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Why Banking is Divorcing Itself from Banks

Banks have always been at the heart of payments and banking services. Whether you were collecting, storing or sending funds there was always a bank facilitating the movement of money. However, as technology has evolved and the demands of the consumer have changed, banks are losing the firm hold they’ve held on banking services for 3 main reasons. 

1) People Are Losing Confidence in Banks

A recent Gallop poll shows that Americans’ confidence in banks has fallen to 21% - a record low. The government bailouts and the increase in fees that banks are charging are the main reasons for this concern. Banks are no longer neighborhood institutions with strong community ties. This lack of trust is creating a strong demand for alternatives to banks. Sites, like, are helping people leave their banks to find easier, trustworthy solutions that meet their needs.

2) More Flexible Banking Services With Social Networks

Traditionally, the role of the bank was to authenticate the identity of individuals and associate them with deposits and transactions. The process that banks use is outdated and hasn’t advanced with the technology of today. PayPal, over a decade ago, became the DNS for banks by associating an email address with a bank account. This simple idea has transformed online payments, yet most banks have failed to adapt or offer similar services.

Similar to PayPal, online networks now have a tremendous opportunity to associate Twitter and Facebook accounts with bank accounts. The flexibility that email and social networks bring provides limitless possibilities for banks. Conducting transactions via social networks or using your Twitter handle to submit payment at an online store is something we’re not too far from. APIs published by social networks make this an easy transition. A couple months ago we created a Twitter payment platform called TweedlePay in just 3 days on BancBox based on the existing Twitter APIs.

Social networks have the ability to subsume most online activities, including banking and payments. When it comes right down to it, there really is no advantage that banks hold over the social Web.

3) Better User Experience Outside of Banks

In addition to flexibility and trust issues, banks offer a poor user experience. Granted, most banks offer simple online and mobile banking services, but there is still a lot to be desired. has set the standard for what a good banking experience should be. While you can’t perform transactional services with Mint, it brings more clarity to peoples’ banking and helps them set and meet financial goals.

Such experiences don’t exist with banks. They’ve tried to make banking a standalone product, but have failed to make one that offers the services, features or UX that other tools on the market provide.

This is a critical time for banks. While they are needed for regulatory control of finances, consumers are beginning to switch their allegiance to anyone who can provide them a better experience. Its up to banks to re-establish a connection with their customers and provide a better user experience or they will be relegated to purely the back-end role of banking.

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Reader Comments (1)

In linkPayee for ach there is payeeaccountNumber and accountNumber in ach ,why there are two accountNumbers are they same?

March 12, 2013 | Unregistered Commentersachin

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