Market Discussions

[RESERVED]

You can delineate the failures of previous banks into two broad categories: insolvency, and a breach of trust (scamming).

Insolvency:
To combat these issues, both internal and external reports have been put in place.
Externally, 3 different financial statements will be available:

• balance sheet
• income statement
• cash flow statement

Internally, there are a multitude of metrics which currently exist (debt load, expense ratios, etc.) that give us feedback on the internal financial health of the system.

Breach of Trust:
Unfortunately, this is not really an area that allows for much improvement. EVE, at its core, allows (and often encourages) these breaches of trust. As long as this core exists as it does, this risk will always be inherent to any player-run bank. The systems, reports, and automation we are attempting to put in place aim to remove as many of these elements of risk as possible.
But as I said, and as I'm sure everyone is aware, this risk is a reality of EVE at its core.

With fewer than 10 posts in MD, or EVE for that matter prior to this thread, and trying to open a bank, using fancy accounting and finance phrases...

Seems legit...

You don't know what you are talking about. Otherwise you would of been able to answer:



Having three different financial statements that say you are insolvent, does not stop you from being insolvent.



What else are you planning to do with the deposited isk?

What checks do you plan to do on any prospective loans? When they send their API, what are you looking for?

What other people (including your alts) are going to be involved?

1) I'm assuming you meant "aren't insolvent". You're correct, it doesn't. It does however aim to increase the transparency and readability of what's going on in the system.

2) Regular deposits (savings accounts) are currently intended to be used exclusively for loans.

3) Good question. The most obvious checks would be past performance, accountability with loans, and/or if the character has been traded. Unfortunately, I don't have anything more specific than this, but I will definitely revisit this question at a later date and time.

4) As of now, I have no plans on having any alts involved. As for people, I have an accountant friend who looks over things out-of-game.



1) There weren't any transactions at all during September, the blank sheets for that month are effectively just a visual sample. Currently, we are maintaining a small float, in order to test the system.

2) The system would operate as a fractional reserve bank. Initially, the fraction would be at least 100% (fully covered by a float). As such, the scenario you suggested wouldn't occur. To expand on this, as the size of the client base increased, the fraction could be decreased below 100%. It would all depend on the granularity of the client base, and how often full withdrawals are expected to be made.

3) This question ties in with the above: the lowest allowable reserve amount would be the full balance of the largest savings account. From a neutral position, anyone could fully withdraw and close an account.
What happens when multiple users want to do this at the same time? It would depend on the size of the user base, as well as the current fraction. As I said, the initial fraction will be 100%, and by the time that could ever change, I'll have a much more specific policy on hand.

4) As of right now, the launch plan is: loans and deposits. Future plans could include an "investment account" type that would fund station trading with a variable return, but that would shift the risk from us to the user.

I want to point out that this is currently a BETA test of the SYSTEM, and specific financial policy is currently being created. Right now, I'm only looking to test the functionality of the core system itself, not to start operations as well as a client base. This is why I'm asking for deposits of no more than 1M ISK: I want to make sure that things flow through the system properly.

In any case, thanks for the questions and feedback, and I hope my answers were helpful.

SSO is now working on the live servers.
In addition, Financial Statements from October 2014 have been posted

Your statements look a lot like personal cash flow than a financial institution.

How many investors/account holders do you have and what us their average account size.

What is your exit strategy should things go bad and the bank become insolvent?

Currently, there is one active savings account (other than my own, used for testing purposes), as well as one active loan account.


There were no additional loans paid out in November. The current loan was found via the MD forums, is public, and happened to be audited as well. Unfortunately, no real way to prevent a default (as of yet, I'll be thinking about this more in the future), so at the moment this comes down to finding good clients.


Regarding an exit strategy: Since the system is currently in beta, a definite financial policy hasn't been fully drafted yet. In this case, I can only speak for what would happen as of this moment, where all deposits are fully covered by share capital/reserve.

Raw's audit did confirm some trading behavior and a few other things but it didn't go into background (like VV's) so I strongly recommend doing your own searching prior to investing if you are going to be using other people's money to do it. Hopefully you can get this to work, but might I recommend you start with people you know, corp mates, alliance members, etc, instead of "strangers" on MD? Hard for us to trust you.