Transparency in Banking - WTF Does it Mean?

I’ve noticed that in many cases when someone wants to defend Munzo or Starling, or even Revolut they’ll say “They are still more transparent than most” or something along those lines.

From what I can see, all banks report in line with regulatory guidelines, they publish their fees and their stats etc

Can someone explain to me, perhaps using Starling or Munzo as context what this means? Is it just something we tell ourselves to justify why we use our Neobank as opposed to a “legacy bank”.

When the fintechs first kicked off development, I think it mostly meant in terms of fees - the fintechs weren’t planning to have any while the high street banks had loads, usually set at a punitive level to punish transgressions, and it was difficult to find out what the fees would be and they were able to escalate up to an unlimited level, so some people ended up in a lot of financial trouble from simple mistakes.

I don’t think this is the case any more. Due to regulation, rather than competition from the fintechs, banks need to cap the maximum number of fees they can charge and their fees are set out clearly in a document. Arranged overdrafts have been restricted to a simple % interest charge rather than the complex charging structures that used to exist.

On top of this fintechs have added a whole host of fees - not the same ones that are charged by the traditional banks, those still seem to be zero, but other fees which to me feel much more confusing and are more likely to be hit by people during the course of day-to-day banking.

Monzo for example will charge you for depositing cash, and after March so will Starling on anything over £1000 in the year (so complex to work out).

Monzo also have different fees around cash withdrawals based upon how much you pay in to your account or what tier of account you have. Monzo’s charges for cash withdrawals abroad are also more complex than the traditional banks, depending on where you are and how much you are withdrawing.

There are charges for replacement cards with both Starling and Monzo if you get more than a certain number in the year.

Now I’m not making any comment on whether these charges are justified or will work out cheaper than the traditional banks, I think that will differ from person-to-person. What I’m saying this that they’re quite complex and therefore, in my view, not transparent.

The other facet of transparency is being open about your development roadmap and publishing quite a lot about what they’re doing and why. Monzo used to be very good at this, and I found it all very interesting, but I don’t think they are any doing this any longer. I don’t think Starling ever did. So I don’t think they’re particularly transparent in this regard, either.

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I think it’s more to do with how they report this stuff, than just the fact of reporting it. Fees for instance are often hidden away in documents no one reads using jargon that a lot of folks don’t understand. What the fintechs do differently in that regard is in how they share that information, and how easy it is to understand.

As Monzo’s fee and limit structure has grown more complex in an effort to curb their cost of doing business, so has how they present this information. Although it’s still cleanly presented in the app, the wording has become more similar to what you’d expect from a Virgin Media bill.

In short, transparency is making the data and information you share inclusive. That is it’s easy for anyone and everyone to find and it’s easy for everyone to comprehend.

There’s a whole host of other stuff that falls into this category as well. Triodos for example, are incredibly transparent about where they invest, who they loan money to. Big banks really aren’t. The information is probably out there in some official capacity but I wouldn’t know where to start looking for it. Triodos on the other make that stuff dead easy to find and practically throw it at you!

Another element folks care about is how the banks are making money, how they profit from you. Monzo are particularly good and forthcoming with that stuff. Barclays not so much.

And for a few of us geeks who like knowing how the stuff in this world actually works, fintechs have been great on sharing that too! A big bank would have never made an infographic like this for instance:

There’s a paradigm amongst older companies, more of a fear really, that transparency puts their business at risk. In actuality, I think it curates better competition, resulting in better and fairer products and services for us all. That’s why I applaud companies who try do better here. Lack of transparency just nurtures the status quo and leaves us stuck with an oligopolistic-like market.

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It’s just something that Monzo in particular (and to a lesser extent Starling) used to love to proclaim “we are transparent”. The faithful lapped it up, and in the early days there was some truth to it (not so much in terms of fees, imho, as these and the format in which these need to be outlined is regulated), but more in terms of explaining development priorities and schedules.

Also in terms of - again in the early days - actually involving the community: in the early days the Monzo people understood close to nothing about banking (some might argue many of them still don’t :laughing:) so they figured out much of it on their forum, in cooperation with and with help from the regulars. Which was somewhat endearing and transparent.

But nowadays it’s just an empty cliche. Something they like to wheel out whenever it turns out that they are no better (and in many instances worse) than their competitors: “at least monzo is transparent”. Something they like to proclaim and point to either (a) some staff on their forum who act like they know everything and are in direct daily contact with TS Anil, but in fact have no clue, or (b) those bygone times, (or, c, think it’s one of those microp statements that’s so self evident and beyond reproach that it doesn’t need any substantiation)

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I think Anne might be readfing the forums :rofl:

Apparently you only get more transparency if you’re on Android

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So you do…

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