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Because large banks don't have enormous revenue or profits while not being super reliant on the tech lords? Traditional capitalist are doing quite well, I think

Because large banks don't have enormous revenue or profits while not being super reliant on the tech lords? Traditional capitalist are doing quite well, I think.

GabeIsko 3y ago
What bank do you know that doesn't rely on cloud services these days? Heck, when was the last time you even made a transaction that didn't involve a computer? I think the respect to which this worldview holds up is the definition of the "cloud capital" that Yanis has constructed, but isn't really able to make a concrete definition of. He isn't an engineer. But in a banking system, the series of transactions are liable to the bank itself, but can only happen really with the assistance of cloud service providers. In the book, he argues for a more centralized system of payment guaranteed by a government, preferably democratically. Whether you agree or not, it is a compelling lens to look through the emergence of Wechat payments in China, or the rolling out of Fed Now servicing, where governments themselves are trying to centralize computation around payments and transaction settling.
- RandomLensman 3y ago
  They do use them, but at times more than one cloud provider as well as their own data centers. Certainly, the top banks do not fear the large tech companies and I think similarly, it isn't that Amazon wants to pick a fight with JPMorgan. They (simply) do business with each other and banks have been using computers far longer then "big tech" has been around. Also, depending on jurisdiction, using cloud services in banking comes with audit/certain oversight obligations (via the bank and more regulation at least being contemplated). Btw., Europe has had some central bank(s) run settlement system (TARGET and its succesors) for a long time now.
  - GabeIsko 3y ago
    It's not about fearing them - it's about them not having any choice but to do business with cloud providers, and that being the case in every industry. The whole thing gets set by whatever prices a handful of companies decide to charge. You are even starting to see cloud subsume the holdout big iron that is generally used to handle large transaction volume processing. IBM is pivoting towards cloud. AWS is rolling out mainframe emulation. Etc. We accept regulations on financial industries because of how influential they are, but why not regulation on cloud companies and services which offload much of their liabilities? I also don't really think you can point to banks as especially profitable businesses in today's environment. They are getting hammered by high interest rates. I'm not committed to this new construction of the economy, but it is interesting that SVB failed despite being the sole bank for cloud focused start ups. It points to a system where normal finance rules we have taken for granted no longer apply.
    - RandomLensman 3y ago
      Banks generally love high interest rates. Look at JPM clocking in at $13B profit in Q3. Cloud regulation is coming anyway (and as I said, it is kind of already there for some cloud uses in financial services), your idea of all cloud users being pure price takers also doesn't match my experience.
      - GabeIsko 3y ago
        You are cherry picking a bit there. Take a look at [bank stocks](https://www.nerdwallet.com/article/investing/best-bank-stocks https://www.nerdwallet.com/article/investing/best-bank-stock...). The reason banks don't "like" high interest rates is it devalues the market rate all the bonds they usually hold. I guess Chase has done a good job navigating. Regardless, it isn't long term bad for banks because they are getting great rates now. But it still goes to show that banks are ultimately beholden to Federal reserve actions, at the end of the day. Believe me, CSPs absolutely wield power when it comes to pricing. Especially in enterprise deals - those are probably more favorable honestly. But I do think we will see regulation around it. I think of CSPs as utilities.
        RandomLensman 3y ago
        I am always talking about large banks. The main business is not holding bonds, but they can suffer a transitional effect on their portfolios, that's all. Btw., Bank of America just under $8B in Q3. You and I have a different experience regarding unidirectional pricing power, but maybe that is related to the different banks we have in mind.
        GabeIsko 3y ago
        Yeah, we would be fairly in trouble if banks just depended on low rates indefinitely. But more expensive debt is worse for them in the short term - that's what banks sell. I'm talking about in principle. At the end of the day, a healthy dollar that doesn't inflate super hard is better for US banks. Banks are such an odd thing to bring up as proof of a capitalism still working in a macroeconomic sense, because they don't "do" anything. Sure they provide financing, but they don't build roads or bridges or software, or medical equipment, or make movies or anything productive that is supposed to improve our quality of life. Meanwhile, 40% of Americans can't afford a 400 dollar emergency. How is that a sign of healthy finance? I think it is worth considering - how is there a system of life where banks are super profitable, and no one can afford any credit? Yanis puts forward a theory in Technofeudalism - that it is really technology enabling all of this, but there are stark economic consequences. Whether or not that theory is right or wrong, it is compelling to consider. I'm fairly familiar with enterprise software deals at Well's Fargo, from the vendor side. That's all I'm going to say about that. Everyone wants to make a deal, but at the end of the day there are really only 2 cloud providers: AWS and Azure, Amazon and Microsoft. They set the pace, they set the price. Even on bigger deals than banks. At least from where I sit.

