Nathaniel Popper writes at the NYT that the Citizens Bank of Weir, Kansas, or CBW, has been taken apart and rebuilt, from its fiber optic cables up, so it can offer services not available at even the nation’s largest bank. The creation of the new bank, and the maintenance of the old one, are the work of Suresh Ramamurthi and his wife, Suchitra Padmanabhan who were born in India and ended up buying the bank in Kansas in 2009 after living in Silicon Valley and passing through jobs at Google and Lehman Brothers. Their goal was to find solutions to logjams that continue to vex consumers all over the country, such as the obstacles that slow money moving from one bank to another and across international borders. The new services that CBW is providing, like instant payments to any bank in the United States, direct remittance transfers abroad and specialized debit cards, might seem as if they should be painless upgrades in an age of high-frequency trading and interplanetary space missions. But the slowness of current methods of moving money is a widely acknowledged problem in the financial industry.
In the United States the primary option that consumers have to transfer money is still the ACH payment. Requests for ACH transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits. ACH technology was created in the 1970s and has not changed significantly since. The clunky system, which takes at least a day to deliver money, has become so deeply embedded in the banking industry that it has been hard to replace. CBW went to work on the problem by using the debit card networks that power ATM cash dispensers. Ramamurthi’s team engineered a system so that a business could collect a customer’s debit card number and use it to make an instant payment directly into the customer’s account — or into the account of a customer of almost any other bank in the country. The key to CBW's system is real-time, payment transaction risk-scoring - software that can judge the risk involved in any transaction in real time by looking at 20 to 40 factors, including a customers’ transaction history and I.P., address where the transaction originated. It was this system that Elizabeth McQuerry, the former Fed official, praised as the “biggest idea” at a recent bank conference. "Today's banks offer the equivalent of 300-year-old paper ledgers converted to an electronic form -- a digital skin on an antiquated transaction process," says Suresh Ramamurthi. "We'll now be one of the first banks in the world to offer customers a reliable, compliant, safe and secure way to instantly send and receive money internationally."
(Score: 3, Informative) by Kell on Monday December 15 2014, @02:01AM
Of course, the elephant in the room is that while banks sit on your money waiting to transfer it, they are using it as capital to invest (effectively taking the interest that would otherwise be yours). Banks have no incentive to be quick with payments for mom-and-pop clients.
Scientists ask questions. Engineers solve problems.
(Score: 2, Informative) by Anonymous Coward on Monday December 15 2014, @03:15AM
As a volunteer for a small organization I keep track of one-time membership fees (~USD$500) that come in to the USA from university students around the world. At first I accepted international bank transfers, but this quickly turned into a nightmare with multiple banks taking additional fees. The other problem was tracking--money would appear in our bank with no reference as to the source. I've now settled on two expensive options, Western Union and PayPal which take about 8%(?) and 4% fee respectively. At least these services work reliably and consistently.
The really crazy thing is that the best option (easiest for me--remember, I'm the volunteer) is to send me a USA check. Often a non-USA student can get a relative or former classmate that lives in USA to send me a check.
I sure hope that Citizens Bank of Weir, aka CBW are able to solve some of these international problems. tfa is very positive and also mentions that this bank also supports https://globalremit.com/publicPage/faq [globalremit.com] So far this only processes payments from USA to India, for a very low fee. Hopefully this service will expand.
(Score: 0) by Anonymous Coward on Monday December 15 2014, @06:52AM
With money going in and out all the time, what difference does 1 day for 1 customer make out of all of the customers? Unless the bank sees panic withdrawals, there is capital to invest.
(Score: 2) by davester666 on Monday December 15 2014, @07:51AM
Banks are no longer [if they ever were] to help you with your money.
They are now to help themselves to your money.
(Score: 2) by Magic Oddball on Monday December 15 2014, @10:15AM
That's why I dropped my old bank (the second I'd used) and switched to a credit union in my area everyone seemed to really like — they're owned by the members, controlled by volunteer boards, and any profits have to be spent to improve things in a noticeable way, like reduced/eliminated fees, more ATMs, etc. So far it's been a hell of a lot nicer to deal with than the two nationwide banks I used.
