Friday, August 26, 2005

PayPal for Banks

I know Berkeley Innovation has had this idea or some similar incarnation of it before, but young people these days need a good method for sharing/transferring money. If we're splitting a bill at a restaurant, or if we're sharing an apartment and need to pay bills, traditional methods of handling these transactions are cumbersome. At a restaurant, the waiter might have to handle multiple credit cards. At home, the sometimes awkward, "Can you write me a check now?" And how about those times when someone just doesn't pay you back? I personally hate playing the money collector.

A better way to do this: Since lots of us young folk utilize online banking, and since many of us are familiar with social netowrking on the web, why don't we connect the two? Say Blaurb and I both bank at Bank of America, and we both have our online handles for online banking.

1) The first feature is that there should be an easy way for me to send Blaurb money for paying for dinner last night or lending me that $20.

2) The second feature uses the fact that most online banking programs have the option to pay bills. How about allowing us to link certain bills to certain accounts so that I can pay a bill while automatically deducting half the bill from the other party?

3) In addition to letting me send money to Blaurb for the $20 she lent me, the system should also allow Blaurb to remind me that I owe her money. She initiates a request to my handle the night that she lends me money. I accept that the debt is real, and then, depending on my settings for how to handle debt, I can either have a reminder hang on my account until I pay off the debt, or I can have it automatically deducted from my account once I accept the debt. The option is there so that young folks who are struggling to pay rent have the flexibility to make sure they don't break the bank. No more awkward, "You owe me money." No more forgetting about that $50 you lent someone last year.

The best part about this is that it would be a win-win for the bank that implements this the best. If I bank with Bank of America, I'd become an advocate and tell all my friends to bank with them too. Because young people are so mobile and have such few assets, the barriers for switching are relatively low. I'm personally changing banks right now because I am moving to San Diego from Berkeley. On a large scale, this could be like MCI's Friends and Family phone plan back in the 80s-90s, where MCI turned customers into spokespeople and sales reps.


Blogger Unknown said...

I agree with you on this Menzies. In fact, I've been floating around this problem in my head for quite some time now. It's not really that easy to start a bank though, so so far it hasn't gone anywhere. Unfort, banks are really slow at this innovation stuff, so the likelihood of one coming out with something like this soon is low.

HOWEVER, funny you should mention BofA, because I don't know if you know it, but they've just started an instant-transfer system for inner-bank money transfers. No fees, just an easy way to transfer to your friends and better than the old bill payment, because they don't have to wait for a check.

It's certainly a step in the right direction, but they definitely need to read your blog and implement some of these ideas for invoicing.

Wanna start a bank?

1:31 PM  

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