> fraud, money laundering, regulations, and legal compliance
A billion times over. I'm very passionate about changing banking, but the reality is that every single 'new' model breaks down when you take into consideration the overhead created by compliance and fraud prevention.
It's a fundamental flaw in defining the problem correctly. If you think banking is just shuffling bits around, then it looks like a trivial problem. But if you think it's a problem of allowing legitimate transactions while limiting fraud and fighting money laundering et al then it's a much thornier problem to tackle.
I think your claim about fraud prevention is fair. However, because compliance and regulatory issues have dramatically shifted, Dwolla might have a competitive advantage in this area.
If you believe that recent regulation (Dodd-Frank, et al.) ensures better outcomes for consumers than past-regulation, you'd think it'd be easier for new entities to comply because they're not hindered by institutional baggage and said entities will share the sentiment and spirit of their regulators. If that's the case, it's a win for consumers.
Comments
> fraud, money laundering, regulations, and legal compliance
A billion times over. I'm very passionate about changing banking, but the reality is that every single 'new' model breaks down when you take into consideration the overhead created by compliance and fraud prevention.
It's a fundamental flaw in defining the problem correctly. If you think banking is just shuffling bits around, then it looks like a trivial problem. But if you think it's a problem of allowing legitimate transactions while limiting fraud and fighting money laundering et al then it's a much thornier problem to tackle.
I think your claim about fraud prevention is fair. However, because compliance and regulatory issues have dramatically shifted, Dwolla might have a competitive advantage in this area.
If you believe that recent regulation (Dodd-Frank, et al.) ensures better outcomes for consumers than past-regulation, you'd think it'd be easier for new entities to comply because they're not hindered by institutional baggage and said entities will share the sentiment and spirit of their regulators. If that's the case, it's a win for consumers.