Queueing and New Zealand Banks

I am frustrated at the lack of expectation placed on New Zealand banks by their customers. In these days of ubiqituious EFT-POS (NZ's point of sale debit card system) and TradeMe deals causing spikes in NZ Post demands, the one area that is not getting any good attention is the speed of bank transfers.

All of the NZ trading banks only allow transfers overnight (inter-day). And when I say day I mean business, err, banking days. And only before a certain time, 8pm for some banks. The funds don't appear in the account until some point in the morning, and you're typically not awake anyway. I'm using 6am although it can be earlier, shout if you think I'm being unfair.

The batching limitations means that a bank transfer will have an average delay of 7/5 = 1.4 days if entered at the cutoff point. Add to this a half day to account for the entry delay when it is not being actioned, and the average delay is nearly 46 hours. This is only half the story though, the minimum delay is 8pm-6am (10 hours) and the maximum a whopping 8pm Thursday - 6am Tuesday (106 hours = 4 days, 10 hours). It gets a lot worse around long weekends too...

This is classic financial friction. It means businesses need more working capital, and that everything moves m-o-r-e s-l-o-w-l-y than it otherwise could.

I'm annoyed that batch processing is perceived to be good enough, after all if telco's can do real-time billing of millions of transactions a day, then can someone tell the banks that it can be done? This can't be good for their systems; they must be encountering a massive peak of pent up transactions every Monday night. It makes me wonder if this is why the National Bank moved it's cutoff point back to 8pm.

ASB is often held up as a shining example for allowing instant transfers. They are better in that intra-bank transfers are immediate but this is anything but perfect. I think their reputation as the bank of innovation must be slightly tarnished by now -- I've seen nothing of great importance on that front for ages, and Westpac launched the first NZ debit Visa this year.

Kiwibank, who I'd expect to have shiny new systems given their age, does allow instant intra-bank transfers. A good step forward. Their other systems are, to be frank, a bit weird though. I was a foundation customer but due to their rather "secure" password rules I managed to constantly forget mine, and they have quite draconian unused/overdrawn account rules. Ciao Kiwibank. I wonder if the Flight of the Conchords were talking about them.

All of this on top of our banking services being very expensive. I'm not sure what we can do about this, I would have thought that one of the existing transfer mechanisms would be able to fake this (think every transaction done as 2x EFT-POS transactions, one debit and one credit) but I think the banks need to authorise this mode of working. I've not looked at some of the layered systems, but they all seem a bit too complex and typically transferring money in from my bank which doesn't solve this problem. Lance lamented the same thing a while ago.

It would be nice to see the telco's offering a banking service; person to person transfers using prepaid balances would be quite sexy and I believe this is quite common overseas. I must dig out some details.