About 8 weeks ago, FedFin found that a four-figure check had gone astray like so many others have for other people. We thank the USPS inspector who brought to our attention that the name of the depositor wasn’t even close to that of the payee, something one likes to think banks notice, even though none did. Given this initial goof, perhaps I shouldn’t have been surprised by how hard it is not only to remedy the loss but also to strengthen our firm’s payment practices. We agreed with the bank that they needed modernization, but three weeks after gaining the audience necessary to file the claim and ask for help, our administrators are still mired in paperwork, not enjoying the enhanced protection for which we agreed to pay for on the spot. And our lost money? Don’t even ask.
At a time of soaring fraud at ever-higher cost to banks, one might have thought ours would have been eager to facilitate our update. After all, we lose use of stolen funds, but the bank is obliged to repay us and take the loss. Which bank is on the hook is of course a battle between banks, but the payer-facing bank is the one that needs to keep the customer. I am sure the bank at every managerial level knows this, but bank culture is often so immutably mired in rigid processes and procedures that critical jobs never get done. Why is it so hard not just to get fraud remediation – yes, I know this means the bank must send us money – but even to get effective fraud-prevention software as quickly as possible?
Which brings me to the policy topic of the day: the imminent arrival of super-empowered nonbank competitors at every step of the banking value chain. This is a particularly inopportune time for banks to make us wish we could do without them.
The President’s “golden age of crypto” dawns with the biggest realignment in bank powers in almost thirty years. The 1999 Gramm-Leach-Bliley Act allowed banks to compete with securities firms, asset managers, and insurers. In 2025, the stablecoin law, changes to crypto-market regulation, and the new Administration’s digital-asset policy all mandate, promise, or contemplate allowing digital-asset companies and even the largest tech platforms into the banking business. This comes without the “functional” GLBA framework designed to mandate a same-activity/same-rule framework for equitable competition. Now, nonbanks can be banks without the muss and fuss of all those pesky rules long imposed on banks to ensure that taxpayer benefits come with costly safeguards and that other people’s money is safe from depredation.
The banking industry’s “culture of compliance” derives from these safeguards, and much of this is a very good thing indeed. But banks must also have cultures of customer service that facilitate problem solving, not endless protocols, forms, and unanswered calls. Our “account manager” was nowhere to be found throughout this entire incident until, likely forced to join a call by senior management, he popped up not to help solve our problem, but to suggest we move money at other banks into his tender keeping. Fat chance.
Bank customers have long been not just “sticky,” but glued on. The challenges of account transfer combined with the dubious cultures at bank competitors kept customers with their long-time providers. The account that experienced fraud was at this bank for at least twenty years. It takes a lot to make us move, but we’ve been through a lot, and the fraud is still unresolved even though we followed every protocol the bank demanded and presented each and every form it wanted. And we take new risks each day our fraud-prevention software is still mired in delays related to unresolved training schedules and God knows what else that prevents the bank from helping us do at a cost to us that which saves it money.
Even if the open-banking rule is rewritten into far more sensible form, banking is set to get a lot more competitive. If the crypto revolution proceeds as planned, then a good deal of this competition won’t be fair and many of the services won’t be safe, but no matter. Banks that serve customers as poorly as ours are at risk and it serves them right.