3 ms·
This is not true. Transaction volume for consumer banking, even including credit card processing, is minuscule - a heavy customer might generate a half-dozen t
by fiatmoney 13y ago
This is not true. Transaction volume for consumer banking, even including credit card processing, is minuscule - a heavy customer might generate a half-dozen transactions over the course of a day, and many of those (particularly credit card transactions) are able to be asynchronously processed over the course of days or weeks.
Ultimately banks are in the business of money management, not money tracking and have been for the 700 or so years they've been around in recognizable form.
Whether they could do this with less overhead than they presently do with new technology is a separate issue.
- karanbhangui 13y agoCommercial banks have substantial trading activities on their balance sheet as well. I'm not sure I understand your distinction between management vs. tracking, but systems that forecast the balance sheet to assess interest/market/credit risk need to be fairly sophisticated. Running a bank effectively goes well beyond correctly tracking deposits and other transactions.
- dkimerling 13y agoI beg to differ. In a world of fraction-reserve banking, banks are in the business of capital aggregation and debt issuance - in order to generate all important "spread". But, that world - the world for the past ~700 years - is disappearing. We live in a world with collapsing credit spreads and Basel III will tighten them even further. In the US, Dodd-Frank's prohibition on lots of fee based income (which was a huge profit center for banks) and the disappearance of debit inter-change due to Durbin makes banks very concerned about the future of their business. Banks are increasingly turning to transactional systems to make money.
- eldavido 13y agoHi Dan I have a friend inside Capital One who tells me they're very concerned about the future of the industry. In a nutshell, C1 makes money three ways: (1) debit interchange, (2) net interest margin (NIM) and (3) fees. Dodd-Frank basically killed debit interchange and fees (esp. with the overdraft changes). If you think spread will keep collapsing, I'm not sure what's left revenue-wise.
- sharkweek 13y agoEh, consumer banking sure, but most focus in banking is rarely around the small consumer, as most people with just checking accounts cost the bank money because of how little they interact with the bank financially -- They only become profitable with 1) a mortgage or lots of debt 2) a lot of money I worked at one of the large banks on a commercial operations team (terrible job btw) -- the sheer amount of data surrounding transactions that came through our office alone was ridiculous and barely manageable.