Market Discussions

Simply put you cannot offer us any security from you simply taking the isk at any point and running. no matter how much you sing and plead about how you are legit and not scamming we simply cannot know for sure. This is why most banks fail. Not sure how you could remedy the damaged reputation banks have from all the previous fails other than to just start it up and hope someone throws you a rope and can vouch for you but even that can be falsified. good luck though

Banks do two things IRL.

They connect people with liquid currency (depositors) with investors in need of currency (borrowers), taking a margin on the transaction that varies with perceived risk, available collateral and what competition and legal regulations will let them get away with.

And they act as investors themselves.


The first role is filled in EVE by this forum section. The second is filled by big (50B-1T NAV) and very big (1-50T) individual market actors.


EVE's economy requires different financial entities to the real world, such as supercapital ship third parties, and the like.

Here's my opinion:

I think that first an foremost you may want to try to experience the game a little more before jumping into the very deep end of providing a kind of abstract financial service to customers who have scary amounts of money to invest. Do some investment, do some actual business that earns you ISK, and probably get scammed at some point throughout the process (it's not pleasant when it happens, but it's part of the learning experience, in my opinion).


This might be a bit too basic for you, but I feel like it's worth saying anyway:

At the most basic level, any type of financial agreement IRL (in real-life) hinges on something that we take for granted: A person (most likely) isn't going to disappear from the universe in the blink of an eye. So if you lend a dollar to a friend, you can reasonably assume that this friend is still on the planet Earth tomorrow, and you have the possibility of tracking him down and getting your dollar back.

In EVE, this fundamental assumption is false; a player character can log off and simply vanish, and there is absolutely no way for you to track down the person to whom you lent your ISK.

Ergo, while the more high-level principle of a bank (trust) is the same in EVE as it is in real-life, there exists no system of consequence for any state of failure. The trust you put into an EVE player is all you have to work with, whereas the trust you place in your real-life banker is backed up by many other social systems which all work together to take a piece of the responsibility of keeping your banker from running away with your money.

That brings us to collateral:

In the real world, when you borrow money from a bank, you "give" them your house as collateral - you entitle them to keep your house if you should "choose" to keep the money you borrowed. This arrangement works because of one simple reason: Even though the bank "owns" your house while you pay them back the loan, you get to keep using the house for its purpose of keeping you warm at night.

But in EVE, there are very few items which can function as this type of collateral, in which you give ownership of the item to another player while still retaining usage of that item. One of the few things which CAN work this way is blueprint originals - you can lock them into a corporation, and have the lender control the corporation, while the borrower has access to the blueprints for manufacturing and research only.

Besides, most other items in EVE are so liquid that you are better off simply selling the items for cash when you need a loan, then rebuying those items when you need them again.


That said, the appeal of a bank is to earn interest on your giant pile of ISK without having to micromanage stuff like market orders or individual, short-term investments. And there is no lack of giant piles of ISK for you to perform banking on, if you can somehow figure out a way to prevent yourself from running away with the money.

There just simply doesn't exist, to anyone's knowledge, a reason why you would want to ask for a trillion ISK from investors and make 2%, 5%, 10%, or even 20% profit over time, when you could make 100% profit immediately by simply pocketing the money. But if there did, I would, along with many many other players, be busy proverbially throwing my PLEX at the screen screaming "BANK MY MONEY! BANK IT!"

Wow.. Big reply.. Awesome! And thanks for it, I shall try and answer in parts!

1, I am pretty into this game already, I know that seems like bullshit, but I am, as I have said before on the forums and as you might have seen on other posts, I have a pretty ****** real life, and I am heavily into the role-play in this game, and I know that sounds lame, but it means I can be who I want to be, and I want to be a well known Capsuleer of Ishukone

2, I don;t know if that was meant to mean my brain can't process it cause I'm too stupid, or that it should be basic knowledge.. I will go with option 2, I do understand that part is hard to use in a virtual game, but as EVE Online says, it is all about trust.

3, I understand I can't prove people that I won't run away, but there has to be away, through other plays vouching for me and the like? No?

4, Fair enough.. Maybe i can work out a system involve the Blueprints or something like that, thanks for that, I will read into ways to do that!

5, All I can do to prevent that from happening is to not do it.. Which I won't, I do understand that my word doesn't mean anything at the moment, but maybe that can change over time, like I said before, I plan on being a somebody in this.. Even if it isn't real, and I need something to keep me anchored, I can offer weekly reports, or stay in contact, hell, I was even thinking of going to one of those public meet ups for EVE players to get more connected with the community and all that.. I am only thinking of starting small, so under a few Million, just a like a test, cause I have done alright for myself, and I wanted to give it a try, this is all in the theory stage at the moment of course,

Anyways, thanks heaps for the such an in-depth reply!

I have been operating TAUTX, a private bank for just about 1 year. While it remains small in NAV, it maintains dependable solvency. Here are some of the things I have learned:

I started privately, within an alliance I have been in for years. To this day, the majority of my investors/clients are those in my alliance. Very few pilots from the forums have chosen to invest in my bank. The number grows by about 1 public pilot I am not affiliated with per month. I take this as a sign that TRUST, and TIME are the biggest public concerns with uncollaterlized, factional-reserve banks. Pilots need to trust you obviously, but at a certain point it seems that the length of operating the bank begins to equal trust in some peoples' eyes. I also encourage all of my clients/investors to post positive feedback on my thread to help the community understand what it might be like to invest in TAUTX. I operate under 100% confidentiality though, and I may have only had 2 pilots do this. 100% confidentiality will definitely affect public perception of your bank, since you wont be able to say who has invested.

