Category Archives: Banking

Big Data = Big Brother??

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Big Data can make your life simpler, profit for businesses and at a lower cost than traditional business intelligence solutions.  Sound too good to be true??!  Read on…

What’s the problem with Little Data?
When you call a bank, they essentially validate who you are, against the information you gave on an application form.  The way they make sure that is you, is by validating that against a credit agency (like Experian or Call Credit) to make sure you are who you say you are, and that you can afford what you are buying.

Now as you well know, a lot can change between the day you opened a current account and today. Not least your mobile number, email address and importantly things like your lifestyle and buying habits.  What you buy and wanted 10 years ago, are very different to today I imagine!

What is Big Data?
Many modern businesses are made up of products that have been bolted on over the years.  These systems rarely talk to each other, and if they do, it’s even less likely the business is linking the data to be valuable for them, and valuable for you.

Big Data describes the patterns that emerge from analyzing trends across systems inside and outside the company.

Companies like Cloudera & Datameer specialize in very quickly doing what business management have dreamed about for at least a decade, without the expense of a data warehouse, and in real time.  They have the tools to connect to all of your data sources, then provide very visual, actionable analysis.

Where does Big Data come from?
As you go about your life, you leave behind data, like a trail of crumbs.  Every time you correspond with a company, government department or make a purchase – all of that data is logged.  What’s more that has been standard procedure for many years.

On it’s own in a dark corner data about what you bought for lunch isn’t very valuable.  When that data is linked to data in other dark corners it becomes tremendously valuable.

What can you do with Big Data?

  • Predict when you might be coming into financial trouble (because your MOT and car insurance is due) – and offer you a temporary credit limit increase (That’s helpful banking!!)
  • Send you offers or deals from Burger King if you eat and McDonalds a lot – saving you money, and making money for the bank by selling that data.  (That data might also be of interest to a health insurance company!!)
  • Check your driving record against the DVLA, instead of relying on you to inform them of speeding offenses etc.
  • Offer an appointment with your bank branch manager when you are looking for a new house and asking friends for advice on social networks.

I’m sure you get the idea, and there are plenty more too.  The Big Data revolution has the potential to make your life a whole lot simpler, whilst giving struggling companies another way to make money if sales are down.

What about my privacy?
Always the big worry.  The key will be to make all of these services opt in.  Under the Data Protection Act and Freedom of Information Act, no entity can store information without your express permission.

As I find myself saying often lately… your data is the cost of free

Will you take advantage of Big Data?
Companies are heading this way, very slowly.  Centralized contact data bases, improved cross business data sharing, and developments like data.gov show even the UK Government endorses a Big Data future.  Big Data doesn’t have to mean big brother, and doesn’t have to be feared.  For most of us it will mean less painful interaction with companies that have the data they need to actually be helpful.  Some further reading on how Big Data is different from Business Analytics

What do you think of Big Data?

  1. Will it be profitable for business?
  2. Will it struggle against privacy laws?
  3. Do you trust it?

Hey Techrunch: This is What’s really happening in Payments in 2011

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So Techrunch have been spending a lot longer looking at Payments lately.  Their high level overviews suggests that they just don’t get it yet.

The article suggests the 5 or flavors of the month in Payments (Facebook, Square, Apple, Google and PayPal) respectively, all have a viable play at the wallet.  Which is fair, but misses the big picture.  They’re not playing in whitespace.  Payments already happen.

What’s really happening

Let’s skip right past the hyperbole and make a bold prediction.

2011 isn’t the year for payments at all, because nobody quite see’s all the parts of the puzzle.  Bricks and Motar retail is a $4 Trillion industry.  Online Commerce is a $400 billion industry.  Mobile, Social and Virtual Currency payments combine to about $4 Billion in 2011 (US based figures, do some googling…).

Defining the Change

The likely outcome is that these will all converge.  They can only converge by working with the infrastructure that already exists within western markets (emerging markets are a much more open play for startups).  Try as they might in the West the start up brigade cannot circumvent financial institutions or the schemes.