(Score: 2) by M. Baranczak on Monday December 15 2014, @10:36PM
I've done the same thing, and I'd recommend it to everybody. The only downside is ATM fees when I'm traveling out of town (my credit union only has about a dozen ATMs). But considering how much I save on the other fees, I still come out ahead.
(Score: 2) by urza9814 on Tuesday December 16 2014, @02:24PM
Add me to the list of satisfied credit union members as well.
Mine actually refunds ATM fees, which is great. There is a limit -- I think it's $12/month for me right now, but that's 3-4 ATM uses which is plenty since I mostly pay for everything with my card. The limit changes somewhat depending on how many of their services you use (ie, if you have loans, a credit card, direct deposit, etc) and I think the max is $20/month.
Funny thing is, my credit union is PSECU -- the Pennsylvania State Employees Credit Union. I'm not a PA state employee (my mother is -- though I think they're open to the public now anyway) and I don't even live in PA. I live in Rhode Island. The nearest branch of my bank is around a thousand miles away, has been for three years, and it's literally never been an issue. I can do everything online or at any bank's ATM with no fees.
Then there's their "negative fees". See, at the end of every year they redistribute the majority of their profits back to the members, based on how much money is in your account and how many of their services you use. So where many banks charge a fee for using a debit card, my bank pays me a couple bucks a year for it. They pay you for having direct deposit, they pay you for using electronic statements, they'll even pay you for having a loan or a credit card. It usually doesn't work out to much (I got $16 last year -- didn't qualify for much though 'cause I don't have much money) but it sure beats paying a fee!
(Score: 2) by zeigerpuppy on Monday December 15 2014, @11:06AM
I was changing coins for notes at a bank one day and the teller was trying to get out of their duty by saying they'd only change the money if I was a customer at that bank. I asked, "is this a bank?"; "Yes sir", "well then do your [internal monologue=fucking] job and change my money [bitch]". Of course they agreed.
Anyway, the old guy at the teller next to me then made a classic comment, "they screw you on the way in... and on the way out"
(Score: 0) by Anonymous Coward on Monday December 15 2014, @12:12PM
Banks have a duty to change your money?
(Score: 0) by Anonymous Coward on Monday December 15 2014, @03:02AM
VERY efficient on mainframes, having been tuned for this exact function for the past 50 years.
And, as the other AC said, banks get the float.
(Score: 2) by edIII on Monday December 15 2014, @11:49PM
Mod AC +5 Informative.
IBM did indeed get their hands into the whole mess quite deep as even today you must encode ACH batch transactions with the X9.37 [x937.com] format:
Writing classes for the stuff is incredibly fun. Forget about using anything other than IBM mainframe era formats and technologies when making these batch files. The level of work you go through to essentially perform a database export from modern platforms into this archaic format is hysterical. We may have as well handed the information and data to wonderfully sweet couriers who's mentally challenged status only makes them handicapable.
It really is a joy though from the perspective of writing flat file formats and normalized data. Just a really really oddball and strange way to wrap records into bunches of records, themselves being bunches. Anybody who remembers dealing with data structures before the widespread use of database servers will appreciate it.
Otherwise, you would get so amazingly angry that you needed to spend a week at a time coding multiple "slightly customized" X9.37 filters to make these little beauties. You might want to yell and say, "There has to be a better $*%&%$ way than this. We're smarter than this. *Sob*"
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 1) by Buck Feta on Monday December 15 2014, @03:10AM
> software that can judge the risk involved in any transaction
I'm going out on a limb here to predict that this will end badly for someone.
- fractious political commentary goes here -
(Score: 1, Informative) by Anonymous Coward on Monday December 15 2014, @03:23AM
ACH sure beats the damn checks we had to write and mail until recently. For Europeans reading this: the default way to pay bills in the US is to write out a check and send it via mail. Some banks allow you to set up payments via an automated transfer system, but free-form transfers (i.e. to your new best friend you met yesterday) are still rare, but several online banks are starting to offer this. Before ACH became widely available in the 1990s, the only choice for fast transfers was a wire transfer, which cost about $25 for the originator and as much for the recipient. At that point, it was cheaper and safer to just send a check via Fedex.
