle credit cards, debit cards and fees.


To name of few of the recent weeks highlights:

– The New York Times has a detailed article on how banks are trying to push people into overdraft fees opt-in program

– A video on YouTube of a person who used to work in the collection department of a major bank (BofA) has also gained attention: link to Finextra blog

This resentment has generated some changes in the retail banking industry:

– From the regulator which has passed bills recently that further protect the consumer

– From the bank themselves that are trying to self police as shown by BofA announcement of the suppression of overdraft fees.


However, some new players think this environment allows them to try and challenge existing banks on their core business model:

Virgin Money, for its launch in the UK as a bank has announced that that it has plans to bill a monthly fee to clients and thus wave other fees such as credit cards.

BankSimple , an “under the radar” startup aims at creating a new retail bank that would not charge overdraft, transfer, monthly fees, and minimum balance fees.

– On a side note The Boring Bank of Cambridge (personal shout out for the best bank name) promises to make bank trustworthy again but nothing much is known of its business model so far.


Do you think these challengers have any chances to grab market share with such strong incumbents?

Investment Lending Market Watch Payments Personal Finance

Introduction to Semantic Web’s “Wave Hits Financial Services”

Semantic Web has published a very interesting and detailed blog post on disruptive innovation in Finance listing the main activities of banks (by source of revenue) and the players that may challenge the incumbents.

Here is a spreadsheet summarizing the bank’s activities listed as well as the disruptive innovations and key players.

Link to the companies listed:

I would personally add a fourth category: Wealth Management. I think players such as Mint and Simplifi are opening a new market for wealth management, making it affordable/free for people to have a comprehensive view of their wealth and make informed investment decisions.