By the same token: Try as they might, financial institutions can’t ignore the fact that a large percentage their customers are on Facebook.

What financial institutions need to do

So your customer is on Facebook, and everyone is gunning after payments, outsourcing CRM and your brand is losing value.  Whether it’s PayPal, the Mobile operators or the startups, the squeeze has started.  Your branch network and existing customer base is a great asset, but consumers are changing.

If I were a financial institution I would:

  1. Develop a strong presence on facebook
  2. Build your e-portal into the page on facebook
  3. Talk to customers via the web chat / page
  4. Help them with the e-banking portal
  5. Speak to facebook about a revenue share on virtual currency payments funded via ACH / Direct Debit

What the startups need to do

Google are interesting, they’re making a more direct play at sitting on top of Mastercard, and working with verifone to win the physical card sales, and bring those into the searchable world.  Selling advertising revenue to reduce interchange is smart.  Facebook, Square and Apple all have some way to go to reach that point, with segmentation strategies.  Amazon too have a horse in this race.

If I were a startup I would:

  1. Work with schemes (Visa / Mastercard) under a revenue share
  2. Develop an e-wallet capability
  3. Sell that to financial institutions as a whitelabel, brandable product

The dream would be if you knew a company who already works with financial institutions for technology, that was able to do all of this for you.  In my opinion there is a killing to be made, helping banks go social.  Consultancies will spring up in this gap in the next couple of years.  Although having seen a recent KPMG presentation on the subject.  2011 isn’t the year for payments.

I have my eye on 2014.

Your thoughts.

  1. Who’s going to win the start up race?
  2. Which banks are embracing social well?
  3. Does anyone in the market have a holistic view?

Understanding Social Media – Four Steps to Social Media Revenue

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Social Media is very much the buzzword at the moment, because the board level execs, and therefore middle management have recognised the massive user base.  Their thinking is along the lines of “We know there are a lot of users there, can we plug what we do today into that?”

In a word, No! It’s a very different space.

Before you can plug your product into a social space, your brand and business needs to be on there.  You’re dealing with real people in a much more intimate way than via a call centre or your website.  The rules are different.  Before you can even think about making money from it, you have to accept you have some learning to do.  Then we can talk about monetisation strategy.

Four Levels of Engagement

Joe Wiggins at Perfect Circle PR, lists the four levels of engagement in the financial sector.

  • Let’s Be Social – simply using social technology to build the brand and community
  • Enlightened Engagement – informing customers through reviews, experts or other respected sources
  • Store of the Community – customers help drive product selection assortment and merchandising
  • Frictionless Commerce – the buying experience is completely redesigned to create a fully customer-centric experience

Let’s be social

Step 1 “Let’s be social” whilst a starting point, is usually a siren of a business who’s marketing department convinced the board that they needed to “just put out press releases” because the competition is doing that.  This is akin to using a telephone for morse code, a waste of potential, but a step in the right direction

Enlightened Engagement

This usually happens when someone high up in the business has the Eureka moment and gets it.  It’s when the business recognises that their customers are talking to each other, and their friends about the business and interactions with your company.

It’s a paradigm shift.  Not everyone outside your employee list is against you.  In fact, some of them really like you and want you to succeed!

Social Media gives you insight to those conversations, and as an insight & perception management tool is invaluable.  This is real time feedback, from people who want to help your brand or business.

Store of the community

Also known as an “App Store”, is a big topc in itself, and a massive investment for businesses that are not already on the cloud infrastructure route.

The idea of having an ecosystem and marketplace of developers vying to make your channels better, for free seems like a tempting one.  It’s entirely possible with the developments in coporate IT Infrastructure and software to begin to make your services open for integration with clients, or 3rd party systems.  PayPal X is a solid example of how to do this in a gentle, risk averse way.

