21st Century Bank

Their collapse would have plunged the world into chaos.

We've all heard the arguments a hundred times before - they were 'too big to fail'.

But wait a minute - what exactly would that have meant? What functions do the banks actually have in people's day-to-day lives?

One important provision is that of a functioning, robust, fraud-resilient system through which people can reliably trade, get paid, pay bills.

In other words, transact.

We have heard about ways of segregating retail from corporate, or investment banking - and this idea stands on the shoulders of that one.

Retail banking is the oh-so-boring post-office school of banking where you have a branch-network, a bunch of ATMs, some daily accounting done to determine who has paid who, bank-managers (these days referred to Customer Service Representatives - or Sales Staff) to miss-sell financial products, offshore Call-Centres, direct debits, standing orders, coinage services, forex, cheque processing, queues, forms, windows, bureaucracy at its finest.

All the humdrum, day-to-day, banking 'system' stuff that we all know and hate.

In Retail, you don't get the pin-stripe wearing, red-braces sporting, lap-dance visiting, cocaine snorting, bonus spending, short-term market speculators. Nearly all the profit comes direct from transaction charges, a teeny bit here, a tiny bit there - added up over millions and millions of transactions a day, turns into proper profits. It's all a lot less glamorous - like the chap who works in the old Bank in Mary Poppins.

These days, all you need to do is build a big fat, reliable, scalable computer system that can deal with all the inputs and outputs without losing anyone's balance down the back of the printer, make sure your costs are lower than your revenues, and you're in business.

But hold on a minute - this isn't strictly what banks were made for.

They were initially the protected storage location for costly items such as gold and silver - they branched out into fractional reserve lending inventing both inflation and bank-notes in the process.

But today, the provision of an electronic transaction service is something completely different.

Banking has become a Utility. Or at least, one specific part of what we call 'Banking' has.

And like a Utility, like Water, or Gas, or Electricity, the Provision of Heathcare, or of a Uniformed Armed Forces, it can (and in the case of RBS in the UK, already HAS) become Nationalised.

(Short pause for breath here - yes, I know that Nationalism isn't a new idea - I'm also aware that some people consider any form of state-ownership as being tantamount to the Communist Gulags of Stalinist Socialism - (and I'm also aware of Governmental reputation in the successful implementation of grand IT projects) - BUT! - we've already established that the Armed Forces and (for example) Roads are already Nationalised, without even the faintest whiff of Communism, so that argument doesn't stand - so we'll have none of that here)

What we have to do is stratify what it is that a bank *is* and what it *does*.

One of the services that a bank provides is this transactional service. You set up an account, and having done so, you can have moneys go in, or get paid away.

Simple(s).

I am suggesting we Nationalise just *that* bit.

We create a National (maybe International) funds transfer system that does nothing except the book-keeping. We charge 0.0001% per transaction, and raise the sort of revenues HBSC posted this week, without hurting anyone's pocket.

And we get to draw a big safety-ring around normal people's day-to-day assets.

The banks can continue to take their risks, doing the fractional reserve thing, borrowing and lending with gay abandon - investing any surplus cash people choose to take out of the transaction system, and generally doing what they do without upsetting anyone else.

And we get a rock-solid, reliable system for sending/receiving funds - and if we so choose, get to pay someone by cheque, without it taking 3 days to clear.