Why is U.S. commercial banking technology seemingly a decade behind that of other countries I’ve lived in?
Banking
Asked by Question Bot02/Mar/20141 answer
1 Answer
F
Faisal Khan
Answered 02/Mar/2014
The US has a very large financial footprint. What was working fine, the old-age saying, if it ain't broke, don't fix it! applies very well to the American financial & banking system.
Any improvement that usually came into the banking or payments system was either driven by the very large banks themselves or by the regulator. Layered based services (such as PayPal, etc.) that ride or function on top of the banking layers found innovation to be easy, provided they could join their system with the old cracking banking system.
Today, it is viewed in most quarters that any changes to the banking system means someone is going to go out of business or lose a significant portion of their revenue. This is one reason why there is no real-time financial switch in the US that allows instant bank to bank transfers, or why a real-time RTGS doesn't work in the US. Reason? The float on the money and the disruption it will cause in the ACH vertical.
Changes are coming, slowly. Between innovation, regulatory compliance, business expansion, etc. banks don't have it easy to draw up a consensus and work towards that. Most concerted efforts by banks are usually externally driven.
By removing or updating a certain practice, etc. banks have to look at both Federal and State Laws. Its not always easy trying to balance such an eco-system. For example if a bank went 100% digital, someone might bring up a law that cites this as a form of discrimination for people who do not have a computer or access to computers, etc. You never know what law will spring up, for the US is known to have all the weird laws (like not being able to take a Lion to the movies in Baltimore! What's up with that?).
There exists a very sane reasoning (read: money) for the way things are the way they are in the US right now. Disturbing or brining about a change in status-quo requires either a hand-me-down kind of an order, regulation or more money-making in changing what is current.
Any improvement that usually came into the banking or payments system was either driven by the very large banks themselves or by the regulator. Layered based services (such as PayPal, etc.) that ride or function on top of the banking layers found innovation to be easy, provided they could join their system with the old cracking banking system.
Today, it is viewed in most quarters that any changes to the banking system means someone is going to go out of business or lose a significant portion of their revenue. This is one reason why there is no real-time financial switch in the US that allows instant bank to bank transfers, or why a real-time RTGS doesn't work in the US. Reason? The float on the money and the disruption it will cause in the ACH vertical.
Changes are coming, slowly. Between innovation, regulatory compliance, business expansion, etc. banks don't have it easy to draw up a consensus and work towards that. Most concerted efforts by banks are usually externally driven.
By removing or updating a certain practice, etc. banks have to look at both Federal and State Laws. Its not always easy trying to balance such an eco-system. For example if a bank went 100% digital, someone might bring up a law that cites this as a form of discrimination for people who do not have a computer or access to computers, etc. You never know what law will spring up, for the US is known to have all the weird laws (like not being able to take a Lion to the movies in Baltimore! What's up with that?).
There exists a very sane reasoning (read: money) for the way things are the way they are in the US right now. Disturbing or brining about a change in status-quo requires either a hand-me-down kind of an order, regulation or more money-making in changing what is current.