An open platform a huge stepping stone onto the quest for the holy grail…

Frictionless Payments

I’m willing to bet everyone see’s the value in this, pay any merchant from any account, anywhere.  On a pure technology roadmap, you could certainly get there without going social… but then how do you interact with this new world of Social Networks once you get there?

You may have the worlds greatest product, but if it doesn’t play well with social networks you’re stuffed.  More importantly, if your business doesn’t support it on the human level, consumers won’t trust you, and the service will fail.

That’s why it is vital your business follows the social and open technology and values equally. It’s as much about how you do business, as the technology.

Spend time getting to know your professional and human audience.  Listen to them.  Interact.  Then let them build the services they want, on top of your core value!  In effect the community will do the integration for you, you just have to open the front door, by being a platform.

What do you think?

  • Will business truly embrace social?
  • How would you implement it?

WikiLeaks fallout: What does it mean for your business?

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Key points that have been missed during the WikiLeaks debate:

  • The vast majority of leaks suggest diplomats do an incredible job. Sensationalist media seems to be owning the narrative and is the real cancer of this story.
  • The US government by increasing security, has defaulted to secrecy. This is not how you win the trust of the people.
  • Assange comes from a breed of hacker who’s motivation is that the truth shall set you free. If we’re all caught with our pants down, nobody has the upper hand.

Personally, I disagree with his methods, his style and the term “Wiki” being used. His intentions are right, but he has let the narrative be controlled by a media who want to turn it into something else.

What is more frightening is the reaction, politicians calling Assange a terrorist is ludicrous and counter-productive. Brett King’s printing press analogy is correct. You cannot close the lid on pandoras box.  You cannot fight a problem caused by secrecy with more secrecy.

What does it all mean? Like the MP expenses scandal, it will die down.  Be aware however that transparency is coming, and those with the most to lose are those hiding something.

You can trace this “open” trend back to the invention of the internet itself. The motivation is inspired by the “hacker” ideal, who believe that “open” creates a better world.  They believe a re-distribution of knowledge is good for innovation, and good for the global economy. Diversity of input = stronger product.

The key message to take from this episode is that your default should be transparency. This would limit the impact of Assange and the WikiLeaks dramatically.  My advice? If you have secrets, get there first.  The acid test is your conscience.  The most motivated hackers are those who believe they are just.  If you find yourself in a WikiLeaks storm

  1. Launch a full internal investigation, and publish the results
  2. Commit to transparent process that will prevent the re-occurrence of any wrong doing
  3. Use the announcement as a platform for building trust with the public and your clients

Do you run a business? How would you react to WikiLeaks publishing your internal dealings?

Banking Disruption

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All this talk of clouds, social media, mobile and the like isn’t going away.  The financial sector has moved from “I don’t care” to “I don’t understand”.  Whilst it’s not a monumental shift, it is important.  As Brett King puts it

Bankers are simply used to owning the pipes, the network, the wires and perceiving that their exclusivity on ‘banking’, their ‘lock on customers’ comes from having a banking license. Clearly, however, disintermediation of the retail front-end of banks is rife. Banks are becoming wholesalers, networks and product manufacturers, but clearly with the lack of innovative capability, the rapidly growing gap between customer behavior and retail banks as poor service companies, the question of whether we need banks has been answered…

We don’t need retail banks – we do need the back-end networks that process payments, we need organizations that are prepared to take on the risk of lending (social lending is unlikely to scale up to mortgage level), and we need mechanisms that give us access to trading systems and markets.

This is an all too common view.  We’re reeling from the “bigger is better” attitude of the past decade, and waking up to notice that plenty of companies have positioned themselves to render banks less and less useful.

Major retailers now offer financial products of their own, Twitter founder Jack Dorsey has just made it possible for anyone in the US to become a merchant if they have an iPhone.  Virtual currencies and mobile payments are almost completely alien to high street banks.  The fear of the unknown has caused inertia.

In effect high street banks are fighting a losing battle, as lumbering, slow moving, poor service companies.  What can they do?

