Community

I'm with you all the way till the end. Studies have shown that native apps convert better than web apps. So, the analogy is more like (say) 7 out of 10 people reach from A to B with a native app whereas only 4 out of 10 manage to do so with a web app. Besides, it's only with a native app that certain tasks can be performed viz. Mobile RDC. And, IMO, the mobile channel will take off only if such mobile-only use cases are exploited. Otherwise, for plain-vanilla account balance, P2P payments and other portable versions of web apps, the mobile channel is itself arguably unnecessary, regardless of whether it's done on a native app or HTML5.

Nice post. Enabling useful transactions is perhaps the most important thing in the early stages. It's important to recognize mobile as something different from a portable version of the web and design mobile apps that specifically exploit GPS, camera, accelerometer and other features that only smartphones have and PCs don't. Mobile RDC is a good example of such an app in financial services. 

We've also seen QR-code based bill payment as a powerful use case not only in parts of the world where web is not widespread but even where it is: It is possible to build a mobile app that enables 1-tap payment by scanning a QR code on the bill, which saves the trouble of logging in, entering credit card details and password, which are necessary for web-based bill payments.

I can't agree more with @OscarS: "Socializing" such actions can make these coupons go viral. We've seen this with one of our campaigns where we promised a free giveaway to all visitors who tweeted the webpage that featured the advertised product from their Twitter account. In devising this mechanism, our intention was to make it as frictionless as possible for visitors to request the giveaway by avoiding forms and yet have some way of staying in touch with people to whom we gave away the free content. One unintended consequence was we got free visibility for the product on the Twitter timelines of thousands of followers of our website visitors. These followers in turn visited our webpage, thus setting off a chain reaction. But, care has to be exercised to design the social action in such a way that the resultant virality is favorable to the brand / product.

The Lehman failure precipitated the GFC. Lehman was so heavily over-leveraged that no Basel accord could have saved it. The events of the last few years have shown that, when things are fine, you don't need Basel and when the dominos start falling, Basel is of no use. Only government bailout can stop the fall, and, if that requires the government to print more currency notes, it will. Point is, Basel accords are woefully inadequate to solve real world crises.

@GaryW:

Very thought-provoking article.

There's a lot of scope of improvement with SWIFT but, having worked with both SWIFT and BT, BT is hardly the epitome of a nimble, fleet-footed company. Like AT&T, BT too might excel in lab and patent level innovation, but SWIFT is far more customer-centric than the telecom behemoths on either side of the Atlantic. 

While you've talked about "commercial networks" with naming anyone in specific, SWIFT offers corporates something very specific, namely, C2B connectivity to enable corporates to connect to multiple banks, and not to one another. I'm not sure if any of the commercial networks you'd in mind even offers a similar product / service as SWIFT because, as far as I know, corporates connect to multiple banks via (a) their respective bank's Internet Banking portal, or (b) SWIFT bureau services or (c) SWIFT. The admittedly low penetration of SWIFT in C2B is better explained by the resistance of corporates to change from their incumbent connectivity method, which is (a), than to the widespread use of third-party networks supporting C2B, if any. 

Comparing financial services with other industries, proprietary networks are still prevalent in automotive, defence and healthcare sectors, if not others. A wave of Independent Trading Exchanges targeting these industries came and went during the dot com era of the late '90s, dragging the leading marketplace technology providers into virtual extinction along with them. A second wave of such platforms has cropped in the last 2-3 years. The jury's still out whether they're going to be any more successful in ousting the incumbent proprietary players this time around than the last.

SQUARE's primary target group is mobile merchants who don't have a merchant account with a bank, probably won't get one even if they applied for it (due to their higher risk profile), and use Square's "master merchant account" in order to accept card payments. Whereas, the target group for BofA's Mobile Pay On Demand is merchants who already have a merchant account with BofA, and within that group, only the ones that wish to accept on-the-go card payments without wanting to fork out monthly rentals for mobilePOS equipment. The two services therefore seem complementary to each other. Unless I'm missing something, it doesn't appear that BofA is taking on Square at all. 

Banks use customer-facing technology to (A) Equip bankers with devices and applications to enrich customer-facing tasks (B) Urge customers to  use technology to perform many banking tasks in self-service mode. Up until and including Web 1.0, use case A was more prominent, so technology and personal care were not mutually exclusive. With the advent of Web 2.0, RIA and mobile apps from the vendors' side and cost pressures from banks' side, there is a rise in use case B where technology and personal care are undoubtedly becoming mutually exclusive. The angst among HNIs - not to mention other customers - to wider use of technology shouldn't therefore come as a surprise. HNIs might prefer to use their time and effort to become UNWIs rather than jump the several hoops required to carry out many self-service banking tasks e.g. make / receive an ePayment. In an op-ed article I'd written a couple of months ago for the American Journal of Internet Banking And Commerce - I'll provide the hyperlink if Finextra permits - I'd predicted that, unless banks reduce friction in technology, they "face the risk of their customers going back to branches, checks and cash". Looks like HNIs have already expressed their intent to do so. It won't be too long before others do.

@RajneeshK:

TY for your reply. I specifically refrained from crystalball-gazing. But, now that you bring it up, for something that's supposed to solve the problems that led to the GFC in 2008, it's almost laughable that Basel-III will happen only by 2018. Besides, five years from now, I expect that we'll be debating about Basel-V or -VI. I love the way BIS has created this seemingly-endless source of business for risk and analytics technologies and services. Not sure how long banks will be able to fund the party, though.

Vodafone seems to be dithering about its M-Paisa service in India. After reading this article, I inquired Vodafone about it and here's its reply:

VodafoneIN2:16pm via Vodafone Support

@s_ketharaman Please note that M-Paisa service is currently not available.

There are several problems with "golden share" in India viz. (a) They're unlikely to find favor with the public (b) The present government might find it too challenging to implement a Thatcherite scale of reform (c) Financial analysts tend to frown upon them, as is the case with a similar instrument floated by Facebook that delinked voting rights with ownership.

The combination of SLR and CRR already provides higher capital adequacy for banks in India compared to those in many other parts of the world. Besides, public sector banks enjoy sovereign guarantee by definition. As a result, many analysts and government officials are asking whether Basel-III is even required for India.