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Although I don't see Apple, Google, PayPal and the other tech prima donnas as being either capable or interested in disintermediating banks, the situation with retailers is quite different. By diversifying into financial services, retailers stand to boost their profits and valuations. Only time will tell how successful they will be but, hopefully, the renewed push by Walmart and Tesco into financial services will drive banks to demonstrate greater focus and passion in developing customer- and merchant-centric solutions.

This ruling applies to ACH, which is not a same-day settlement system. It's interesting to view its impact on realtime systems like Fed/CHAPS or near-realtime ones like FPS. Carrying out the required fraud detection checks takes a few minutes / hours, the payment misses the scheme roundtrip duration SLA (e.g. 2 hours in the case of FPS, a few seconds in the case of CHAPS) as a result. The bank is not guilty of wrongdoing but how will the court rule in case the corporate sues the bank for delaying the payment?

Worse still, what if banks sit on the payment and enjoy the float, acting out the pretense of carrying out fraud checks? They're clearly guilty of wrongdoing, but will it ever be possible to prove their guilt in any court of law?

By signing up with a bank, a corporate acknowledges the level of security provided and understands the level of concomittant risks involved. When the issue clearly lies on the corporate's side - like in this case where its Financial Controller opened a malware-laden email - a court-driven review of contractual roles and responsibilities can prove to be a double-edged sword.

Can't deny your view of the status quo and prescription for change. In fact, I've blogged and commented about this subject using the term "omnichannel banking".

When it comes to a tradeoff between fat bonus and customer centricity, the status quo makes it clear which way banks have leaned thus far. Having said that, many banks I've come across will nevertheless change their well-entrenched and self-serving practices if they're faced with documentary evidence about how they've actually been hurt by them. Wonder if there's any?

Hopefully, this incident at Citi brings about a sea change in website security gaffes that are, unfortunately, not too rare. For example, the website of a leading European-Indian insurance JV in India displayed the automobile insurance policy # on the browser's address bar. Anyone could help themselves to the policyholder name, contact info, car make and model, sum assured and premium. To make it even easier for competitors to harvest a rich contact list to go after, policy #s were sequential! No need to generate random policy #s or apply mod10 checks: +1 or -1 to the displayed policy # was enough!  

People having been using their mobile phones for long enough and making cash and card payments forever. They've also experienced the benefits of NFC in contactless cards e.g., with a laptop bag in one hand and several shopping bags in the other, it's a great relief to pass by the Oyster Card reader and get the turnstile to open at a tube station without going having to take out their wallet containing an Oyster Card from their handbag or jacket / trouser pocket (believe me, it works!). They might wonder if using an NFC mobile for such a usage scenario is practical. 

Therefore, I'm not sure how receptive an average consumer would be to education around how to make mobile payments. 

More than education, a little incentive might work wonders to spur adoption of NFC mobile payments - for example, twice the reward points for paying via mobile as against plastic. Until the resulting question of "who bears the cost of the incentive?" is answered, I won't be surprised to see continuing apathy from banks, and hence, consumers towards mobile payments. 

Many of them begin with grand plans of setting up a parallel payment network, only to realize, like ISIS did, that it's not easy to disintermediate the 50-year old big card networks. Then, they dilute their offering to mWallets. Maybe I'm missing something here, but does it really take the likes of Google and MNOs to develop mWallets? A startup like Keyring could do it long ago for loyalty cards, it can't be so difficult to make the same app support credit/debit/prepaid cards?

@Keith R: Not that he needs it, but in further mitigation of Paul P, I doubt if any spell checker would've spotted this error since both 'hire' and 'higher' are dictionary words!

While costs may be high, the few case studies I've come across demonstrate abundant benefits. Despite a strong business case, if SWIFT connectivity hasn't gained enough traction among corporates and SMBs, it seems to me that SWIFT and its resellers haven't done enough to provide a compelling reason to buy that resonates with their prospective customers' pain areas. Maybe they should take a leaf out of the marketing playbooks of ERP vendors who've managed to grow their revenues constantly by selling to corporates and SMBs over the years despite high license, consulting and maintenance costs against a backdrop of less than perfect track record of successful implementations. 

@Robert S:

Banks in Canada have reportedly informed customers that they will forfeit fraud protection from their banks if they disclose their Internet Banking credentials to PFM and P2FM services. Not a surprising move when viewed against the backdrop of fraud loss situation you've described. 

@Brett K:

Thanks, I now understand that "Mobile Engagement Banking" is the crux of your argument for the future of banking. The shift from traditional outbound to modern inbound marketing is already happening in many other industries, so I can easily forsee that it would happen in banking in the manner you've described. I agree that catering to that will call for different organization structure, messaging platform, analytics and UX as compared to today's. Even granting that banks are woefully unprepared for all this, they can always partner with third-party companies who are better in these things. Let's assume they fail to enter into such partnerships. Does it mean that Apple / Google and others who are better at fostering such engagement will disintermediate banks? No - not in the next five or even 10 years, and for the following reasons:

1. In principle, to me, banking per se holds primacy over mobile engagement banking. To put it plainly, banking is banking, engagement is only engagement. 
2. I've come across several cases of accounts being frozen unjustifiedly by PSPs like PayPal versus none by banks. Therefore, in actual practice, I'd feel safer putting my money in a bank - even an old fogey one that insists that I visit its branch for every transaction - than keep it in a PayPal account. This might change if regulators force PayPal and other PSPs to play by the same rules that are applicable to banks.
3. Notwithstanding the above, the whole point could be somewhat moot: As tech companies, Apple / Google / Facebook / eBay-PayPal enjoy a seat at the top of the valuation totem pole whereas banks have to stay content at the bottom half. It isn't reasonable to expect shareholders and Wall Street to permit the tech prima donnas to dilute their tech positioning and get into banking in any significant way, knowing that any such move would likely lead to their market caps taking a nosedive.  

In short, when it comes to banking solutions, to twist the popular saying, banks are not damned if they do, and not damned if they don't!

@Finextra M: 

Railroads got disintermediated by automobiles in the USA; the FORTUNE magazine recently reported that Google Search is getting disintermediated by vertical search engines, name brand etailers and group buying sites. History is replete with examples of incumbents getting blindsided by young upstarts in other infrastructure-heavy industries. At the time it happened, no one would have charged the incumbents of being the worst. To that extent, I don't believe that the present 4-corner card network model is permanently unassailable.

At the same time, history has shown that disintermediation can happen only when the newcomer renders the incumbent's offering irrelevant. Like someone said, the only way to beat Google is by making search less relevant and not with a better search engine.

If we look at mobile banking / payments, they continue to use banks and card networks. It's open to debate whether they're more or less convenient, secure, etc., than other forms of banking. But, one thing is undeniable: They're a form of banking and, by definition, they're not making banking less relevant. The only way banks and card networks can get sidelined is by something that makes banking and payments irrelevant. I don't know if that *something* will ever happen, but I'm sure that mobile banking / payments are far from that *something*.