Market Discussions

I'm new to Eve but I can already see how this community feels about banks. Not that I blame you since there's really no repercussions to stealing everyone's money, but I still think banking can be a valid feature of the game.

What if someone created a bank that, on top of paying interest, provided you with other benefits such as:

-Increase interest rates over time

-Tiered interest rates

-Redeemables like escorts, refining services, etc.

-Brokerage services; the stock being ore. We have offices in every region and use a certain amount of your investment to buy ore at the lowest available price. We provide you with a daily report on regional prices; you tell us when you want us to sell the ore and we send you the profits.

Please feel free to poke holes in these ideas or add your own. Basically, what would you like to see in a bank?

There's no way to prove it I suppose, but this is my only account. How would you collateralize a deposit?

I often wonder if a bank in EVE might survive by giving dirt cheap interest rates, kind of like in real life. I'm thinking about less than 1%, to prevent rapid growth and subsequent crashes. Players could still earn some ISK and the bank wouldn't be under pressure to deliver so much interest.

OBVIOUSLY there's the trust issue, I know. But if that could be figured out and there's a low interest rate in place to keep itself from crashing, it might fare better than what we've seen in the past.

Just a thought, not sure if it's been tried.

Thank you for the insight. What about the brokerage idea? Is anyone currently doing this, or would this not be viable for some reason?

Real banks make their money by LENDING.
They give you 1% and lend your money out at 10%. They also have a margin of lending ability, like, 10 to 1 or something. So if they have 1 billion of *your* money, they can lend out 10 billion of *their* money.

What your asking, is for people to invest in you, and hope you can make profits and pay them back.

For a minute there i thought i was the only one thinking "friends with benefits" when i read the thread title.

History teaches us EVE banks are more volatile than any of their RL counterparts....

I wouldn't be interested at all. The problem with banks is that they are scams, not that they don't provide enough perks. Sprinkle sugar on a dog turd and its still a dog turd. Any bank that accepts unlimited donations is scam because there are far more people looking for an low-risk easy return on their isk than there are worthy borrowers that will pay back interest on their loan.

Meh.

Some of us just quietly run banks that provide a decent interest rate, to not all that many players, and otherwise go about our business playing the game.

@the OP: Banking, whatever form it comes in, takes time. Even if you keep it simple.

The time investment doesn't double when you add another feature to your bank; it's squared.

Banking, like EVE, is best when the person doing it figures out exactly what's fun about the activity, and then sticking only to that.

Anything else and you're just turning it into work/increasing the likelihood that you'll flame out (and so adding one more brick to the negative reputation wall that Nightshade sees every time the word "bank" is used).

This is why banks in EVE that work best are the ones that start small.

They are the ones that pay out quickly, reliably and above all earn for their customer an amount equal to that customer's initial investment as quickly as possible.

Many obstacles need to be passed before any forms of In- or out-game Banks emerge in New Eden. (considering RL definition of a bank)

The simplest form of Banking as RavenPaine state, consist of Lending. The Bank will borrow money via current accounts (fixed deposits, bonds and loans) and lend money to customers via Loan accounts (credit cards, bonds, syndicated loans etc…)
Additional RavenPaine points out that RL banks have the ability to lend out more money than what have been deposited (and typically also have a mismatch between tenors - borrow short; lend long).

Lets analyze these simple features:

1. The bank accept deposits from customers and most people are willing to use there services for following reasons:
Without a current account life would be difficult. You need it to receive salary and pay bills/taxes
Banks are considered safe – And they are safe because of Rules, regulations, transparency, accounting standards, bankruptcy laws and State guarantees.
Taking all these features into consideration a small customer can disregard almost all Risks which normally apply to investments; especially Credit Risk and Settlement Risk, and so willing to accept payment for the account or at best Zero/low interest on deposits.


2. Banks lend out money to customers:
Banks will lend to individuals and corporates based on credit worthiness/history.
Again rules, regulations and bankruptcy laws have a major impact on the credit assessment and the Risks the bank faces. This is why small limited companies typically will find it impossible to get a bank loan without collateral or personal guarantees.
Typically the credit assessment will result in the bank giving out the loan based on the government benchmark (yield curve) + Risks (where credit risk will be the major component)

3. Money creation & Tier capital
Banks are the main source of money supply and they create money out of nothing via loans.
Banking regulations such as Bank for International Settlements – Basel committee and Dodd Frank in US set up detailed standards of Capital ratios and such limit the banks availability to lend out unlimited.

Banks in New Eden:
EVE is a world full of Alts and combined with game mechanics the result is that punishments do not exist, so characters only face reputational risk.
There are no banking regulations, enforceable covenants & Investor protection, bankruptcy laws or state/ccp guarantees.
Only CCP can create ISK (see my threads about ISK here and here)
No benchmarks or yield curves exists and hence no liable way to price credit.
“Wallet” game mechanics make bank cash management & payment solutions obsolete.

In short, banks in New Eden are at worst Scams or Ponzi scheme and at best just a personal money lender with very little in common with a RL Bank.

I do believe that player operated banks should become a part of New Eden as it would add valuable content and differentiate Eve from other games in a revolutionary and innovative way.
First step would be to create a risk free benchmark and state backed securities market – see my post on the topic here…