Goldman Has Some Boring Plans

One thing you could do if you’re a big bank is, like, companies give you their money, and you hold on to it for them, and you give them a website where they can log in and see how much money they have, and when they need to pay their workers or suppliers or whatever, they tell you to do it and you send the money. This is, roughly, called “transaction banking.” It’s pretty standard? There are ways to innovate in this business, or make it more complicated (you can pay their foreign suppliers in foreign currency, you can automatically advance them some money to pay suppliers even if they don’t have it yet, you can make the website better), and of course there are ways to make it risky (you take their money and invest it in Bitcoin or Ponzi schemes, or steal it), but the basic idea would be familiar to medieval bankers. They give you money, you hold it for them, you give it back when they need it.

Obviously it is a big business because there are lots of companies and they have lots of money and they have to pay lots of employees and suppliers and so forth. Many other banking businesses are lumpy and unpredictable and specialized: Most years, most companies won’t need to take out a syndicated loan or issue bonds or raise equity or do a merger, and they almost never need to do complex derivatives. But every company needs a checking account every day.