Why cant we start our own bank?

[johnboy]

Totally naive question but...

 

Why can't we get together and start our own online bank. Something really basic to pay our salaries into and pay bills and once it has some funds to make small loans etc. A bank that does not make a profit from its customers just covers costs. Run the same way John Lewis the department staore or the guardian newspaper is as a trust or coop. as most banking is now done electronically would it not be easier than constantly fighting these people?

[jonni2bad]

It's not impossible..

 

However, let's say that I create a 'bank' tomorrow. You don't know me, but because I'm a mod on this site, you would trust me to hold on to your wages and pay bills from it?

 

If it was the other way around, you would expect me to trust you to do the same?

 

I appreciate it may have been more hypothetical, but I don't see it as ever being likely. You might class a local credit union as being a starting point, but these take many man hours to run on a voluntary basis, and they are not quite the same thing as a bank anyway.

 

Sorry if I just seem negative, but it's an honest answer to your question none the less...

[Don Quioxte]

Cos at the moment we are struggling to get the users of this "Co-op" to realise that it is a cooperative venture and that perhaps they have a moral obligation to donate some of their not so hard won cash to keep the co-op afloat.

 

quite how we would manage to convince people to treat a BAG bank any differently at the momet has me perplexed. but maybe I will be proven wrong over the next few weeks as the donations come flooding in?!?

[johnboy]

I suppose what I am saying is as its all electronic why cant we have a virtual space where money gets lodged and just goes to that place (cyberspace) and sits there and is used to pay bills etc when enough of of us put our money together it would be big enough to offer loans morgages whatever why do we need the tradtional notion of a bank.

 

Why cant we all have individual locked accounts that only we can dispense cash from? accounts that follow us wherever we go all this kind of old fashioned bank behaviour of let us steal sorry look after your money and keep it in a safe place was ok with cash but nowadays What safe place? its all in cyberspace and has been for years.

 

Why do we even need a bank?

[jonni2bad]

If you want a mortgage next month, would there be enough money available to borrow from this new 'bank'? If you need to buy a new car even?

 

I was under the impression that even credit unions have to have a loan of some description to get going, so even co-operatives need assistance from the big boys.

 

It mainly about credibility. You simply wouldn't get many people prepared to use this new 'bank' and risk their savings. Whilst money is typically virtual, as you say, there needs to access to hard cash, and people across the country need to access it immediately (a.k.a. cash machine networks).

 

It's a nice idea - in principal - but the reality is, in my opinion, a pipe dream.

 

I hope you don't think I'm trying to flame you, by the way, we just seem to be at different ends of the spectrum here

[cakey]

Surely the better option would be using poeple power (e.g members of the forum) to negotiate a new account with one of the major banks - similar to what the pipeline card guys are doing with fuel...

[dave]

That is our intention, ultimately.

 

However, we'd need the clout of more than 20k people - I think the bank, with millions of customers, sees us coming to them with 20k people - they would think that it's not worth losing the lucrative penalty 'market' for. Yet.

[fallen404]

I'm sure the main obstacle to creating a monetary collective is the banks themselves. As others have pointed out, people need access to cash instantly a lot of the time, and I'm pretty sure the big boys wouldn't let us use their cash-points (or at least not without hefty 'withdrawal fees'). I'm pretty sure everything else would be simple by comparison, but the unscrupulous old men that are the banks wouldn't take kindly to an ethical young scruff (us lot) taking away a lot of their business (which we would; if you told someone that there was a bank that wouldn't charge people for going over-drawn, etc, then I'm pretty sure that, barring major commitments to their current bank, they'd switch as soon as they could). In other words, they'd make integration with their systems as difficult as possible, delay cheques and transfers to and from the new bank as much as possible, and generally try to make it seem like they gave poor service.

[thecornflake]

If you want a mortgage next month, would there be enough money available to borrow from this new 'bank'? If you need to buy a new car even?

 

You wouldn't have to offer these services. We're just talking about a basic bank that handles you payments in and out, and doesn't charge extortionate fees for DDs failing etc.

 

It mainly about credibility. You simply wouldn't get many people prepared to use this new 'bank' and risk their savings. Whilst money is typically virtual, as you say, there needs to access to hard cash, and people across the country need to access it immediately (a.k.a. cash machine networks).

