Barclays: Two revolutions that never were

RBS (including NatWest) will be launching cardless ATM withdrawals using a mobile in the next few weeks.  They are essentially reusing the ATM service that they have had for many years.

Added: 07 June, 2012 - 20:32 | Finextra member says:
RBS (including NatWest) will be launching cardless ATM withdrawals using a mobile in the next few weeks.

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Thank you for sharing that. It would be interesting to see how (and when) Barclays responds to that. ATM withdrawals are often-overlooked when it comes to mobile finance, even though it's a logical "extension".

The NatWest link took me to a page that described how NatWest's customers could make cardless cash withdrawals from its ATMs. I admit that the use cases mentioned in the article for such a service - lost or stolen card - are valid but this service is hardly revolutionary or even forward-looking.

On the other hand, let me take the example of a product offered by ICICI Bank for over 4-5 years. Here, an ICICI Bank customer initiates a P2P payment via ICICI Bank. The bank sends an authorization code via SMS to the beneficiary, who doesn't have to be an ICICI customer. The beneficiary simply visits the nearest ICICI Bank ATM, enters the PIN and cashes-out the payment. ICICI Bank enables a P2P payment virtually in realtime even to the unbanked or customers of competing banks and makes a tidy fee in the bargain. While not revolutionary, this product expands the footprint of bank-driven retail payments and is self-funding. 

Exactly, Kerharaman. There are many ways to implement cardless ATM withdrawals that are (much) safer than the current mag-stripe (!) setup. Today, NCR announced trials of a barcode-based approach (similar to what Starbucks uses for payments). SMS is another good implementation, as per your example. Both, importantly, are out-of-band methods. With our platform, we combine out-of-band with the "chip-n-PIN for the Internet" to be in line with the current US push for "chip-n-PIN" by Visa and MC.

Just so that my previous comments are clear, ICICI Bank exemplifies a different usage scenario, one in which said beneficiary doesn't have a card at all since s/he doesn't have an account with said bank. The use of mobile in this context is complementary to card, not as replacement to it. This product expands the market and earns fees for said bank and is not an example of a security mechanism. To me, supplementing cards by mobile / barcode is great, but not replacing the former by the latter.

Interesting element of "mobile money", Ketharaman, thank you for the clarification. Something to consider, for sure. Banking, as Brett King is saying, has become a rather loose term. If we provide the service you describedi, i.e. facility to withdraw cash from an ATM, are we a bank? To take it further, does a company need to be a bank to give consumers what they want n respect of "banking"? The answers are clear to many non-bank companies in this playing field.

Personally, I won't trust one penny of my money with any company that calls itself a bank without possessing a banking license. Anyway, the point is moot because (1) Banks are supposed to be dowdy and old-fashioned, so why would a startup founded by a few 20-somethings want to be called a bank? (2) In any case, nonbanks lack the legal latitude to call themselves banks where I live.

As I've mentioned in my earlier comments, the said 'cardless ATM cash withdrawal' product is from ICICI Bank, a bank that has a banking license and happens to be among the Top 5 banks in India. As of now, nonbanks can't even offer self-branded ATM services, let alone create an interesting ATM-based product like this.

IBM recently sold their Retail Store Systems (RSS) division for US$850m. RSS - the current market leader (!) - has 1000+ employees plus another, probably, 1000+ of field engineers, as well as tons of R&D personnel and several factories.

Square have around 100 employees (could be wrong here), zero R&D, zero factories. They were valued at US$4bn. For a very good reason.

I'd be (very!) careful when it comes to 20-something (I am 45, btw) startup owners, especially when they are aiming to disrupt such a conservative (i.e. slow to respond/adapt) industry as banking.

@Alexander P:

Since SQUARE is the only startup you mention, let me say:

• Its founder Jack Dorsey is not even 30! (could be wrong here but not by much)
• As I've pointed out elsewhere in my Finextra comments, SQUARE is an ally - not adversary - to banks. Before SQUARE, all those "Florida boardwalk" type of merchants were only able to accept cash from their customers. Thanks to SQUARE, a lot of their transactions now happen via bank-issued credit / debit cards, fetching banks an incremental source of interchange revenue without the incremental risk - as banks see it - of issuing acquirer accounts to such merchants. I hope the US$ 4B valuation of SQUARE factors in the risk that SQUARE takes by acting as a sort of 'master-acquirer' for all these merchants. 

Ketharaman,

If you Google "Jack Dorsey" (why guess if one can be sure), the first search results entry says "b.1976". But I cannot see why age is at all relevant (unless you are as young looking as Alastair Lukies and get laughed at by stereotype-prone execs who later still collaborate with you, without apologizing).

Square couldn't care less about the banks, but not the other way round since, as you correctly noted, Square drives consumers away from cash transactions (not that card issuers care about Square).

It's not about what an entity is called or how big/small/young it is. It's about VALUE that an entity brings to the table.