Because large banks don't have enormous revenue or profits while not being super reliant on the tech lords? Traditional capitalist are doing quite well, I think.

GabeIsko 3y ago

What bank do you know that doesn't rely on cloud services these days? Heck, when was the last time you even made a transaction that didn't involve a computer? I think the respect to which this worldview holds up is the definition of the "cloud capital" that Yanis has constructed, but isn't really able to make a concrete definition of. He isn't an engineer. But in a banking system, the series of transactions are liable to the bank itself, but can only happen really with the assistance of cloud service providers. In the book, he argues for a more centralized system of payment guaranteed by a government, preferably democratically. Whether you agree or not, it is a compelling lens to look through the emergence of Wechat payments in China, or the rolling out of Fed Now servicing, where governments themselves are trying to centralize computation around payments and transaction settling.

RandomLensman 3y ago
They do use them, but at times more than one cloud provider as well as their own data centers. Certainly, the top banks do not fear the large tech companies and I think similarly, it isn't that Amazon wants to pick a fight with JPMorgan. They (simply) do business with each other and banks have been using computers far longer then "big tech" has been around. Also, depending on jurisdiction, using cloud services in banking comes with audit/certain oversight obligations (via the bank and more regulation at least being contemplated). Btw., Europe has had some central bank(s) run settlement system (TARGET and its succesors) for a long time now.
- GabeIsko 3y ago
  It's not about fearing them - it's about them not having any choice but to do business with cloud providers, and that being the case in every industry. The whole thing gets set by whatever prices a handful of companies decide to charge. You are even starting to see cloud subsume the holdout big iron that is generally used to handle large transaction volume processing. IBM is pivoting towards cloud. AWS is rolling out mainframe emulation. Etc. We accept regulations on financial industries because of how influential they are, but why not regulation on cloud companies and services which offload much of their liabilities? I also don't really think you can point to banks as especially profitable businesses in today's environment. They are getting hammered by high interest rates. I'm not committed to this new construction of the economy, but it is interesting that SVB failed despite being the sole bank for cloud focused start ups. It points to a system where normal finance rules we have taken for granted no longer apply.
  - RandomLensman 3y ago
    Banks generally love high interest rates. Look at JPM clocking in at $13B profit in Q3. Cloud regulation is coming anyway (and as I said, it is kind of already there for some cloud uses in financial services), your idea of all cloud users being pure price takers also doesn't match my experience.
    - GabeIsko 3y ago
      You are cherry picking a bit there. Take a look at [bank stocks](https://www.nerdwallet.com/article/investing/best-bank-stocks https://www.nerdwallet.com/article/investing/best-bank-stock...). The reason banks don't "like" high interest rates is it devalues the market rate all the bonds they usually hold. I guess Chase has done a good job navigating. Regardless, it isn't long term bad for banks because they are getting great rates now. But it still goes to show that banks are ultimately beholden to Federal reserve actions, at the end of the day. Believe me, CSPs absolutely wield power when it comes to pricing. Especially in enterprise deals - those are probably more favorable honestly. But I do think we will see regulation around it. I think of CSPs as utilities.
      - RandomLensman 3y ago
        I am always talking about large banks. The main business is not holding bonds, but they can suffer a transitional effect on their portfolios, that's all. Btw., Bank of America just under $8B in Q3. You and I have a different experience regarding unidirectional pricing power, but maybe that is related to the different banks we have in mind.
        GabeIsko 3y ago
        Yeah, we would be fairly in trouble if banks just depended on low rates indefinitely. But more expensive debt is worse for them in the short term - that's what banks sell. I'm talking about in principle. At the end of the day, a healthy dollar that doesn't inflate super hard is better for US banks. Banks are such an odd thing to bring up as proof of a capitalism still working in a macroeconomic sense, because they don't "do" anything. Sure they provide financing, but they don't build roads or bridges or software, or medical equipment, or make movies or anything productive that is supposed to improve our quality of life. Meanwhile, 40% of Americans can't afford a 400 dollar emergency. How is that a sign of healthy finance? I think it is worth considering - how is there a system of life where banks are super profitable, and no one can afford any credit? Yanis puts forward a theory in Technofeudalism - that it is really technology enabling all of this, but there are stark economic consequences. Whether or not that theory is right or wrong, it is compelling to consider. I'm fairly familiar with enterprise software deals at Well's Fargo, from the vendor side. That's all I'm going to say about that. Everyone wants to make a deal, but at the end of the day there are really only 2 cloud providers: AWS and Azure, Amazon and Microsoft. They set the pace, they set the price. Even on bigger deals than banks. At least from where I sit.