 

That's a better point. Security at the level the banks use costs a lot of money. And I'm not sure how cash machine use works but there are probably some pretty hefty fees for using them as well.

 

I don't think it's a unachievable as some think, but it's certainy not something a few people could just set up on their own.

[jonni2bad]

You wouldn't have to offer these services. We're just talking about a basic bank that handles you payments in and out, and doesn't charge extortionate fees for DDs failing etc...

 

Well, I'm not sure who "we" are, but I responded to this post by the OP...

 

...when enough of us put our money together it would be big enough to offer loans mortgages whatever, why do we need the tradtional notion of a bank...

[johnboy]

bit of a ramble here but Well, my basic point was that now money is electronic and we dont require physical buildings and lets face it we are paying more and more by switch and CCs paper and coin money like cheques are on the way out so if you dont need cash point and clearing etc what do you need I think something like your own numbered account that you take with you in your mobile or something. At the moment banks are parasites sitting between us and our employers why dont we cut out the middle man all a bank account is nowadays is apiece of software that says you have x anmount pof credit and yes why cant we just begin basically with a deposit bank where we pay in and pay out our bills. I wonder what the law says about doing something like that having your own personal bank of one and then getting them all together?

[jonni2bad]

I do rather like the concept of an account that you take with you - where not only your money but also the DDs and S/O and maybe even history and all related to an account number.

 

I know that's not grossly different to just switching banks and letting them swap everything over for you, but still...

 

I have no idea how it would need to be developed though, and I'm too tired to think right now!!

[neilloffhagen]

I think the most difficult part would be the intial setting up of things - like purchase of Servers, internet presence (e.g. needing a lot of bandwith both ways for people to access account info) and the security involved. When I say difficult, I mean more the actual cost of that, not that it would be too difficult to actual do those things. But the financial cost would be huge. Perhaps the only way that could be funded would be to approach a "money Angel" (is that the right term for them?), but then you'd get all sorts of restrictions no doubt. But all great ideas start off being put down because they do seem impratical at first, but over time the idea really starts to come together

[johnboy]

So what is the software you require so that you could say to your employer send my money here? The more I think of it the more I think that the bank is just some kind of wizard of oz an illusion, its just software and servers!Why cant i set up my own bank of me and tell my employer send the dosh there please. pay my bills and DDs, as for cash well yes thats a tricky one but then there are now so many private cash machines springing up I could pay them to let me have cash at a reasonable rate. But seriously whats the law say about setting up a deposit bank anybody know? I keep thinking of how carphone warehouse set up their domestic phone service and marketed it on the basis of the more that join the cheaper it gets which has been really successfull. Im saying this as I think this has the potential to be a huge snowball all this stuff about charges are just the the beginning (hopefully)

[pj41]

Now There's a thought,

 

Think outside the box guys and girls there's no money in the system its all numbers on paper. Look at the price of gold over the last few months. Why the massive jump in price over the last two years?

 

Governments and banks can print paper money as much as they like. Look at the US, its bankrupt, it just prints more dollars to stave off the inevitable.

 

The Banks are part of a bigger picture.

 

Claim your money back, it's all illegal.

[HD]

Security would be the problem. Imagine if a fraudster hacked their way into our system and took everyones wages at the start of the month.

 

I like the idea, a national credit union. The probem is you would need to employ people. Employees need a boss. A CEO with control over a sum as large as our combined salaries would demand a large renumeration and would start to look to maximise their income. How long before we would turn into the enemy. Feeling cynical tonight:(

[fallen404]

"All power tends to corrupt, and absolute power tends to corrupt absolutely."

[dave]

Effectively, you mean a building society (of sorts), not a bank.

 

Every account holder is a member.

 

It's a nice idea. I like it. And I think you're right - what's a bank, if it's not just the sum of it's servers, software and networks?

 

It's certainly food for thought if nothing else.

[johnboy]

Like i said look at how john lewis is run or the guardian, the guardian is a trust

 

see http://www.gmgplc.co.uk/gmgplc/scott/formation/

 

and john lewis calls itself a partnership

 

http://www.johnlewispartnership.co.uk/TemplatePage.aspx?PageType=CAT&PageID=4

 

they have constitutions or rules stating what they are about and cant be bought or sold like normal comapnies and in john lewis,s case the workers are all partners and have a vote, two pretty successful outfits that pride themselves on high standards in what they do.