One of my personal concerns during investment is how detailed the pilot has been with their proposal. For me, this is because I can trust someone more if they are realistic, plan for contingencies, and clearly define their present and future behaviors. To offer investors the same that I expect from loan requests: I sought to develop strict policies for the amount of public isk my bank can take on, when it can expand those amounts, and how to reduce those amounts, among other detailed (and probably wordy) policies.

Please read my bank's webpage. Most of the policies are listed there, and I think were wisely developed by both myself and the community. Other entities can probably use some of the better ones in their own operations.

Another thing I have done is tried to read as much as I can about the other banks, why they failed, and why they were so great. I came to the conclusion that offering guaranteed rates of interest was the primary purpose of insolvency. Offering a variable return means that TAUTX could pay 0% if it came to that, and still remain solvent, whereas other banks' policies did not allow for this. A 0% return wont help your banks reputation any, but within the definition of solvency your bank could continue operations as normal in the event of major catastrophe.

The lower the ROI you can get away with offering, the better for your bank's profits. I started with a guaranteed ROI, and a very high 5%, I believe. I eventually scaled that down to the current variable return, and 3% on bonds, as reality set it. I think like this:
I report a NAV each month, and that NAV is: (a little under the actual NAV of TAUTX) minus (Share values of 6.25bil). So, TAUTX has almost always had in its personal NAV more than double the public funds it has on deposit. So, I am operating under a pseudo-full-reserve banking model (not an actual full reserve!) and therefore feel comfortable offering the average ROI on fully collateralized loans (~2%).

Read read read. That is my advice. Read everything you can about RAW23, Elizabeth Norn, Grendell, Chribba, ebank, Hexx, and everything else market discussion related.

Start small, and don't seek to expand. Seek to remain dependable and trustworthy, but also to make wise and business savvy decisions at all times. Public banking is about time.

Thanks for the replies Koniforous! for the massive reply!

So it started through your Corporation? That is something I was asking before as I thought doing that for maybe 1-3 months would be enough to get a customer base and some references, and a general feel for it, as, like i've stated before, trust is a massive thing in this game, and I intend to get it one way or another.

I agree with your point about having rules of how much ISK you can accept and loan set at a maximum, so you can have at least double that maximum in reserve just in case, as a means to pay every back and all that if an issue arrises, or have enough on hand to keep withdraw amounts where the customer wants them at the time, that makes sense.

I will give it a read when I get home, I am on the train at the moment (2 and a half hour trip home, got to love work) but thanks! I will find the link thought your profile!

And I have been reading on as many banks as I can find, and reading the forum articles on this forum, a lot of hate, but no one ever got anywhere from being a wimp and not standing up to the occasion so to say!

I was thinking between 1.5% to 3% based on total amount and type of loan/account I am still reading of ways to use collateral in this universe to it's fullest extent, but I feel I am getting a rough feel for it, still much more reading to do though.

And all I want is to start small first, nothing big, just to try it and test the waters, cause I like numbers, and I like making people happy, more ISK generally means more smiles, haha! Anyways, thanks for your reply mate, I will message you if I need more in-depth advice on some extra details, fly safe!

This is the kind of information that every potential investor is going to try to squeeze out of you. This is valuable information, but in the future you will be asked to "show, don't tell" - players will want to see your wallet logs, your eve-mogul, even your API. Anything to get an idea of whether or not you are doing the things you say. You will be asked many question, and you will receive many comments, and it will probably feel strenuous, invasive, as if the whole world is try to poke holes in you.

But I assure you, these guys are not trying to be mean, they are simply trying to understand you. They want to understand what is going to happen to their ISK if and when they give it to you.

That is an inaccurate statement simply by the fact that there are currently banks operating which have not succumb to any of those fates yet. But I also don't believe that every single past venture that would qualify as a bank ended in failure, per se. I'm sure there must have been at least a small bank that operated for a while, and then closed by paying back every deposit.

I wouldn't disagree that there is a history of failure, of course, but I don't think that necessarily implies that every future bank must end in catastrophe, or that every past bank project was wholly bad. I accept the fact that some things we do in EVE we do simply for the sake of doing them, and I am partial to appreciating the journey and not just the destination.

I understand the resentment towards banks, given the past and all that, but that is like saying you hate all females in the world because one did something bad.. But I can't say much to change you mind, I can say that if possible I would give the ISK to a 3rd party to hold, I don't know anyone big in EVE yet but that would be one choice if I could find one trustworthy to the EVE world, that or like I said before, have it like a council with 3 people that can't do anything without all agreeing, or I would be the only one with access to the ISK.. There isn't much I can say to make you trust me or to change your mind.. I can only show you.. So yeah.. Thanks for the reply though mate

So to sum it all up, the things you will be facing in attempting to start a new bank, publicly, are:

-Skepticism and distrust as a result of bitter ends to previous banking ventures.

-The ability to generate a moderate to large margin of income, consistently. I think the consistency is the biggest part. 1-3% is a bit small in aims. Any player who has a decent amount of knowledge and skill playing the market can consistently generate income at 10% per month with smaller amounts of capital (under 100b). And a lot of people can do it with much more than that.

-Communication. You will need to be able to communicate clearly and efficiently, being as transparent as possible with all potential investors. As much of a drag as it is, you will need to announce every change you make to your money-making processes with the bank as well as personal projects outside the realm of the bank's wallet.