CHOICE membership

Neo banks (Google, Amazon, Facebook and Apple) - would you trust them?


#1

Big tech players like Facebook and Google seem to be ready to shake up the banking industry. However, what are the risks and would you trust them?

Add your thoughts in the comments below.


Facebook money?
#2

Wouldn’t use them mainly because of the of the last paragraph in the Choice assessment - Trust.

It has been proven (time and time again) that the companies which plan to enter the neobanking space can’t be trusted with one data. Adding financial data to the pile of data they manage on behalf of their users is even more concerning as I imagine that this data will be shared with other parts of the same business to better profile its users.

At least at the moment the bricks and mortar banks don’t flog off ones financial information to anyone willing to pay for it.


#3

I’m old school. If there is a problem, I want someone I can talk to. Is there is dedicated direct communication channel that can be used if there is an issue, or do you play call centre roulette and end up with staff who have no idea and no answers?


#4

Having observed:
A) How little respect they pay to much larger nations like the EU and how the EU has needed to respond to each of them across a broad range of concerns,
and
B) How little impact our Australian Government is likely to have or ability to control their enterprise.

Why would you bother!

Any one of the four might fail under duress from the EU or the US Govt. If they really pushed the point, where would any Aussie creditor rate in the outcome, under the laws of a foreign country? The same goes for many foreign banks of course? Except they are not exposed in the same way as the other four.

Is a Neo Bank really another descriptor for “Credit provider”?
EG AMP and ING offer banking that is digital only.
While everything they hold may be measured in dollars or equiv, in the end is it just them offering credit to a third party you want to transact with? How do they assure the security of your savings?


#5

In Australia under Australian law our funds are guaranteed by the Australian Government up to 250K for each individual Australian Bank Account - you do not get that guarantee outside the country
Portugal and Greece had all of their Bank Accounts “frozen” when the country was practising austere accounting and tightening their belts… I want to know my money is safe and I can get it when I need it.
.


#6

OT or not? Digital only is not the same as online only. ING Direct has a walk-in ‘lounge’ in Sydney as well as a fairly robust call centre. It is a subsidiary of the Dutch ING Group and is registered in Australia as a bank and operates as one. They provide full function banking services, even if not as broad as some.

FWIW I spent a few years with Bank of Melbourne and their shop-front staff often had to do many minor things through the call centre and often asked why I did not just ring their call centre myself. It seemed the branch staff could instruct on using the ATM, take deposits, pretend the tellers were ATMs for withdrawals, ‘sell’ and ‘buy’ coins, help fill out forms, and (try to) sell insurance. With ING I know to just ring (or email) or use the app and overall have encountered equal or much better service than from BoM, as well as perks including higher interest for my online savings and not being dudded by those pesky 3% off shore/currency fees.


#7

Some interesting stats on digital payments from Roy Morgan. The report is based on a survey of 50,000 people and indicates that “72.4% [of people] are using at least one digital payment method over an average 12 month period.”


#8

I wouldnt touch this with a ten foot bargepole but some will, so probably worth keeping an eye on.

I also would not touch google money, or the Apple credit card (even though I am generally an Apple user). I want my money to be local, so to speak.

(and thanks for the topic move, just wasnt sure where it belonged)


#9

Right. These companies already have too much of our data. Why would I want to share payment data or assets data with them?

There are differences between a bank and a payment (transaction) mechanism and a cryptocurrency.

For example, PayPal is a payment mechanism but it isn’t a bank as such (you have no need to entrust your life’s savings to them) and it certainly isn’t a cryptocurrency.

A cryptocurrency can be used as a payment mechanism but can also be used like a bank.


#10

I don’t consider that ‘old school’ :wink:


#11

One of the great things about crypto-currencies is that they have no ‘central control point’ to monitor who is spending their money on what. The idea of Zuck-Bucks (thank you Mark Fennell) goes totally against this decentralised and democratised principle.

That said, the model for the neo-banks is already in the wild via online games that make their money via micro-transactions, requiring you first to buy the ‘in-game currency’ with real money to add an abstraction layer and hopefully confuse the gamer into spending more than they intend.

This article is nearly five years old, and doesn’t even touch on mobile games like Pokemon Go or Farmville or Candy Crush.

I suspect that Facebook et al see the value in creating some distance between ‘real’ (fiat) currency and the currency you spend on their platforms - as well as getting their own paws on the cut banks, credit card issuers and other third parties currently take.


#12

Listening to a recent Planet Money podcast episode on the way home this evening, I learned that if you pay the wrong person using Venmo (owned by PayPal) then you are pretty much reliant on that person’s honesty in order to get your money back.

While it’s a US podcast, I suspect the situation would be roughly the same in Australia. This alone makes me somewhat chary of new payment platforms (although I do use PayPal rather than giving my credit card number to countless websites).


#13

Likewise, and if I can use Apple Pay I do that too, so the sites (and B&M stores for that matter) don’t get my CC/DC number.