Digital Money Forum

Because that's where the money is

[Dave Birch] The electronification, virtualising and dematerialising of money means the electronification, virtualising and dematerialising of crime, because (naturally) criminals go where the money is.

FBI officials say a mix of banking Trojans and phishing attacks has plagued victims - mainly public institutions and small and midsize businesses - to the tune of $100 million in attempted losses as of October.

[From FBI: Online Banking Attacks Reach $100 Million Mark]

Note, by way of comparison, that about $60m was stolen in physical bank robberies throughout the USA in the whole of 2008. How stupid do you have to be to walk into a bank with a gun when you could just stay at home and send out some e-mails? We must find a way to accelerate the transition to e-payments and at the same time make e-money more crime-resistant than cash.

Jeff Slawsky, Slawsky & Associates

[Dave Birch] Jeff Slawsky has spent thirty years in the US financial services industry and wrote the book on developing and managing a successful payment cards business. Literally: it's called "Developing and Managing a Successful Payment Cards Business" and he wrote it with Forum friend Samee Zafar back in 2005. In this podcast, Jeff reflects on the seismic shifts in the US payment card business and speculates about the longer-term impact on regulatory, social and business changes in the American market.

Listen here in either [Podcast MPEG4] or [Sound-only MP3] format.

For all you utter bankers

[Dave Birch] Wow, that was excellent fun. Nothing really to do with electronic payments, but I've been playing a fantastic new card game called "Crunch: The Game for Utter Bankers" with the kids and some friends.

Crunch is a satirical card game for 2 to 4 players that places you at the head of the boardroom as a CEO of a global bank juggling the conflicting demands of your ailing bank and your future retirement fund. An average game sees you bribing your way out of government investigations, fending off aggressive takeovers and forcing debt onto the unsuspecting public. Meanwhile, reward your hard work by taking inappropriate bonuses and - when no one's looking - brazenly embezzling your bank's own funds and hiding them about your person.

[From Crunch - the game for utter bankers | BoardGameGeek | BoardGameGeek]

The game served a dual purpose, both of which left me delighted with it. First of all, it was fun to play. Basically, you build up your bank's lending against assets (ranging from shares in listed companies to Nazi gold) and then when a crunch comes you trade in trust for government bailouts. It didn't take long to learn, and both the kids and adults enjoyed it. It had an unexpected second purpose, though. I bought it for fun, but in playing it the kids asked a lot of questions about the credit crunch, about the relationship between assets and debt, and about the idea of deliberately growing your workforce and assets to become too big to fail (adding "workforce" cards also gains you "trust" cards).

Run, don't walk, to your nearest games shop -- I got mine from Playin' Games in Museum Street opposite the British Museum -- and pick up a copy of this super game.

Federal Trade Commission disclosure. I have no affiliation with Terrorbull Games, the creators of "Crunch", and have received no payments nor any other form of remuneration related to this endorsement. No animals were harmed during the writing of this blog post.

Faster faster

[Dave Birch] At the Intellect Financial Services group meeting, Paul Smee, the Chief Executive from the Payments Council, gave an excellent summary of Council's goals and objectives as well as making some suggestions for better co-operation between the technology industry and the financial sector, such as creating some kind of vendor forum. He said in passing that much of his focus over the last couple of years has been the Faster Payments Service (FPS). FPS is a little bit of a success story for the UK payments industry, so it's worth talking about.

Innovation that matters for the majority

[Dave Birch] That there is an interplay between the technology and monetary policy is obvious. Look what is going on in Africa. People who aren't allowed to hold dollar bank account hold dollar-denominated mobile top-up vouchers instead. Ugandans without an effective electronic payment system are using M-PESA from Kenya to execute local transactions in Kenyan shillings. Congolese without access to any banking network use mobile money instead (and may never, ever, want or need a bank account as a result). In India and elsewhere the banks have managed put a regulatory finger in the dyke but the pressure is building and money is already leaking away from conventional institutions and networks into newer, mobile-centric, customer-facing organisations. The dam will, at some point, burst. How will governments be able to "manage" the money supply when it is being zipped across borders by mobile phones, global handset hyper-hawala.

At the very first Digital Money Forum, the late Professor Glyn Davies (author of the magnificent "A History of Money") said that every technology revolution in money led to less centralised control. That's a good thing, but it also explains why the conservative nature of governments and regulators comes to the fore in questions concerning money. If anyone anywhere in the world can transact in any currency, then the weak will go to the wall very, very quickly. Gresham's Law on a global scale.

banking, currency, mobile, payments

Paris match

[Dave Birch] We still have a couple of places left for the (free) CSFI Roundtable discussion on "Innovation and the Internal Market" at the OECD in Paris on Friday. See the research fellowship invitation for all of the details.

banking, innovation, payments, SEPA

What's in a name?