  1. Focus on giving the most value to the consumer, not the least & profit taking (which is still rife, sadly)
  2. High Street brands have scale, and scale can often buy value.  Pass that on to the consumer!
  3. Bank’s IT departments are a black hole, they need a much more rapid service development cycle.  See Google: “Always in BETA” for how to break a new product
  4. Branches are a massive opportunity to leverage a brand name.  Face time for consumers is paramount
  5. Owning the pipes doesn’t make the consumer subservient to you, it makes you subservient to them.

The focus is so very risk averse, and focussed on tangible ROI that banks will likely be the last to move.  It’s often impossible to show a 5 year return on a wholesale perspective change.  What can banks do in the medium term?

Deutche Bank are represented by their CIO on the Enterprise Cloud Leadership Forum and at SIBOS 2010 made statements that are alien to many high street banks.

  • Learn about the cloud by leveraging the cloud (Use Google Apps, Youtube, Facebook for business!)
  • Have the internal debate about what to open up and how
  • Provide a platform for other developers to add value to your services

Can you imagine a CIO saying these things even 2 years ago?!

I look at Visa & Mastercard who now both have a development platform & a payment service provider as key leaders in the area.  PayPal & Bling Nation are then a neat front end to a scheme based auth’s engine.

What is a bank in a cloud based connected world, other than a database and risk carrying entity for financial products?  The separation between service and risk is also demonstrated by people like BankSimple who are primarily consumer focussed.

Interesting times…

What’s holding back Mobile Payments?

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It’s a complex picture, but so far the Solutions have come from two angles.  The first is from the banking sector, which is historically complex, and evolutionary.  As such we have product offerings packaging a prepaid card, with mobile services, tied to one operator and one bank…  The definition of a silo.

The second is from the technology sector.  In the past 5 years companies have been able to revolutionise advertising, media and traditional retail using a combination of technology & business model change.  Yet despite several complete implementations and product offerings, that would be enough to revolutionise or even create some market sectors, Mobile Payments have not taken off.

The businesses using the latest technology, software and business models have missed a critical element of the banking sector.  The banks themselves are the largest gatekeepers to change, and are often so slow to adapt they move forward with Scheme and Legislative mandates rather than through any entrepreneurial spirit.

The critical mistake made so far by existing solutions, appears to be the focus to sell mobile payments to the consumer, without considering the merchant or bank.  Many of the solutions are also technologically complete but unable to interface with existing banking business processes & Infrastructure.  The Open solutions allow anyone to become a merchant and completely bypass the existing network.  Whilst Square has focussed on the Merchant, they offer nothing to the consumer that is new & none of the banking security that comes through a regular Merchant account.

Neither Payment Silo’s nor Open Payment Platforms will gain ground without a killer feature or major unique selling point to the Merchant.  The keys to an adoption of a new model have historically been Simplicity, Compatibility & Universality.   TSYS is uniquely placed to provide this.

Lessons from Technology Companies

The story of how Apple ‘evolutionised’ their way into a market leading position with the iPod and iTunes is a great case study for how to approach the Mobile space.  The iPod when it launched was “just another MP3 player” however its unique selling point was the wheel interface.  Being intuitive there was a low barrier to adoption from a usability standpoint.  At the time the only solution had been illegal Mp3 downloads, or by ripping your own Mp3s from legally owned media.

Apple coupled their iPod launch with the launch of iTunes.  By coupling a business process, and media supply channel with the technology change, Apple positioned themselves uniquely for the coming move away from physical media by the consumer.  Despite the resistance of the recording industry Apple subsequently came to dominate the Music Sales space.

Scheme Dominance

Critical to understanding the slow uptake of Mobile Payments is the Schemes themselves.  Visa and Mastercard have piloted payWave and PayPass respectively.  Despite this the schemes have not issued any mandates like they have with DDA / PKI security.  They are in no hurry to jeopardise their position as Gatekeepers to the Point of Sale.

