The Bankwatch

Tracking the consumer evolution of financial services

The MintChip experiment appears to be over and is being sold off

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About 18 months ago I attended the introduction of Mintchip by the Royal Canadian Mint.

Royal Canadian Mint takes on digital cash

Mintchip is a project of the Royal Canadian Mint designed to provide an infrastructure for payments that would replace cash.

But now in a dramatic change of strategy, they are intending to divest Mintchip to the private sector.  This is disappointing.  In the article it is clear progress was being made, and alliances arranged with security and terminal vendors.  It is unclear what the future will hold for MintChip now.

It is especially disappointing because government involvement was one of the attractive aspects because it made the concept trustable and a suitable replacement for cash.  For me it set up a perfect real world comparison to Bitcoin and I discussed that here along several levels such as Government or not, P2P or not, unique ‘coins’ or not, new currency vs new transmission of existing currency.

I wonder (speculation here) if industry lobbyists got involved here, is it just to experimental for the Government, or did someone decide it is not the role of government to develop money transmission methods.

Too bad.

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Written by Colin Henderson

April 7, 2014 at 12:29

Posted in Uncategorized

Game changing banking technology announcement

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Once in a while I am fortunate enough to get a hold of embargoed material.  This one is expected to be released to the public in about 1 month but I was able to get exclusive rights to release this now.

Here is a senior management communication from a well known bank with what I can only describe as game changing technology for financial services.  In a few days I will be able to provide additional exclusive detail, but meantime this is just too good not to share.

Enjoy this internal management letter.

To All Management:

Many of you are engaged in our scheduled enhancements to our online and mobile offering.  However there are some highly confidential elements as some  you know which had to be held back until we received regulatory approval.  We now have that approval.

First some background.  Technology is rapidly evolving and we are all very aware of that nowadays.  Part of that is the rapid expansion of UAV (Unmanned Aerial Vehicle or Drone) technology in silicon valley.  You may also have noticed that FaceBook is directly involved with drones to provide enhanced internet services, and in fact they have purchased an English drone company recently.

Our online banking strategy was always intended to be competitive rather than leading edge and its time to revisit that approach.  This new initiative which I am going to share required us to work very closely with OSFI, PIPEDA and Interac as well as some big players in silicon valley, to gain approval before we could share more broadly.  I believe this will literally take online banking to new heights.

We can now announce our intention to be the first bank to deliver banking by drone.  We believe this will frankly make mobile banking look like yesterday’s news. It will be branded Drone Interac Payment (DIP).

More to follow.  Meantime there is much preparation required, primarily for employees and it begins with you.

From a training perspective, all employees will be required to receive advanced UAV training so that they will be able to direct the drones from the desktop.  Management will be first to receive this advanced training.  You will be receiving a new monitor and joy-stick to accommodate drone piloting.

Good luck with this and any questions, please contact your friendly Chief Drone Interac Payment Pilot contact (C-DIPP) name redacted.

Written by Colin Henderson

April 1, 2014 at 01:07

Posted in Uncategorized

“mobile-first, cloud-first world” | finally a new Microsoft

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Its been some time (decades?) since I had anything positive to say about Microsoft. Nadella in a few short weeks is setting the tone and direction that will change the company.  The iPad app delivered on a non Microsft OS this week was a big deal.  Now this mobile-first, cloud-first world statement is a sharp right turn away from a Microsoft centric world.

Satya Nadella email to employees on tuning our organization | Microsoft News Center

Today marks the start of another big week for Microsoft as we gear up for the Build conference in San Francisco. We continue to push on the momentum from last week’s news about how we will thrive and grow in a mobile-first, cloud-first world, as shown by the great Office apps for iOS, rich new APIs for developers and our new Enterprise Mobility Suite.

The new organisation reflects Cloud, Gaming, and Devices.  It remains to be seen if that works but it is a clear strategy that is reflective of the dynamic changes in technology during the last 5 – 7 years.  I say good luck to Nadella.

Written by Colin Henderson

March 31, 2014 at 22:53

Posted in Uncategorized

IRS determines Bitcoin is property not currency

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This is a fascinating ruling on the Bitcoin argument as a currency.  The US IRS has noted that Bitcoins are not fungible, which is one of the features of cash.  Each Bitcoin is unique which also implies unique tax treatment.  Whereas cash can be together in bills or in an account and it doesn’t matter which one is spent first.

This doesn’t stop it being used as a payment medium, but it is not the same as cash.

Bitcoin Tax Ruling Credit Slips

The IRS ruled that Bitcoin and other virtual currencies are property, not currency.  This means that they are subject to capital gains taxation.  And that means that Bitcoins are not fungible.  The price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular Bitcoin when spent.  If I spend Bitcoin A, which I bought at $10, but is now worth $400, I’ve got a very different tax treatment than if I spend Bitcoin B, which I bought at $390.

Written by Colin Henderson

March 31, 2014 at 08:34

Posted in Uncategorized

Welcome to The Machine

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Finally it is sinking in.  Computers and internet have been with consumers since roughly 1992 with early adoption then adoption through late 90’s and early 2000’s.  In our industry as recent as 2003 senior banking executives still referred to online banking as a passing phase.  A consultant (Forrester?) coined the phrase “bricks and clicks” to summarise the obvious that branches would in fact be supplemented by online and life would carry on.  Enormous amounts in the billions of dollars were invested delivering ‘common customer experience’ across thousands of branches over the next 5 – 10 year period.