[Dave Birch] I got caught out in a meeting referring to the APACS Card Payment Group, which of course no longer exists. I thought I'd render a quick public service to help other people to avoid similar mistakes. Here's your handy cut-out-and-keep guide to the UK's new payment organisation landscape.

The Payments Council was created in March 2007 to set out the national strategy for UK payments. It has a Payments Council Board made up of banking representatives, some independent directors and an independent chairman (Brian Pomeroy). The principal UK payment schemes (listed below) have a contract with the Payments Council to set out rights and duties.

The UK Cards Association is the successor the much-loved APACS Card Payments Group (CPG). It is the trade body for the UK cards industry. Its 14 members, the major card issuers and acquirers, work together here on non-competitive issues.

Financial Fraud Action UK was created earlier this year to work alongside the UK Cards Association on the specific issue of reducing fraud.

The Dedicated Cheque and Plastic Crime Unit (DCPCU) is a specialist law enforcement unit made up from officers from the City of London Police and the Metropolitan Police and funded by the banking industry. It investigates serious and organised cheque and card fraud.

SWIFT (UK) Limited is the membership organisation representing the UK's SWIFT users.

banking, payments

Finnish line

[Dave Birch] I had a few questions from journalists about the announcement of the Nokia Money service. We'll get on to the service itself in a minutes, but the dreary pedant inside me can't resist first pointing out that most of the headlines were on about mobile banking:

Noki­a is to enter the mobile banking market

[From Nokia to Launch Mobile Banking Service]

The announcement from Nokia, of course, says nothing of the kind, and for a very good reason. In most countries, if you decide to launch a mobile banking service then you need to be a bank. An if you offer a banking service without a banking licence, you will tend to get arrested. The Nokia press release very clearly calls the service a "mobile financial service", and says that

we are enabling services such as payment of utility bills, purchase of train and movie tickets, top-ups, all through their mobile phones

[From Nokia - ShowPressRelease]

Quite. Nokia Money is a money transer service, not a banking service. If someone else want to run a banking service that uses Nokia Money as money transfer and payment mechanism, then that's great. My guess is that people will want to do this, although whether the operators will be sanguine about them doing so with Nokia rather than with the operators themselves remains to be seen.

There is every reason to see this business model as sound. There is a latent demand for financial services amongst the unbanked and there are organisations perfectly capable of delivering those financial services once the mobile money transfer service is in place. A good example of this is in the Philippines, where the G-Cash mobile money transfer service forms the payments platform for a growing range of financial services, including banking. This is how I would expect Nokia Money to evolve. To see an example, check out what Green Banks is doing with the Microenterprise Access to Banking Services (MABS) infrastructure

Now, rural banks are no longer just traditional depositories; it has also become a venue for clients to make the following transactions:

1. make loan payments (Text-A-Payment)
2. make deposits (Text-A-Deposit)
3. make withdrawals (Text-A-Withdrawal)
4. send and receive remittances (Text-A-Remittance)
5. disburse salaries (Text-A-Sweldo)
6. pay bills for schools and utility cooperatives in remote areas (Text-A-Bill Payment)

[From Mobile Phone Banking Blog]

A few years ago, I was involved in a study for a customer in Latin America who was looking at the business opportunity just for this last service, the bill payment. Without breaking any confidences, I think I can say that the business opportunity was substantial, but only available to an organisation with a large enough cash-in network, which meant agent networks rather than banks (either through retailers or specialist outlets) because it would be too expensive for banks to build big enough networks from scratch.

Don Lisle, Citibank

[Dave Birch] Dion Lisle is a Senior Vice President of Citibank’s Growth Ventures team within the Innovation office. After a 20 year career in high technology, Dion joined Citibank’s Growth Ventures team from a Silicon Valley startup called Obopay to drive innovation in the area of mobile financial services. Dion’s responsibilities cover working with Citibank’s vast array of business and geographic leaders to drive innovation within mobile financial services. In this podcast, he talks about Citi's focus on the mobile future.

Listen here in either [Podcast MPEG4] or [Sound-only MP3] format.

banking, payments, podcast

Bob Cronin, ACI Worldwide

[Dave Birch] Bob Cronin, who holds an M.S. degree in Computer Science from the University of Iowa, has over 20 years of technical and management experience at ACI. He began his career in the technical ranks and was involved in all aspects of software design and development before moving in to technical management. After four years directing ACI's Asia-Pacific services team, he has spent the last ten years in executive management at ACI Worldwide holding senior positions in the Product Management, Product Development and Global Services areas and is currently responsible for the Corporate Management Office at ACI. In this podcast he explains what's happening to ACI's flagship BASE24 software and shares some vision for the future of transaction processing.

Listen here in either [Podcast MPEG4] or [Sound-only MP3] format.

banking, payments, podcast