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Thinking of starting a bank - What steps do I need to take?

First post
Author
Tau Cabalander
Retirement Retreat
Working Stiffs
#21 - 2015-01-07 19:02:30 UTC
Julius Rigel wrote:
Tau Cabalander wrote:
Every single EVE "bank" has either been a scam, robbed, or failed.
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.

Call me an optimist then.
Scion Lex
Tungsten Carbonide Asset Management
#22 - 2015-01-07 21:51:09 UTC
My advice is simple. First, close this thread. Second, stop using the word bank. Thirdly, think about operating a hedge fund. If you don't know what that is look it up. Lastly, and most importantly never ask for money or clients via forums. Build your 'bank' privately. I would document as much of it as you can as you go. Once you have a couple of years and some liquidity built up you could consider jumping into the shark tank. Yet, if you get that far then why bother?
Leannor
BlackWatch Industrial Group
Reckless Contingency.
#23 - 2015-01-08 13:35:55 UTC
My two cents worth.

the only feasible way for a Bank structure to exist, if if there is accountability. And this can only happen with an ingame mechanism that CCP would need to release - in a simillar way to contracts. (Ie, if you fail to repay on time via the mechanism you get standings loss to concord and eventually flashy red on some scale.) Clearly you'd need a simillar counter for those in 0.0 and WH otherwise they'd just hide, so some kind of docking inaccessibiltiy or gate restriction would be the only possible deterent.

Even then, your risk pricing would have to be on a person by person case basis. Initially very high, and with track records it lowers. They get more isk for less cost (per isk). This doesn't avoid the confidence builders targeting a massive lump sum to run away with - unless you code the interest rate so that by the time they have access to (say) 100M, they have already paid you close to that figure already via interest in order to be able to access that leve - thus reducing your 'real' capital loss exposure.

Honestly though, ... I'm not sure there is enough demand in game to lend money. Maybe because there is no supply ... who knows. But it is always going to fail, unless there is an in-game mechanism and accounatbilty. Smile

"Lykouleon wrote:

STOP TOUCHING ICONIC SHIP PARTS"

Bad Bobby
Bring Me Sunshine
In Tea We Trust
#24 - 2015-01-08 14:06:33 UTC
Grendell wrote:
To this date I have run the only successful bank that did not fail or scam. I closed it about half a year ago as I no longer enjoyed running it. My recipe for success was controlling who my clients were, how much isk they deposited, and up to a month notice on any withdrawal. It was for lack of a better description, a sort of exclusive bank with very, few but big clients. At it's peak I had about 50 clients, with roughly 1.4 trillion isk to work with. Most in MD don't really consider my former bank as a real bank, as it wasn't public in the sense that anybody could deposit isk.

TBANK was much the same and closed successfully after several years of operation under much the same circumstances.

But like you say, neither of these institutions qualify as a "real" bank in most people's eyes. We skirted all the issues common to real banks by being choosy about out clientelle, restrictive on our deposits, restrictive on our withdrawals and modest in our interest rates.

I'm aware of several other private banks that are either corp/alliance only or restricted to a circle of friends that have also been successful... but I also know of several such banks that failed in just the same ways as the real banks.

TAUTX wasn't a real bank when it started, I haven't bothered to read up on it recently to see if it ever turned into one later. But since it's tiny, it's existence has only little relevance to the debate. Given time that may change.


Julius Rigel
#25 - 2015-01-08 14:43:26 UTC
Leannor wrote:
Honestly though, ... I'm not sure there is enough demand in game to lend money. Maybe because there is no supply ... who knows. But it is always going to fail, unless there is an in-game mechanism and accounatbilty. Smile
There's more than enough demand - there are lots of players around here who, like me, have more money than they can be bothered to manage efficiently, whatever that amount may be for any one individual, and anyone would jump at the opportunity to have someone else do it for them, if only it weren't a huge risk. For that matter, I'm sure there are plenty of enthusiastic and / or novice traders and manufacturers who would happily make use of that money, if they could.

That said, my greatest failures in investing have been to incompetence, not dishonesty. That's not to say I've never been scammed. Of course I have. We all have. It has always been a step in the learning process. But the price I paid for that lesson was 100m. It's a completely mundane story that isn't even worth telling. Everyone has heard "that" story - you're young and naive and a friendly merchant approaches you with an exciting business venture. Ten minutes later you've become the lucky owner of your very own ISK-shaped hole burned through the bottom of your wallet, and you don't repeat the mistake. Incompetence, on the other hand, is a grand, epic tragedy of cloven friendships and shattered dreams.
X ATM092
State Protectorate
Caldari State
#26 - 2015-01-08 20:11:21 UTC
Do it within a group where there is already a relationship and trust. I occasionally loan money within FA uncollateralised and have had no issues doing so but I am routinely trusted with hundreds of bils of debt within FA and haven't stolen it previously so I have that going for me. If I'd opened with asking for the isk from strangers then I'd never have gotten anywhere but by starting with a presence within the alliance, then honouring super transactions and finally by third partying them I built my reputation up.
Myriad Blaze
Common Sense Ltd
Nulli Secunda
#27 - 2015-01-10 15:41:22 UTC  |  Edited by: Myriad Blaze
Like others already said (and ignoring some technical aspects), the two main issues are trust and effort.