SEPA (Single European Payments Area) and GSMA (Trade Group of Wireless Operators responsible for the SIM card standard) have recently launched a consultation on mobile contactless payments.  The likleyhood is that before we get any real movement on Mobile Payments, we’ll need a Compliance mandate to make it happen.  History teaches us that banks move slowly to protect their dominance.  I expect this trend to continue.  How about you?

Making Life Easier with Payments

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The banking sector is unwieldy for anyone to navigate, especially those without experience in it. The sheer amount of Compliance, legal issues & Audit involved is immense and often a shock to the uninitiated.

What Jack Dorsey is doing with square is interesting much more for the payments platform than the Magstripe reader. Twitter knows how to be an Open API and unleash 3rd party apps. What they don’t know is how to navigate the Audit minefield. Security is paramount in the financial world, and often the reason their technology lags behind other sectors.

Change in the financial sector works in decades not years. If Square can succeed where PayPal almost did a decade ago, by breaking the dominance of Visa and Mastercard then we might just get Payments as easy as a Foursquare check in.

History teaches us that old Gatekeepers don’t give up power easy though.

Where does Apple fit into this? They have a tendency to build everything themselves, to a fault. Apple Video just has not taken off, while Hulu, Boxee and Youtube all threaten to leave it for dust. Apple entering the Payments sector could well produce the same result.

Somewhere between the OpenID/ OAuth discussion, Square, Paypal X & NFC is the answer. Who can put all of those jigsaw pieces together is anyone’s guess. The list of people trying is astronomical though.

Want Mobile Payments?

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The EDC 2009 Global Payments Survey suggested that in the USA, the mobile would replace the wallet over the coming half decade. A bold statement indeed, and something we have all heard before. It’s an argument that is winning traction since Square has won itself a lot of attention, mostly for some snazzy web design, and having a certain Jack Dorsey at its helm.


The problem facing these upstarts is that some very exciting companies are trying to create a solution where the consumer doesn’t see a problem. Perhaps the greatest degree of disruption will come from developing economies. Payment processors and banks have been attempting to load these territories with credit cards. Whilst this might give a short term revenue burst, where is the strategy?

Africans are already using SMS as a form of payment, because its simple and low tech. Payments in the western world need to be simpler, and have no barrier to entry for the consumer. The consumer has a phone, and has a bank account. They don’t have a payment mechanism that works as well as the card.


Until that is the case, we’re in an interesting but risky place with mobile. mPayy and oboPay both show a lot of promise in solving the Mobile Payments problem. However until someone is able to package this service and sell it to the banks, Mobile Payments will not take off. Given that most Payment Processors still think “e-commerce” is the future (scary I know), that could take a while.

Payments Innovation

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Is the payments industry and innovation diametrically opposed? Banks, payments infrastructure & the business model we use has been the same for at least 30 years if not more.

Are there good reasons for this?


Looking at the payments sector, you have very large slow moving clients who until the past decade have been entrenched in a risk averse position. This has lead to the rise of compliance, propriety standards and data silos.

In effect the industry built walls around itself and then asked the consumer to come to it. The consumer, who had little choice at the time took the best offer on the table.

In a sub prime housing bubble, with strong profits and even stronger bonuses, what motivation was there for change? The collective wisdom of all in the industry was that the security offered by existing infrastructure and Gatekeepers worked well.

We had an evolutionary change when Generation X revealed to the world it’s new age. The Internet brought The Information age. Sure enough, 5 years later most banks were thinking about online banking. A typically slow, but measured reaction given the sheer amount of security required.

Now Generation Y has revealed its own masterpiece. We call it Social Media. No doubt like “World Wide Web” and “Netscape” Social Media and 2.0 are terms that will die with the buzz that created them. Yet when the dust settles what will remain is the value.

The Generation Y consumer’s core values differ greatly from the Payments Industry. Generation Y wants instant access, 24/7 and to own the interaction. The risk of not granting this wish is that Generation Y are not shy about rubbishing bad service. Or on the flip side praising good service.

How can the payments industry take advantage? This is the challenge of innovation.