Yet in one example I know, two web servers produce the rough equivalent of 90 branches worth of business every day for a bank and support 2 million customers on PC and mobile. hmmm

Ten years later since bricks and clicks internet is ubiquitous.  Branches are largely empty when compared to the line ups out the door in the 90’s.  Amazon can ship me things that get delivered next day.  Future Shop is closing down big box stores and laying people off.  It is rare to spot someone with a real book on the subway anymore.  A significant group skipped books and watch movies on the subway now.

And on it goes.  Gillian Tett writes today:

Digital v human: the new debate ft.com  (registration required)

The real rub of invisible digitisation is exactly that: the revolution is unseen. imageThus, while “the progressive response to the harshness of 19th-century capitalism was fuelled by a growing awareness of what was going on behind factory walls, CBS (Computer Business Systems) are by comparison invisible”. They are like black holes: sensed, not watched.

Recent books on the topic.

Mindless: Why Smarter Machines are Making Dumber Humans (Simon Head)

The Second Machine Age , by Andrew McAfee and Erik Brynjolfsson)

Relevance to Bankwatch:

There is a shift that has taken place that was significantly accelerated in 2007 with the introduction of the iphone.  In the seven short yeas since then, smart phones and tablets have become virtually ubiquitous.  Everyone has one and everyone of any age can use one.  There are no instructions that come with it; it just works.

Online no longer means just computers and laptops.  Barclays Bank took just 2 months to achieve the 2 million mobile users that took 13 years for PC web banking.

Yesterday RBC announced their digital wallet.  Digital wallets were spoken of in the 90’s but it took smart phones to provide the catalyst for them.

For financial services we are indeed on the verge of another dramatic shift.  The first which saw transactional banking shift to customer self service though online and mobile has happened with some stragglers to pick up.  The next shift will be in payments and more importantly, how we buy things. 

It is no longer about transaction migration.  It is about experience and memo to marketers; we are not talking about a website redesign. 

This is now about the entire experience and removing the friction of paying for things.  Company’s such as Uber and Hailo have removed payment friction from taxis.  Your focus is on getting from point A to point B.  The focus is not “do I have cash” or “does this cab accept visa”.  You can focus on the travel experience.

Flypay has a target of getting you out of the restaurant in 60 seconds.  Simply scan the QR code on your bill, and leave.  Again the emphasis is on the experience and the reason you are there, which is to enjoy a meal.

Gillian and the books she references worry about people and their jobs being either displaced or marginalised as poorly paid and repetitive jobs.  Gillian fears the shift exacerbates income inequality.

These networks keep displacing jobs that used to be performed by the middle classes, tossing them out of work or into thankless, monotonous drudgery, even as a tiny elite of skilled managers (or business owners) gets wealthier.

Either way the shift to a significantly more technologically enabled world is coming.  I say ‘coming’ deliberately because that shift has not really started yet.  Sociologists and commentators will debate right and wrong.  But Banks need to be continually taking that long term strategic view into deployment of capital in physical or virtual networks and considering the future impact of ROE for those that are further ahead.

Written by Colin Henderson

March 28, 2014 at 08:58

Posted in Uncategorized

RBC launches mobile wallet

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The RBC Mobile Wallet, came out yesterday.

image

It uses NFC and I have to  predict this will be the start of a big uptake in Canada for mobile payments. 

RBC Mobile is as simple as a download for your android phone, and from my understanding it is available before log in within the RBC app.  Then when you tap you will be guided through the acquirer rules for pin just as you would with your debit card. 

I hear rumours that two other Canadian banks are close behind.

Side note:  when am I going to see this cool stuff for my iphone!

Meantime, well done RBC!  Check it out here.

Written by Colin Henderson

March 27, 2014 at 09:29

Posted in Uncategorized

George Colwell – Leveraging Real Time Data Insights | SAP Banking day #sapbankingday

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George Colwell – Leveraging Real Time Data Insights

Comments from this session:

  • Types of data for Banks:
  • legacy
  • premium content
  • social media
  • deep web
  • PFM – whether presented to clients or not, client data must be aggregated and understood at that level
  • Premium data – commercial services
  • object is one single view of data representing best view of client
  • data insight:
    • sense & respond
    • predict and act
  • the better the data the better at prediction
  • embedding the predictive capability at the business process level real time
  • scoring example in a payment fraud startup
    • location
    • time of day
    • etc
  • decreases chance of false positives
  • [ed] this is also an opportunity for marketing and pro-active service levels
  • other data elements
    • social media for brand sentiment
    • relate to purchase propensity
    • mortgage payment to another bank
    • mortgage payment stops – why?  (different bank, sold house, lost job etc)
  • personalised care
    • Amazon example again – they are watching for customer service problems
    • bank example:  customer tweets about bank problem – don’t just ask why – relate the tweet to actual client transactions and frame service response in that contaxt
  • George introduced Dan Adamson from http://www.outsideiq.com/.
    • doing interesting things by aggregating customer data around the web, and developing structured views and analysis on that client
    • using HANA predictive cycles go from 12 hours to 30 seconds to 3 minutes
    • the plug here is that with enormous data sets HANA runs the cycles much faster

    Written by Colin Henderson

    March 25, 2014 at 12:38

    Posted in Uncategorized

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