Let's take a closer look:

I know I can be trusted. But how could you know?
And if I'm brutally honest, I'm not 100% certain that I wouldn't be tempted if “the price is right”. Assume you had 5 trillion ISK entrusted to you by other players... or 10 trillion ISK. And all you had to do is deciding to keep it. And probably get immortalized in EVE for the biggest heist in the games history along with your decision. And more than likely also get coverage on games websites, newspapers and maybe even national television for stealing more than $ 200,000 in game currency. I'd bet you'll find many people in EVE who would agree that not exploiting such an opportunity would be a wasted chance.

And if I have to admit that I could be tempted, despite believing to be a person of high morals (and let's not forget that this is only a game), why should I believe that you cannot? And who says you would need trillions to be tempted? When I started playing the game… like you are now... 1 billion felt huge and people with 20 billion and more were super rich. So maybe it takes only some billions to tempt you in your current situation. How should I know and how could I be certain?

Sure, if you play for some time you might come to realize that 20 billion or even 100 billion is not that much. But to realize this you usually need to earn that much ISK yourself first.

(And let's not forget that the trust factor is a big issue in lending out the banks money, too.)

And that brings us to the other issue... effort.
Once you earned that much money – especially if you earned it via working the market – you know how to make more ISK. And you have the funds to do it. Why would you invest your game time to earn ISK for other people when you could spend that time to earn all that ISK for yourself? Sure, maybe you like roleplaying... but I have seen enough people to burn out on that sooner or late (which would bring us back to the trust issue). You still could issue a bond if you need some ISK for a specific task, but a bond is meant for a limited time and is in many ways different from a bank.

My advice to you is to start earning your own ISK via trading (since you said you are good with numbers and spreadsheets) and maybe look into industry, but forget about that bank for now. Then in a year (or better in 18 months) reread this thread. It's very likely that you will view your own idea from a different angle then. At least you will have some ideas how to work with money and how to make profit.
Koniforous
Tauren Transit
#28 - 2015-01-10 18:23:22 UTC
Myriad Blaze wrote:

And that brings us to the other issue... effort.
Once you earned that much money – especially if you earned it via working the market – you know how to make more ISK. And you have the funds to do it. Why would you invest your game time to earn ISK for other people when you could spend that time to earn all that ISK for yourself? Sure, maybe you like roleplaying... but I have seen enough people to burn out on that sooner or late (which would bring us back to the trust issue). You still could issue a bond if you need some ISK for a specific task, but a bond is meant for a limited time and is in many ways different from a bank.

The unsaid point here is that eventually you will earn for your private coffers an amount that becomes unworkable. I hear a lot of people give this example for one of the main reasons not to start a bank, or to close one. But I don't understand why they feel this way. A bank can also offer loans to generate profit on unworkable or unused capital. This is also one of the reasons I like the idea of varying roi's based on the banks performance. If a bank offers 5% of profits to account holders, and earns 10% interest on a 1bil isk loan, then account holders will see 5mil divided between them.

So long as pilots want to give you their isk, you can generate profits on that isk in anyway(after paying your owed rois), and that isk not sitting there costing you to have it, then continue taking and working that isk.
Tear Jar
New Order Logistics
CODE.
#29 - 2015-01-11 22:26:49 UTC
Koniforous wrote:
Myriad Blaze wrote:

And that brings us to the other issue... effort.
Once you earned that much money – especially if you earned it via working the market – you know how to make more ISK. And you have the funds to do it. Why would you invest your game time to earn ISK for other people when you could spend that time to earn all that ISK for yourself? Sure, maybe you like roleplaying... but I have seen enough people to burn out on that sooner or late (which would bring us back to the trust issue). You still could issue a bond if you need some ISK for a specific task, but a bond is meant for a limited time and is in many ways different from a bank.

The unsaid point here is that eventually you will earn for your private coffers an amount that becomes unworkable. I hear a lot of people give this example for one of the main reasons not to start a bank, or to close one. But I don't understand why they feel this way. A bank can also offer loans to generate profit on unworkable or unused capital. This is also one of the reasons I like the idea of varying roi's based on the banks performance. If a bank offers 5% of profits to account holders, and earns 10% interest on a 1bil isk loan, then account holders will see 5mil divided between them.

So long as pilots want to give you their isk, you can generate profits on that isk in anyway(after paying your owed rois), and that isk not sitting there costing you to have it, then continue taking and working that isk.


Banks offering loans run into the exact issue of trusting the people they loan money to.
Ren Oren
Native Freshfood
Minmatar Republic
#30 - 2015-01-16 02:45:01 UTC  |  Edited by: Ren Oren
Alexi Drakenovic
Doomheim
#31 - 2015-01-16 02:58:12 UTC
Thanks for those links, I will read them up on my way home after work,

I can see what you are all saying, kinda sucks really, but oh well, I have started it in my Corporation, 4 members so far so that is good, i might investigate this route further down the track when i have some more capital behind me and have some references at least, thank you all for the advice, tips and knowledge, seriously, thanks.

I will focus on working out a way to make better and ways to fix things as muhc as possible by then so that people might be able to feel more comfortable. Thanks again guys!

Fly safe!
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