(Score: 2) by Justin Case on Monday December 15 2014, @04:19AM
Does this mean the hackers can drain my account instantly instead of having to wait 24 hours?
Frankly, until computer security gets a lot better, I'd rather switch to a bank that promises to go back to paper exclusively.
(Score: 2) by bradley13 on Monday December 15 2014, @10:42AM
This is an area where the US banking system is really outdated. In Europe, you can know my account number, routing number, bank number, IBAN number, or whatever number your little heart desires. This gives you the ability to transfer into my account, but you have no ability to take money.
In the US, given the information on the bottom of a check, you can withdraw money from the account quite easily. This is (afaik) part-and-parcel of the ACH system. There can be no excuse for such a gaping security hole existing in modern times.
It's not entirely clear, but it looks like this new system would not include such a hole, though it does nothing to plug the existing one.
Everyone is somebody else's weirdo.
(Score: 1) by FlyingSock on Monday December 15 2014, @02:14PM
Actually, at least in Germany, you can also take money out of my account. BUT, the bank is legally obligated to refund the money to me, if you erroneously take money from my account, and I inform them of this in a set time frame (4 weeks).
This gives banks a strong incentive to check what kind of requests are coming in. Further I would assume that banks cooperate in getting the money back, that they had to refund to the customer.
(Score: 2) by jelizondo on Tuesday December 16 2014, @04:14AM
Using a U.S. Bank, yes, you are right. But parent was referring to non-US banks. You can have all the numbers your little hearth desires, but without my token (a physical one) you may not get any money out of my account.
U.S. banks are so backwards it's unbelievable. Just across southern border, every bank will demand three things before they let you transfer money out of an account using the Internet: a username (or card number), a password and the code generated by the token. Got three out of two? Sorry, our of luck!
Also, banks will transfer money to any other bank the very same fucking minute! Why does it take days to get a transfer in the U.S.? I keep two accounts in Mexico at two different banks, and for tax purposes, I transfer money from one to the other routinely. It's click on OK and wham! it appears in the other bank's account!
And don't tell about international transfers. Last year I wired some money to my daughter in South Africa and it took two WHOLE weeks for the money to arrive. I should have used PayPal, even it is more expensive.
What keeps U.S. banks so backwards that even a Third World Country can offer better services?
(Score: 2) by urza9814 on Tuesday December 16 2014, @03:01PM
As an American, that sounds...slow and difficult.
If someone wants to give me money, all they have to do is write the amount on a piece of paper and sign it (ie, write out a check). Once that check is in my hand, I can have the money available to withdraw from my account in under a minute. It doesn't take days. I don't have to call the bank, I don't need usernames and passwords and some temporary token key. I take the check, take a photo of it with my phone, and the money is in my account available for withdrawal instantly. And the image of the check (both those I write and those I deposit) is included in my bank statement so I have a perfect record of where the money came from or went to and why.
It's not the most secure thing in the world, but I can't really think of a more convenient system.
There's two places where I use online transfers. One is to pay my credit card bill, the other is my taxes. The credit card bill isn't bad, they store the account details and I just give them a payment amount and a date to pay it. The taxes are a huge pain though, gotta reenter all the details every year and half the time I transpose a digit or put in my saving account number instead of the checking account number and then I've gotta jump through hoops to get it corrected or they notice the error and end up mailing me a check or bill (which I usually prefer, but they charge a fee)...mailing a check is just a hell of a lot easier to me, you can't screw it up and you don't have to memorize a bunch of long strings of digits.
