Bank Stupid

In the last year I’ve had to deal with financial institutions more than I would like. I filled in countless of forms, and handed over literally hundreds of documents about my current financial status, and here’s what I’ve learned: everything about this system is a nightmare, and if you’re self-employed it’s a thousand times worse.

Today I tried to apply for a credit card. I already have a credit card mind you, but I wanted one with the same bank our home loan is with so I could transfer money to it without a business-day delay. Easy-peasy right? When I was 18 and earning less than $15,000 a year I was getting offered credit cards with $5,000 limits from multiple banks.

My financial setup is a little complicated, so I’ll spare you the boring bits. The long and short of it is this: because I part-own the business that employs me, I’m technically “self-employed” and so I’d need to provide two years of financial records for the company. Had I been an employee of some random (or even the same) small business, then all I’d have needed was my two most recent pay slips and confirmation from my employer that I worked where I said I did. I had similar problems when applying our home loan, and all because I have a stake in the business.

“Apparently being in control of your own destiny is so foreign to the worker drones in bank-land that they cannot comprehend it.”

Mikey’s thoughts on the issue1

We’re being punished for choosing to create our own wealth; for having some measure of control over our income; for not fitting the standard model that banks would like to see. And the madness is that their risk is less, not more. As an owner, I’m in the driver’s seat, and have the potential to make significantly more than my standard salary. As an employee I’m a passenger who can be pushed out the door at any time.

I understand that banks need do their due diligence when lending people money. And I know the consequences when they don’t. But there’s has to be a better way. The market is ripe for disruption. People are crying out for a bank to give them a compelling experience. To actually help them achieve their financial goals, to really facilitate the day-to-day running of their lives and businesses.

If nothing changes then today’s banks are dead companies walking.

  1. Mikey’s home-loan story is even more ridiculous. His bank would lend his partner the money, but not the two of them together because his “self-employment” was too risky. Derp.