How do we get banks to work outside their risk model
GigaOm has a preview of a paid report here but even the preview is a nice summary of the challenge facing banks that they still find it impossible to to address.
When we look at the current transaction volumes, mobile is nowhere. So it is understandable that banks see no problem here.
This paragraph in the GigaOm preview summarises something banks have difficulty understanding; the bold emphasis is mine:
In the same way digital payments companies like PayPal helped usher in the PC-based e-commerce explosion, mobile-focused companies are exploring how to make these transactions easier, for shoppers and merchants, at physical stores and online.
Making it easier for customers. As we all adapt or rather become absorbed in the intrinsic beauty of smart phones it is obvious the future lies in mobile. Yet mobile does much of what the web did in 1995 and on. It challenges security, usability, and probably most important, credence of the average bank strategist. The idea that a $250 brick that fits in your pocket can manage functionality that many disbelieved in expensive PC’s 15+ years ago is a challenge for many. Part of that challenge lies in the construction of bank technology that is just now catching up to the web revolution.
I blogged earlier about Square Cash which does exactly this; make leapfrog jump ahead in functionality that only works in mobile. It makes the functionality mobile centric. Its so new we don’t yet know the technical details on how they do it, but I am certain Dorsey has given that some thought. I used to argue that future functionality plans should be based on web first. That is old hat now. Mobile is the future and web is a supportive, additive channel for banks. This is the first step to understanding where we are headed.
There will no doubt be risks, therein lies the awkward point for banks which are built around sophisticated risk models that find it impossible to step outside the current risk averse model.
Much more to come.