Banking

But do we really still want & need traditional banks that are "too big to fail"? What are the opportunity costs of impeding competition from other players? The original rationale for supporting the banking system was developed before the rise of corporations of similar magnitude. For example, Telstra, ANZ and NAB all have very similar magnitude market capitalisations (about $69bn at March 2016), revenues ($20-26bn) and profits ($4-7bn) and, if subjected to the same competitive pressures, arguably face similar scale of business risks. In an age of internet-enabled consumer choice, it is much easier for customers to make an informed decision about whether they want their deposits invested in low-risk bonds or higher-risk investment funds. Telcos such as Telstra would be ideal businesses to take on the banks with new payments technologies, as they can already add 3rd party product charges directly to phone bills (though it seems they need to better manage this to protect customers).

Telcos could also build a stronger force for challenging the banks if they formed alliances with superannuation funds. Deposit-holder investment risks could be managed through diversified Capitalist Co-ops networks, supported by loyalty programs similar to current banking & "frequent-flyer" credit card schemes. And with the superannuation & tax reforms I propose, most people should want to put all their spare cash into superannuation (with decent, tax-effective investment earnings) rather than in traditional low-interest bank accounts (as long as their super balance exceeded the proposed regulatory minimum balance that gives them the flexibility to withdraw it if required, although super fund organisations might also allow people to borrow against their super assets, so they could effectively withdraw below their regulatory "minimum" balance).