Banking Liberation Movement

Back in the 1970s, when a high-end supercomputer had about the performance of today’s entry-level cell phones and networks were expensive proprietary technology, ATM transactions were … wait for it … free.

And you earned interest on a cheque account.

Banks made almost all their money on the difference between the deposit and lending interest rates.

Core computer technology, based on Moore’s Law, is about on billionth of the cost it was 45 years ago (price per transistor roughly halves every 1.5 years).

Never in all the fields of human endeavour has such a massive improvement in efficiency been so extraordinarily wasted.

So what made everything so expensive? Not having higher paid more skilled staff in the branches – that has also gone backwards. The mind only boggles at how banks have destroyed such a massive opportunity. With careful design the cost per transaction could be almost zero, and saved costs shifted to quality customer relations.

If companies like Google and Facebook can offer free services on a massive scale, only making money on a tiny fraction of total transactions, how hard can it be?

Banks have fallen into the trap many enterprises fall into of trying to maintain outdated systems on the basis that it is too expensive to re-engineer them from scratch, with the result that their software accretes more and more layers of cruft and becomes harder and harder to maintain.

If banks cut their services back to what they had on offer in 1975, carefully coded to maximum efficiency and small total software size so it was manageable, then put a web front end around what you could do back in 1975, you would have most of what you can do today and it would cost a tiny fraction of what they spend today on software. The biggest cost would be ensuring you had the best possibly security (and some banks don’t even have that…).

So why don’t they do that?

Each major bank has accumulated an army of software developers dedicated to maintaining the complexity of the existing systems to maintain the need for an army of software developers. And if they all do it, they can pass the costs on to the customer.

Nice work if you can get it.

So what can we do?

How about this for a radical idea? Free banking software. The free software movement has delivered some of the best operating systems in use today, web browsers, sophisticated database engines and the most robust network stacks available today. Why not the back-end of a banking system?

It could be done in 1975 with one-billionth of the computing power available today. How hard can it be?

Free eTax Software

After years of complaining, I’ve decided to take on the Australian Tax Office’s inability to create an eTax system that is platform-independent. While a minority of computer users use computing platforms other than Microsoft Windows, they have a right to access government services. It is also wrong that a government agency is favouring one company over other alternatives. It’s as if you were only allowed a tax break for business use of a car if it was a specific brand.

Let us be clear about this: some have said, what’s the big deal? Mac or Linux users are no worse off than people without computers who also lose out on the benefits of eTax. That’s not the point. Someone buying a popular (if not the most popular) computer platform may have their choice swayed if a major, mainstream application is not available. If you want to use a Windows machine, a Mac or a Linux system, you have good options for spreadsheets, word processing, email, web surfing, personal accounts etc. on all of them. A government agency such as the Tax Office ought not to be swinging competitiveness of rival computing platforms towards creating a monopoly.

If you want to make your voice heard, here are two things you can do:

• sign my online petition


• complain to the ATO online or by phone 1800 199 010

What will I do with the petition? Once it’s reached 1,000 signatures I will alert the ATO, Wayne Swan, Joe Hockey and Bob Brown as to its existence. I will challenge each of them to take action.

The results count below includes a few bogus signatures that I’ve trimmed:

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To illustrate the standards of other countries, here are some that support at least 2 platforms:

• South Africa: Mac plus Windows
  
• USA: Mac plus Windows – as far as I can tell the IRS also publishes the spec so anyone can develop software for electronic filing
  
• UK – online filing, with options to submit information in more complex cases from other software (available from private sources, so a good guess is that the spec is available).
  

In summary, we are not talking about an insoluble problem. Even a developing country does better, and it’s not because Macs are much more popular in South Africa than in Australia. They represent an even smaller niche there than here.

Stupidity

Against stupidity the gods themselves contend in vain

- Friedrich von Schiller

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With that piece of advice from the great German writer, who am I to try?

I must be pretty stupid to ignore Schiller, which means I outclass the regular idiot. So I will contend with them.

The particular stupidity I have in mind is the extreme reluctance of society – especially major opinion-formers like the press and political leaders – to accept scientific consensus when it flies in the face of tradition. Especially when that tradition has mega-bucks behind it.

Let's contemplate a few examples.

1. Free or Open-source software

In South Africa, c 2000, I was involved in writing a report for the governement on why free software represented a big opportunity to South Africa. Not only would there be massive savings in government costs in software licensing, but a small fraction of that saving could be diverted towards developing local software development talent.

While there are divided views on this subject, there is a growing consensus in acadamia and industry that at least some areas of software development are best done on a free license basis. For example, Sun has opened their Solaris operating system, Apple's Darwin core of Mac OS X has been open for years, and IBM has embraced Linux.

So the report I was working on wasn't particularly prescient: it was informing government of a trend they could tap into.

The consequence?

Very little happened immediately but about 2 years later, the government recalibrated funding per discipline for undergraduate degrees, and dropped computer science to a category below pure mathematics, an overnight drop of 40%. Why? No one has been able to give me a satisfactory answer, except that the government based its figures on data from universities, which have traditionally underfunded computer science, as a cash cow for less popular subjects like physics. Another explanation: some of the crap universities were teaching basic computer literacy as "computer science", and this is very cheap to teach. Put 1,000 students in front of a lecturer who has the class memorise the menus on Excel.

Do I need explain more how idiotic this is?

Maybe just a bit.

Computer science, if taught properly, needs two things which are expensive: a good ratio of equipment to students, and a good student:staff ratio. Without the first, programming is hard to teach at all unless a lot of the students can afford their own equipment. The second is important to have quality time to get in the deeper concepts.

Add in the imperative to teach "currently useful" stuff, and the fact that someone who can look after a large computer network has skills in high demand in industry, and you have a high recurrent cost. You need to turn over your labs at least once every 3 years, and you need relatively highly paid technical staff to maintain them.

If you compare this against teaching physics, the same student:staff ratio argument applies. The equipment one does not apply to the same extent: undergrad physics can on the whole be taught with relatively inexpensive equipment which does not go out of date fast. And you can train up a physics lab technician with skills not much in demand in industry.

Finally, a really big difference between computer science and physics is that much of the most advanced CS research is very inexpensive. Commodity PCs can be used in many cases, even borrowing from the undergrad labs if necessary. Whereas a subject like physics becomes really expensive once you start wandering off pure theory.

This last point brings me back to my starting point.

A free software movement in South Africa would require very little funding to get going compared with almost any industry associated with advanced physics research. The skills developed could affect many areas of society, in delivering more efficient services, briding the digital divide, and providing a base for exports.

2. More

That's enough for this time. Further topics: tobacco control; climate change.

Watch this space.