Archives for banking



The Inefficiency of Long Hours

Writing for The New Yorker, James Surowiecki explores the downside of working long hours:

The perplexing thing about the cult of overwork is that, as we’ve known for a while, long hours diminish both productivity and quality. Among industrial workers, overtime raises the rate of mistakes and safety mishaps; likewise, for knowledge workers fatigue and sleep-deprivation make it hard to perform at a high cognitive level. As [David] Solomon put it, past a certain point overworked people become “less efficient and less effective.” And the effects are cumulative. The bankers [Alexandra] Michel studied started to break down in their fourth year on the job. They suffered from depression, anxiety, and immune-system problems, and performance reviews showed that their creativity and judgment declined.

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Massimo Young Reports from Kenya: The Surprising Secret to Banking Success

My good friend Massimo Young recently moved to Kenya, where he is seeing what happens when you mix a little American ingenuity into a thriving but chaotic developing economy.  In what I hope is the first of many blog posts, Massimo reports on just what it takes to succeed in the banking industry in Kenya.  (Massimo does not have a financial interest in any of the companies discussed in his post, although he wishes he did!)

M-PESA: The Story of the Most Successful Bank in Kenya
By Massimo Young 

It’s not easy to do business in Kenya. Business people complain all the time that despite a wealth of opportunities, there are often major roadblocks to accomplishing much on the ground, especially at scale. In fact, Kenya ranks 121st out of 185 countries in the World Bank’s “Ease of Doing Business” survey.

On the other hand, there are some amazing examples in recent years of businesses that have managed to accomplish a lot very quickly. In particular, the wild success of mobile banking in Kenya has changed the way people use money here. Launched just 5 years ago, Kenya’s leading mobile money transfer service, M-PESA, now processes a total of about $5 billion in transactions per year, equivalent to an astounding 15% of the country’s GDP. Before it launched, only 14% of Kenyans participated in the formal banking sector. Today, about half the adult population uses M-PESA. Read More »



One Man’s Story of a Very Unwilling Bank

A reader we’ll call H., who’s in the rental-property business, writes in with a bizarre story about his bank. Assuming it is at least 60% true from both sides (his side and the bank’s), what are we to make of this?

My partner and I were looking to obtain a small business loan. Our banker told us that loans are very hard to obtain because banks are being very stringent. Not like we were going to shut down without a loan, but we figured it could help us grow the business. So, in an effort to build credit (and a good relationship) for our business with a major U.S. bank, my partner and I proposed to our banker that we would give him $50,000 cash to hold onto and in return, have the bank loan us $50k for 5 years. Basically we were securing the loan with cash as collateral. This way, we could prove to the bank that we are a responsible business and were hoping that after this first loan, the bank will be willing to lend to us in the future with more favorable terms.

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An ATM Gone Wrong — The Triumph of Little Computers?

I recently switched banks, to Chase. So far, it’s been a pretty good experience. Indeed, the bank does a lot of very good things from a customer-service perspective.

But:

While using an ATM, I wasn’t able to pull up a list of recent transactions. I was sure I just wasn’t finding the right menu. I could print out the recent transactions but I didn’t want to print it out; I just wanted to look at it on the computer screen. Having failed to figure it out after a few ATM visits, I wrote to the very helpful and smart Chase employee who helped me set up my accounts. He confirmed that I couldn’t get recent-transaction data via the ATM screen. Furthermore, he wrote:

Your only other options at this point are:

1) Enroll your mobile phone for Chase Mobile which will allow you to receive a text message of recent history

2) Download the Chase iPhone application which will allow you to access real-time transactions

3) Stop in and sit with a banker who can show you recent transactions/pending or posted

At this time, there is no alternate way to view recent history at a Chase ATM.

I apologize for the inconvenience.

Wha? “Sit with a banker” to see my recent transactions? Shall I bring my collection of buggy whips to pass the time while waiting? Read More »



Goldman Sachs Stumbles: The End of the “Vampire Squid”?

A few years ago, a friend of mine who used to work on Wall Street told me that the only stock anyone needed to own was Goldman Sachs. He was of course half-joking (I sure hope this wasn’t the advice he was giving clients), but his point was clear: whatever price increases were happening out in the world, whatever profits were there for the taking, no matter the market, you could be fairly certain that Goldman was on the scene.

The image of Goldman Sachs as some sort of omnivorous, ever-present beast was perpetuated by Matt Taibbi in his 2010 Rolling Stone article, in which he dubbed the firm “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” And that was just the second sentence.

It would appear that the squid has since had a few of its tentacles lopped off, or at least been shrunken down to size. For only the second time since it went public in 1999, Goldman Sachs has posted a quarterly loss. Read More »



Security Overkill, Diaper-Changing Edition

I’ve been thinking a bit lately about security overkill. This includes not just the notion of “security theater” — security measures meant to inspire comfort by mere show of force/complexity — but the many instances in which someone places a layer of security between me and my everyday activities with no apparent benefit whatsoever.

My bank would surely argue that its many and various anti-fraud measures are valuable but in truth a) they are meant to protect the bank, not me; and b) they are cumbersome to the point of ridiculous. It’s gotten to where I can predict which credit-card charge will trigger the bank’s idiot algorithm and freeze my account because it didn’t like the Zip code where I used the card.

And security overkill has trickled down into the civilian world. When the class parents at my kids’ school send out a list of parent contact info at the start of each school year, it comes via a password-protected Excel spreadsheet. Keep in mind this list doesn’t contain Social Security numbers or bank information — just names, addresses, and phone numbers of the kids’ parents. I can imagine the day several months hence when someone actually needs to use the list and will find herself locked out by the long-forgotten password. Read More »



FDIC Takes Aim at Bank Arbitrage Profits

The FDIC has imposed a fee that makes it more expensive for banks to borrow in the overnight ‘repo’ market. The intent appears to be to reduce easy arbitrage profits for big banks and smooth credit markets in the long term. Read More »



Mobile Banking Takes Off in Kenya

A new paper by William Jack and Tavneet Suri looks at M-PESA, a mobile-money transfer service in Kenya. Mobile banking has become particularly popular in the developing world, where safe, reliable banking has historically been limited, and often available only to the wealthy. The authors conclude that M-PESA has been wildly successful in Kenya: “We estimate that M-PESA had reached nearly 40 percent of the adult population after a little more than 2 years of operation, and that now, approaching only the fourth anniversary of its launch, is used by more than two-thirds of households.” Read More »