 

so there are structures out there that show it can be done but the problem is how to do it in banking? so ordinary people dont get ripped off. Because at the moment the banks have us by the balls. However this movement shows that is changing, the question is do we stop with just the bank charges or do we go further?

[neilloffhagen]

Security would be the problem. Imagine if a fraudster hacked their way into our system and took everyones wages at the start of the month.

This is what I see as the main challenge. From what we hear people are always trying to hack into the banks and other supposedly secure places. We'd be a definite tarket, so would need to have some people in place who knew a great deal about securing a network or onctract a company like cisco or someone to come in and secure it all and then you would need money i mean I could build some servers Linux or Windows), and give some security, but I'd never be sure enough that it was totally safe. Well, I just wouldn't use Windows for such a system.

I like the idea, a national credit union. The probem is you would need to employ people. Employees need a boss. A CEO with control over a sum as large as our combined salaries would demand a large renumeration and would start to look to maximise their income. How long before we would turn into the enemy. Feeling cynical tonight:(

The idea of running a credit union or co-op is that surely the people at the top wouldn't want to take large salairies. At least not as large as some do. They'd join if only for the kudos of working for such a company ? Or is that too idealistic?

 

Neil.

[johnboy]

Ah neil, at last someone who knows about computers, if we could possibly build our own servers, (build our own bank) that would really freak the banks out! Would it be possible or has it already been done to make security software open source? so it could be improved or would that defeat the object?

 

What software do the banks run? anybody know? and how much does it cost? can't be too much if you can still make 11billion

 

Anyway we could start small add capacity as we need it what would be an optimum size?

 

Could one hundred people get together and start it off?

 

just put in a nominal sum a pound perhaps and then gain expertise work how to pay direct debits look for security flaws dont expose ourselves too much.What do you reckon?

 

another question who looks after all BTs money and british gas where does that money go? do they have bank accounts if so who with?

[thewifeandI]

I think there is also the (small) matter of getting Bank of England approval - I'm not sure on this, but I think you have to have a large security deposit and major assets to back up the institution - bonds/indemnities/bits of paper, etc. You are also not allowed to use the word 'Bank' in your business title without approval as far as I remember.

 

Cheers.

[neilloffhagen]

It's probably a bit of a personal opinion, but most do consider open source software more secure than another OS. The problem is it can need configuring to make it so. Whilst it comes with default settings that have certain amount of security set up, I would not be too happy without a security professional looking at it to check the security level. It's one thing to have a server hacked that is holding company information, but another totaly if it's hacked and is holding banking details of many people that ends up with people loosing money. I'm sure you've read accounts of how some credit card details have been aquired, etc...

 

Where I currently work we had a guy in from Redhat, as we were deploying RHEL on various servers and we asked him for other comoines who were using redhat. He came up with several banks in the city who use it. Whilst redhat is for purchase, as it's open source there is a company who have cloned it and you can download it for free. Called CentOS. But in reality there are other OS like OpenBSD http://www.openbsd.org/ that would be nice and secure.

 

Another thing that would be needed is someone very good at investments. I presume the banks do some sort of overnight investment of our money to make themselves money. We'd need someone who was very good at that, as we couldn't just take money, leave it in the bank and just give it back when it was wanted, without first doing something with it to make a bit of money to pay for the servers, any software, staff and other things we'd need.

 

Neil.

[genlovesben]

Im probably gonna get shot down in flames here but here goes.

 

just skimming through the posts on all the topics, we have a lot of technically minded people here. We also have alot of people that started off back in february, which was when i first discovered this site, with no knowledge of the law who are now walking timebombs against the banks..

I dont see why given time we cant do this.. it might take some time but never say never. As for cash, all it is at the end of the day is pieces of paper that say that the bank of England will pay you that amount of gold if you present it.

Has anyone looked into the Liberty Dollar system (i think thats what its called) in america. I know America is a different country but it strikes me that if they are unhappy they start taking back control. i remember seeing a program where they were discussing this new currency and how it is widely accepted now.

If they can do that why can't we do something like taking our money back from the banks..

 

just my twopeneth..

 

gen

[neilloffhagen]

Well, I thought I'd email the Bank of England and ask what steps are needed to start a new bank or building society. Be interesting if they reply