The beauty of a paper check is that all you need to know is who you're paying and how much you're paying them. There *are* reasons we built an ecosystem around the paper check instead of bank transfers. Paper checks aren't so good for crossing national borders, which is probably why Europe was so much quicker to get rid of them. Americans don't generally do much of that. So instead of focusing on better bank transfers, American banks focused on better check processing. Which has worked out pretty well as far as I'm concerned. This isn't the '90s anymore; even a paper check can be pretty much instant. Hell, you could even send one by email or SMS, although you'd usually use an "e-check" there (which is basically just a bank transfer in disguise.) Or are you not familiar with those features due to dealing with so many backwards foreign banks? ;)
(Score: 2) by jelizondo on Tuesday December 16 2014, @08:41PM
Right, only thing I need to do is send a U.S. paper check to pay my suppliers in Mexico...
Thank you for pointing it out.
Except, of course, that it will not work and having checks (even e-checks) does not make U.S. banks the best in the world.
And you know what is funny, one of the banks I used (not anymore) in Mexico was Citibank, which offers all the electronics transfers you need, uses security tokens, has an App for managing your account and all the goodies, which they DON'T offer in the U.S. Why offer better and cheaper services south of the border? Because Americans are used to lousy banking services and in Mexico they must compete against BBVA and Santander (Spain) which offer European-style banking.
Get out of the basement more often my friend.
(Score: 2) by urza9814 on Tuesday December 16 2014, @09:00PM
So...the only flaw you found with what I said was the flaw I explicitly pointed out in my post?
(Score: 4, Informative) by Leebert on Monday December 15 2014, @04:22AM
Planet Money did a great piece on ACH last year: http://www.npr.org/blogs/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy [npr.org]
What's interesting is that, according to them, American banks in 2012 voted against replacing ACH, for reasons which seem rather silly (concerns over fraud, the associated cost, and an apparent need to increase staff to accommodate the new system). They mention one reason that I think is a bit more likely: Fast transactions might cannibalize existing revenue streams (e.g., expensive wire transfers which are faster than ACH).
(Score: 3, Interesting) by SuperCharlie on Monday December 15 2014, @04:47AM
Also it would stop the scheme of the bank selecting what order to post things to maximize overage charges I would think.
(Score: 2, Informative) by Anonymous Coward on Monday December 15 2014, @04:52AM
There is a couple other little tricks they like to use on people who ride the edge (usually people with little money).
They will order the transactions largest to smallest. This has the effect of maximizing bounced checks.
They will usually do deductions before additions.
Basically they pull things out of order to maximize fees. My wife was on that treadmill for a couple of years. She could put in 100 bucks cash write a check for 75 that day and have 25 at the beginning yet still get bounced on the fee. Oh and the fee would eat whatever was left and then bounce the next check the next day. If they had done the transactions in order she would have been fine. Oh then if you get someone who is a dick they will double submit it and you get double fee charged. It took an act of congress to get rid of those fees.
(Score: 2) by jackb_guppy on Monday December 15 2014, @12:15PM
In the '70s, when I was in college, we were to write bank software. I wrote it debit, large to small, then credits ,large to small. Instructor told me the was wrong way to do it! It is the order of recept is only correct way. I guess I was ahead of the curve.
(Score: 0) by Anonymous Coward on Monday December 15 2014, @05:30AM
I'm ALL OUT OF GUM!
(Score: 1) by macson_g on Monday December 15 2014, @09:44AM
Now, just get rid of this 'cheque' thing, and you'll be almost at European level of technology!
(Score: 2) by VLM on Monday December 15 2014, @07:09PM
Could you guys PLEASE just come over here and invade us and force your banking system, health care system, multiple political party system, and high speed internet service on us? It doesn't really matter which country, because the USA is so F'ed up that any of you would be an upgrade. Heck, even Turkey.
(Score: 0) by Anonymous Coward on Monday December 15 2014, @10:45PM
Short of the invasion (wishful thinking?), does anyone know of a USA bank that is also a member of the Euro banking system? This might make Euro electronic transfers possible when I'm (in USA) dealing with someone in Europe?? Could be reversed too, a Euro bank that has offices in USA that takes USD deposits and can use the USA system (Routing numbers, paper checks and etc).