1993-10-11 - Re: The Bank of the Internet!?

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From: “Perry E. Metzger” <pmetzger@lehman.com>
To: cypherpunks@toad.com
Message Hash: 08c970f43db6de8b1067260e9272276de4c5b81a2fe0a4646d5be111946396a7
Message ID: <9310111713.AA18358@snark.lehman.com>
Reply To: <9310111642.AA26409@illuminati.IO.COM>
UTC Datetime: 1993-10-11 17:16:19 UTC
Raw Date: Mon, 11 Oct 93 10:16:19 PDT

Raw message

From: "Perry E. Metzger" <pmetzger@lehman.com>
Date: Mon, 11 Oct 93 10:16:19 PDT
To: cypherpunks@toad.com
Subject: Re: The Bank of the Internet!?
In-Reply-To: <9310111642.AA26409@illuminati.IO.COM>
Message-ID: <9310111713.AA18358@snark.lehman.com>
MIME-Version: 1.0
Content-Type: text/plain

Douglas Barnes says:
> Oh really? :-)
> I worked for First City National Bank in MIS for three years... I'm
> sure Chase has the drop in terms of experience, but you need to realize
> that these institutions are the IBMs of the financial world. How
> much truly innovative tech do you see out of IBM, despite all the 
> centuries of experience locked up in meetings?

Plenty. Find me a workstation with the sort of uptime a 3090 running
MVS will give you. I think this is a matter of neglect and a lack of
market pressure, but let it never be said that IBM's problem was a
lack of technological expertise. They have possibly the finest
manufacturing technology engineers in the world, and world class
computer jocks, even in the mainframe world. They have expertise in
scads. Their problem has always been an inability to understand that
they are in a competitive marketplace. Thats why they are always
suprised when their machines don't sell even though they are priced
too high. They are also too big to manage.

> Also, the Credit Union movement was started by amateurs in the 19th
> century, and the bulk of CUs are still started by rank amateurs today,
> albeit the regulators like to see some folks who have at least a
> basic grasp of accounting (of which do indeed have.) 

Hey, thats fine, but if you aspire to revolutionize a business you
should first understand it. To my knowledge, most credit unions do not
produce financial innovations.

> I think that you are overestimating the sexiness of this project, as
> did an earlier poster. It's really quite ordinary, 

Thats my point. The ordinary day to day problems of producing good
banking software are not trivial. Designing a dam for a large river
presents no technological challenges whatsoever. Try doing it without
a lot of specialized knowledge.

So you are starting a bank. Tell me -- can you tell me what a bankers
acceptance is? What the clearing time is for checks? What sort of
securities instruments a bank is allowed to invest in? If you find
yourself with fractional pennies in a transaction, what do you do with
them? Can you tell me what organization sets accounting practices in
the U.S., and what the name of their major publication is? Whats a
CUSIP number? If one of your credit union's members cashes a savings
bond, what sort of tax information must your accounting system keep,
and what forms are you obligated to file, and when? How do you clear a
check from an out of country bank? Indeed, how do you clear a a check
from an american bank? What, legally, is a check? What language is
needed on a loan document to make the loan transferable?

This stuff isn't difficult. There is just scads of it. Getting the
software to handle all of it properly isn't a part time job. Stating
that you are setting out to produce "the" banking protocols of the
future when you don't grok banking yet is a bit on the hubristic side.