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There should be more of this. Much more. From different angles and view points but with the same clarity and directness. Banking is in a deep, existential cris

There should be more of this. Much more. From different angles and view points but with the same clarity and directness. Banking is in a deep, existential crisis for decades now and the march of digitization only increases the pressure to find a way forward. In response techno-solutionists imagine all sorts of replacements, whether it is "fintech", or "banking-as-a-service" or "crypto" but all are hopelessly shallow and incomplete, almost insultingly crude. What is entirely missing from these neobanking movements is any straight definition of what is the purpose of banking and bankers. What is their irreducible value proposition that cannot be delegated to machines and algorithms. What is their role in society. Are they allies or enemies of surveillance capitalism? Are their users clients or products? Can there be an honest relation with the sovereign monetary system and the lender of last resort or is private banking a scheme to privatize profits and socialize losses? Last but not least, what role, if any, should they play towards environmental sustainability. The questions and challenges are pilling up and there are no breakthroughs worth mentioning. In a parallel universe we might have something like BN (banking news), where all sorts of individuals, teams small or large, would pimp their blogs, radical ideas, open source solutions or fancy software products, but above all a positive, forward looking vision for a crucial sector.

vkou 3y ago
> what is the purpose of banking and bankers. To borrow money from you, paying you a low interest rate, but allowing you to withdraw it at a drop of the hat, while lending money to someone else, at high interest rates, but on a fixed, multi-year repayment schedule. Borrow short, lend long. It's socially useful, and if the bank does it well, it stands to make a lot of money.
- kayamon 3y ago
  The purpose of banking is to allow people to store their money safely. It is not to allow finance bros to gamble with customer deposits without consent.
  - immibis 3y ago
    The purpose of banking for most people is to put their money in so they don't need to carry cash around, but the purpose of banking for banks has been to make profit by gambling the money people are giving you for safekeeping. A bit like the relationship between Gmail and personal data, really.
- astrange 3y ago
  And the purpose of this is to increase money velocity by providing loans. "Narrow banking" (having the government provide bank accounts) wouldn't work unless the government also provided business loans, which doesn't really make sense.
  - nologic01 3y ago
    Any references to narrow banking been tried and "not working"? Separating the issue of private money from providing commercial credit risk insurance (ala CDS) should be possible.
    - astrange 3y ago
      The Fed won't give you a license to operate a narrow bank. It's been tried; they said it would make private banks insufficiently capitalized.
      - immibis 3y ago
        It should be unconstitutional for them to prohibit that.
        astrange 3y ago
        You'd be fine with a regular law. But like I said, it would affect money supply greatly (ceteris paribus) so there's a lot of consequences to work out.
        immibis 3y ago
        Free countries start from the presumption that everything not forbidden is allowed. It would affect the money supply greatly, but there was a time when every bank was a narrow bank, so isn't it really the fractional reserve banks who came along and affected the money supply greatly? I'm not saying narrow banks are worthwhile, but it's utterly insane that it's illegal for a bank to simply hold $100 bills in a bank vault on your behalf. It's utterly insane that banks are not just permitted, but legally required to lend out your money. And there's a minimum amount, too, because a bank that lends out $1 of each customer's money won't get a license.
- nologic01 3y ago
  Thats a rather incomplete business model description of banking. There are at least three distinct elements and largely unrelated to core banking: payments infrastructure / gatekeeping the private/public monetary system, managing interest rate risk (which is what you describe) and managing credit risk. Add to that countless "non-core" intermediation activities which nevertheless, depending on the type of bank can be major revenue sources. Maximazing social utility is indeed the key question but how to do it in a sustainable and future proof way is hardly ever seriously asked.

vkou 3y ago

> what is the purpose of banking and bankers. To borrow money from you, paying you a low interest rate, but allowing you to withdraw it at a drop of the hat, while lending money to someone else, at high interest rates, but on a fixed, multi-year repayment schedule. Borrow short, lend long. It's socially useful, and if the bank does it well, it stands to make a lot of money.

kayamon 3y ago
The purpose of banking is to allow people to store their money safely. It is not to allow finance bros to gamble with customer deposits without consent.
- immibis 3y ago
  The purpose of banking for most people is to put their money in so they don't need to carry cash around, but the purpose of banking for banks has been to make profit by gambling the money people are giving you for safekeeping. A bit like the relationship between Gmail and personal data, really.
astrange 3y ago
And the purpose of this is to increase money velocity by providing loans. "Narrow banking" (having the government provide bank accounts) wouldn't work unless the government also provided business loans, which doesn't really make sense.
- nologic01 3y ago
  Any references to narrow banking been tried and "not working"? Separating the issue of private money from providing commercial credit risk insurance (ala CDS) should be possible.
  - astrange 3y ago
    The Fed won't give you a license to operate a narrow bank. It's been tried; they said it would make private banks insufficiently capitalized.
    - immibis 3y ago
      It should be unconstitutional for them to prohibit that.
      - astrange 3y ago
        You'd be fine with a regular law. But like I said, it would affect money supply greatly (ceteris paribus) so there's a lot of consequences to work out.
        immibis 3y ago
        Free countries start from the presumption that everything not forbidden is allowed. It would affect the money supply greatly, but there was a time when every bank was a narrow bank, so isn't it really the fractional reserve banks who came along and affected the money supply greatly? I'm not saying narrow banks are worthwhile, but it's utterly insane that it's illegal for a bank to simply hold $100 bills in a bank vault on your behalf. It's utterly insane that banks are not just permitted, but legally required to lend out your money. And there's a minimum amount, too, because a bank that lends out $1 of each customer's money won't get a license.
nologic01 3y ago
Thats a rather incomplete business model description of banking. There are at least three distinct elements and largely unrelated to core banking: payments infrastructure / gatekeeping the private/public monetary system, managing interest rate risk (which is what you describe) and managing credit risk. Add to that countless "non-core" intermediation activities which nevertheless, depending on the type of bank can be major revenue sources. Maximazing social utility is indeed the key question but how to do it in a sustainable and future proof way is hardly ever seriously asked.