Two-Way Equities Banking

April 15, 2011

Today’s post is me theorizing about a type of savings bank of which I, for one, would like to be a customer.  Since it’s finance that means I’m in over my head and don’t really know what I’m talking about, so I would very much appreciate your comments and clarifications about the idea’s

  • novelty
  • desirability
  • possibility
  • legality

The way I see it, it’s very simple: a “cashless bank”.

I’m starting to make a little money again, which is nice.  I also don’t want to die starving on the sidewalk one day, so I’ll have to start investing.  Since I’m actually worried about dying starving in the sidewalk, unlike most college-educated white people, perhaps you can guess that I’m one of those people who doesn’t invest for gains so much as to assuage my paranoia about the dollar going kaput, banks getting run on, etc.

Read some history.  When it comes to finance, everything is stable and predictable and boring until Shit Happens and the black swan takes a dump on your parents’ life savings.

So here’s what comes to mind:

It’s a “bank” where all of my deposits (made via cellphone pictures of my paychecks, etc) are instantly “translated” into the commodities/equities of my choice.  N% gold, M% silver, X% Exxon stock, Y% pork bellies, and Z% Yen.

And then, when I make a withdrawal (like at the grocery store with my debit card), so-many of those equities are instantly sold to produce the cash.

Every year I get the auto-generated report about how much I made on interest and capitol gains, etc.

It’s like a “100% gold standard” bank, but it doesn’t have to be just gold.

When I log in and change my N%/M%/X%/Y%/Z% mix (+5% Yen, -5% pork bellies), some brokerage magic effectively happens, selling one to buy the other right after.

If customer A sold some Yen at the same time as customer B bought some Yen, it would be gentlemanly to clear that trade in-house for free and not have to go to Wall Street to do it.

Of course on the inside, this is surely much more complicated.  The institution has to have so-many dollars of cash on hand for withdrawals and to “float” things along.  When I took out $20 at the grocery store I didn’t actually sell half an Exxon share at that instant.  It actually happened an hour or so later.  The idea, though, is that the bank abstracts all that that away and charges some kind of fee structure that makes it all fair for everybody.

I know some banks offer sub-set/sorta-similar services for their bigger-dollar people, where every 15th the month (ie “payday”) so-many dollars get taken from the checking account and go into buying some stocks, or whatever, but I must admit that I’m interested in doing it much slicker.  Also, I’m especially turned on by the idea that it’s two-way, so that it’s no big deal to extract cash from it without logging into a brokerage website and waiting 48 hours, or whatever.

If there’s a meta-pattern for how fortunes are made, it’s taking something that’s only for rich people (cars, bank accounts, electricity to the home, telephones, etc) and applying technology and sophistication to make it available to the little guy.  To me, that’s exactly what this is.

Please do me a favor and fire away.  If this is a dumb idea then let me know now so I don’t waste any more hope on it.

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2 Responses to “Two-Way Equities Banking”

  1. Steuard Says:

    It’s not quite as fancy as what you’re imagining, but I have checkwriting privileges on a couple of my bond-based mutual fund accounts. My impression is that mutual fund companies only offer that option for relatively low-volatility funds: I haven’t seen the option for any equity funds, for example. But I could imagine a mixed-asset mutual fund doing something like what you describe.

  2. craigrmeyer Says:

    Indeed. It just doesn’t seem that ridiculously exotic, but doesn’t quite exist yet. It could have something to do with banking rules, and how you can’t have investments that PRETEND to be bank accounts, like with debit cards and stuff. It could be something like, but of course I’m just guessing.


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