From: habs@panix.com (Harry S. Hawk)
Date: Mon, 11 Oct 93 11:29:50 PDT
To: cypherpunks@toad.com
Subject: Re: The Bank of the Internet!?
Message-ID: <199310111827.AA22615@panix.com>
MIME-Version: 1.0
Content-Type: text/plain


Perry
>> I don't care for the Government, but I suspect that Chase Manhattan
>> has a much better idea of the problems involved in cash transfer and
>> accounting systems than you guys do. People who've never worked for
>> financial institutions rarely understand where the real problems are.

>Douglas Barnes           
>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? (I went to work for
>them after First City, so I got to see it frist hand.)

There is a huge difference between the back office transactions at
a brokerage house and those in a small bank/credit union. A point of
reference, in 1990 Shearson Lehman brokerage services used 18 gigabytes of
data for client records (PER Month). Unable to keep all that data on disk
(they were planning to go optical), they had huge costs in microfilm, esp.
in paying folks to retrieve data by hand.

A major problem with Brokerage back office is physically keeping track of
where stocks are and where they are going (they can be sold, bought, held,
borrowed and lent). Other rules, as Perry mentions, include suffering
economic loss at certain points if you are unable to document certain transactions.
 
I don't, however, see how any of this could impact a simple credit
union type bank opperated over the Internet. Such a back office 
should be far simpler. The trick will be growing such a enterprise
into a business that can offer any degree of sophisicated financial
services. A major plus is that if digital signatures can be used,
and strorage space allows, little if no paper records need be kept,
which will allow the entire operation to exist in "cypherspace."

I do agree with Perry in that it will be a full time activity, and
that much learning will have to take place. I am more optimistic than
Perry in feeling it can be done. 

From Jan of 1988 to March of 1990 I worked in the Advanced Technology and
Office Systems Consulting deptments of Shearson Lehman Brothers (now
Smith Barney Shearson). I was involved in their efforts to implement
optical storage systems for both data and images.


--
Harry S. Hawk           ON Vacation