The Anonymous Widower

The Concept Of Hybrid Banking

I have been writing about hybrid trains and locomotives recently.

In Hybrid Power On The Railways, I summarised the current state of development, with brief descriptions of the current hybrid trains and locomotives.

This was my conclusion.

Just as hybrid cars are becoming more numerous, I suspect we’ll be seeing more hybrid trains in the future.

So can hybrid principles be applied to other industries and processes?

A Standard Hybrid Process

In my opinion, one of the best hybrid systems is the transmission of London’s New Routemaster bus. This description of the drive-train is from Wikipedia.

The bus is a hybrid diesel-electric driven by a battery-powered electric motor, charged by a diesel fuelled generator and recovering energy during braking by regenerative braking.

It is a classic serial hybrid vehicle.

Energy is collected in the battery from the diesel generator and regenerative braking and the battery powers the bus.

Hybrid Banking

Could a bank account be designed on similar principles?

  • Money would be collected and stored in a deposit account, where it would earn interest.
  • There would be a wallet, where sufficient money is available to pay bills expected.

I also believe that just as in the bus, there would be a clever control algorithm, that made sure money was in the right place.

  • To pay bills.
  • Earn maximum interest payments.
  • Avoid charges for going overdrawn.

Many would believe, I’m asking for the impossible.

But!

Zopa Or Another Peer-To-Peer Lender As A High Interest Deposit Account

I use Zopa to store my excess cash.

I just add money, when I have spare.

Zopa’s computer decides, who I lend it to, so it’s effectively deposit-and-forget.

Since, I started investing I have earned returns of around five per cent before tax.

Any irrecoverable debts are allowed against earnings.

But the unique property of Zopa and probably some other peer-to-peer lenders, is that each month a certain amount of money becomes available for reinvestment or withdrawal.

These figures show the percentage of money, I’ve had available in the last few months.

  • November 2018 – 6.9%
  • October 2018 – 7.1%
  • September 2018 – 6.7%
  • August 2018 – 7.5%
  • July 2018 – 6.8%

So it looks like for a mature Zopa portfolio, around 6-7 percent is available for reinvestment or withdrawal.

If like me, you have tax bills to pay at various times of the year, you might sometimes take the latter option, as I do!

But if you do withdraw money, your ratio will change.

It should also be noted that a high proportion of Zopa contracts make payments on or around the first of the month. So lenders can get a sizeable payment in the first few days of a month. All very handy!

Nationwide Or Any Other Bank Account As A Wallet

I use Nationwide as my bank account, transferring money between Nationwide and Zopa as required.

I also have a sensible agreed overdraft limit, which gives me an extra amount of flexibility. I think it’s only been used twice in the last couple of years at tax payment time.

As the overdraft limit is lower than the minimum amount of money, I’ll be able to withdraw from Zopa in a month, I know that if I use the overdrsft, I should be able to repay it quickly.

The Control Philosophy

I don’t have a computer to work through the control philosophy, but I can use the brain I was born with.

By about the twentieth of the month, I can see the state of my finances and generally know, whether my pension will cover my expenses for the next month or so, or if I need some help.

So when the Zopa payments kick in around the turn of the month, I withdraw what I think I’ll need.

If I draw out too much, then around the twelfth or so, I put any surplus back into Zopa.

A Hybrid System

I believe that what I have described works in a similar way, as a typical hybrid drive system for a bus, train or car.

  • Zopa backs up the bank account and provides extra finance when needed. This is a similar function to the traction battery in a hybrid vehicle
  • The agreed overdraft facility is there if any extra short term finance is needed. It has a function similar to capacitors in a hybrid vehicle, where they are used to provide a fast smoothing response.

Imagine an on-line banking system, which used artificial intelligence to calculate how much extra money is needed each month and transfer money to and from Zopa accordingly.

 

December 25, 2018 Posted by | Finance | , , , | Leave a comment

Crossrail’s Latest Issues Begs The Question, How Do We Judge Success In Transport Megaprojects?

The title of this post is the same as this article on Forbes.

The article makes some interesting points about transport megaprojects. It is definitely a must-read.

As an example of a megaproject that went wrong, it cites the Channel Tunnel, which exceeded its budget by 80%, required refinancing and then Eurostar only carried a third of forecast traffic.

This article on the BBC, which is entitled How Eurotunnel Went So Wrong, gives the full story of the Channel Tunnel finances.

So should it now be closed? Obviously not, as the alternatives of driving and flying would create a lot more unwanted carbon dioxide and would need more motorways and airports.

The benefits of building Crossrail, such as increasing the capacity of London’s transport system, reducing congestion in Central London and giving better access to Canary Wharf, East London, Heathrow, The City and West London will just come in a year or so later.

The article also says that according to Oxford professor; Bent Flyvbjerg, Crossrail is suffering a 7% cost overrun, where the average for rail projects is 45%.

In my view Crossrail has suffered from a number of problems that together have caused the cost and time overruns.

  • Not enough time was built into the schedule to test the sophisticated trains with their three signalling systems.
  • No dedicated Crossrail test track was created, so the trains could be fully tested.
  • An unfortunate transformer explosion, was a big cause of delay in testing systems.
  • There were not enough workers to finish the project.
  • Central London is awash with large projects, some of which became viable because of Crossrail, that are sucking up masses of workers.
  • Brexit uncertainty has meant that a lot of EU workers have gone back to Europe to build projects nearer their homes.

Where was the European project supremo, who added up all the needs of these European megaprojects, to make sure, we had enough resources to build all of them on time?

 

December 25, 2018 Posted by | Transport | , , , | Leave a comment

I Am A Twenty-Four Hour Person

I rose as usual at around five-thirty this morning and went through my normal routine.

  • I measured my weight and blood pressure. Incidentally, I weighed 61.8 Kg.
  • I checked my savings in Zopa and my bank account.
  • I did two dozen press-ups

Now I am on my first cup of tea of the day. I have also replied to a couple of e-mails.

I’ve been like this in one way or other since the 1970s, when I started programming Artemis.

In those pre-e-mail days, I would be on my computer writing code before six and generally only stopped writing code around ten at night having been writing on and off all day.

C would sometimes drag me off for some shopping or a visit to a pub or restaurant, but I worked very hard and was well rewarded.

Some would say my hours are unusual, but my father was the same. Memorably, he once mowed the lawn at two o’clock in the morning!

 

December 25, 2018 Posted by | World | | 1 Comment