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 or current account, 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.


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 now 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.

  • May 2018 – 7.5%
  • April 2019 – 6.0%
  • March 2019 – 5.7%
  • February 2019 – 5.6%
  • January 2019 – 6.1%
  • December 2018 – 4.7%
  • 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 current 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 overdraft, I should be able to repay it quickly.

The Control Philosophy

I don’t use 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 twelth 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 | , , , | 1 Comment

An Offer From A Bank Out Of The Disruptive Handbook

Banks don’t often copy the sort of marketing ideas used by the disruptive companies like Zopa and OVO Energy.

Both these companies pay users a bonus for introducing new customers.

Now Nationwide are saying that if you recommend a friend and they switch to the Bank, you’ll both get £100.

Nationwide does all I need from a money-transfer company. I should say that I don’t use any of their other services except for free travel insurance and a credit card, which is one that is recommended by various financial pundits, as it is very good in its use abroad.

This sounds like a good deal all round, for those who have simple banking needs like I do.

So if you’re thinking of changing your bank and Nationwide is on your list, get a friend to recommend you and you’ll both be quids in.

August 17, 2015 Posted by | Finance | , | Leave a comment

Institutional Bank Transfers Have Really Got Better

Today is a Monday and I was surprised to see my monthly pension payment had arrived in my bank account overnight.

A few months ago, the transfer would be in a pending pot, but I wouldn’t have been able to use it for probably three days.

I could blow it all today, on a wheel nut for a Lamborghini.

The only users in this process are the banks.

I always remember my friend, David, who rose to the top of a major clearing bank, telling me that they got a third of their profits from overnight money.

So they won’t be getting the interest payment, when they lend out my pension money for two days. Unless of course, they lent it out for Friday and Saturday nights!

March 24, 2014 Posted by | Finance | , | Leave a comment

The Increased Speed Of The Zopa To Nationwide Transfer

I needed to remove some of the excess interest and repayments in my Zopa account to top up my Nationwide current account.

The last time, I looked at the speed of this, it took three or four days before, it was fully documented in my bank account and available for use.

I initiated the transfer at 06:43 on the 19th. I know the time precisely, as Zopa send a check e-mail on every requested transfer. The payment arrived in my bank account sometime before 06:00 this morning. So it was definitely under forty-eight hours.

Remember too, that I’m only siphoning off interest and repayments from Zopa.  In a typical month you get upwards of five percent of your investment in Zopa, available for withdrawal, without cashing in any loans.

I’ve used Nationwide and Zopa as an example here, but I suspect most other reputable institutions, companies and individuals are the same.

I think the only thing that will happen to this sort of transfer in the future is that it will get faster.

March 21, 2014 Posted by | Finance | , , | 2 Comments

Nationwide’s New Credit Card Statement

I received my on-line credit card statement from Nationwide yesterday and it has been simplified in their new web site, so that it is now very easy to see how much you need to pay for either the minimum amount or to avoid any interest charges. In the past, you sometimes had to guess the latter.

This means that I can get my cashflow more precise.

So are we going to see a features war between banks, as they make their web sites better to attract more customers?

After all, when you make a major purchase, like a car, a washing machine or a new partner, you carefully check out all the features! But unless you actually move your account, that’s a bit difficult with banking. Where is the test-before-you-buy feature?  With peer-to-peer lending sites like Zopa and its ilk, you can experiment with a small sum, before you actually make the decision to move your savings there!

Certainly, unless they do something horrendous, I can see no reason at present to move my account away from Nationwide.

March 16, 2014 Posted by | Finance | , , | Leave a comment

Nationwide Updates It’s On-Line Banking

Nationwide has brought in a new on-line banking web site, which seems to go some of the way to meet some of my objections about lack of information.

As an example, I’d setup a single payment to pay a credit card bill for the 13th March. Until the start of this week, the money would have been debited from my account at midnight and marked in my account by an anonymous entry, just giving out how much I’d paid. But this morning, the money had gone from my account and the entry gave full details about the transaction.

So Nationwide seems to be getting closer to my ideal of a money transfer company, where I can collect all my incoming payments and organise all of my outgoings.

March 13, 2014 Posted by | Finance | , | 2 Comments

Is Nationwide Being High-Handed?

On my on-line bank summary from Nationwide, there is a button saying Upgrade Now against my Current Account.

It doesn’t say any more and I suspect, it would put me on one of their pay-ten-pounds-a-month accounts, which give me a right to useless interest rates.

Surely, I demand something a bit more informative!

August 15, 2013 Posted by | Finance | , | 1 Comment

Have Nationwide Lost The Plot?

I’ve just logged in to my Nationwide bank account and they gave me a soft Internet sell on their ISAs.

They were offering a guaranteed pittance of 2.5%

I get a guaranteed rate of 5%, admittedly before tax, with Zopa.

We live in interesting times!

May 3, 2013 Posted by | Finance | , , | 1 Comment

Another Useless Piece Of Information From Nationwide

A couple of days ago, I paid a plasterer, who had done some work on my bathroom.  I paid by direct transfer and by chance, his bank account was also with Nationwide.

This morning, when I checked my bank account, it was labelled as an Internal Transfer.  Surely, their system could do better than that!

On-line bank statements could be a lot better and would probably lead to all kinds of good secondary effects if they were.

For instant this morning, if I didn’t know the plasterer, I might have to contact him to make sure he got the payment.

I’d give Nationwide’s on-line statements three out of five at most.

I sometimes think about changing, but all the banks are probably as useless as each other and how many would let me have an account for a month say to try them out?

March 5, 2013 Posted by | Finance, World | , | Leave a comment

A £100 Button On A Nationwide Cashpoint

I needed to get some money out this morning, so I went to a Nationwide Cashpoint in Kings Cross Station.  After keying in my pin, it offered me the usual choice, but with a special £100 button.

As that was what I was going to draw out, I just touched it and got my money!

How sensible!

December 4, 2012 Posted by | Finance, World | , | Leave a comment