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posted by LaminatorX on Monday December 15 2014, @01:53AM   Printer-friendly
from the credstick dept.

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."

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  • (Score: 4, Informative) by Leebert on Monday December 15 2014, @04:22AM

    by Leebert (3511) on Monday December 15 2014, @04:22AM (#126081)

    Planet Money did a great piece on ACH last year: []

    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).

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  • (Score: 3, Interesting) by SuperCharlie on Monday December 15 2014, @04:47AM

    by SuperCharlie (2939) on Monday December 15 2014, @04:47AM (#126084)

    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

    by Anonymous Coward on Monday December 15 2014, @04:52AM (#126087)

    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

      by jackb_guppy (3560) on Monday December 15 2014, @12:15PM (#126131)

      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.