Forte Financial Blog

Musings on the Future of Contactless Payments

David Birch has a great post on the future of contactless payments vs. phone payments:

I've heard more and more people -- on the issuing side -- talk about skipping over contactless cards completely and just moving directly to phones of one form or another, either NFC phones or phones with NFC stickers on them. The argument is, essentially, that it's hard to deliver enough added-value to compete with the cash just using a card whereas a phone can be a platform for more services for the both the payments and retail sectors.

There is much food for thought in the post, so don't stop reading - go here for the rest.

Demo Videos from FinnovateStartup Posted Online - Very Cool

Back in April I attended Finnovate Startup here in San Francisco and live blogged the event. It was a whirlwind of 40 startup/young financial technology companies presenting 5 min demos (no scripted PowerPoint!) of their products/new features. Lots of energy, great people, and some really cool stuff.

This week the videos were posted online, so now you can watch from the comfort of your office, cafe, or sofa. Check 'em out here.

Vendors represented include:

PayPal is 10 Years Old (and Bigger than You Think)

Over at FinanSer/SWIFT Community, Chris Skinner observes PayPal's 10th birthday with a round up of stats demonstrating the remarkable growth of PayPal and shift toward metrics like active users rather than registered users as their business matures.

Excerpt:

In their latest company presentation, published June 16th, they have these figures:

• PayPal operates in 190 markets using 17 currencies
• A third of people in the UK have a PayPal account
• Over 100,000 websites accept PayPal in Europe

PayPal has more users than most payment services:

• PayPal                         141 million
• Chase                           115 million
• Citi                                114 million
• AMEX                            78 million
• CapitalOne                   59 million
• Discover Card            50 million

Total Payment Volume (TPV) grew by a third in 2007 to $47 billion.

Read more here.

Citi to Whitelabel Ariba EIPP Solution

From Bank Technology News:

Ariba, a spend management solutions firm, has agreed to a first-ever private-label agreement for its invoice and payments technology with Citi’s Global Transaction Services unit. Citi plans to integrate Ariba with its own e-payment and supplier finance offerings. Those programs include Citi’s recently launched purchase card program and connectivity to major supplier finance services in the payments industry.

GTNews: Corporate Payments & SEPA & SWIFT

A couple articles of interest at GTNews this week:

Payments in Need of Standardisation
Jonathan Williams, Experian Payments
Corporate treasurers are facing pressures to consolidate and standardise their processes - how can they balance these requirements?

SEPA Security - Lessons Worth Learning from the Past
Steve Brunswick, Thales e-Security
SEPA security should not be regarded as a daunting task but instead corporates should learn from the experience of previous large security projects.

The Latest Shift in Payments
Rohan Padhi, Cognizant Technology Solutions
This article considers the impact of SEPA and corporate access to SWIFT and how banks are tailoring their offerings to meet client needs.

Plus, AFP's Global Corporate Treasurers Forum just wrapped and there is a recap of the major themes. Not surprisingly, liquidity was a a hot topic. Vendors take a look to see what CFOs and Treasurers are worried about (in addition to their careers, that is).

Commentary - How to Optimise Treasury Strategy and Your Career
At the AFP's recent Global Corporate Treasurers Forum in Chicago, topics such as treasury strategy, organisational structure and career progression took centre stage, against the backdrop of the liquidity crisis. .

There's plenty more at GTNews.com

Simple, Convenient Taxi Payment via SMS

If you happen to be in a taxi in Abu Dhabi, that is. Aneace describes the simple, convenient solution here. If only this were possible in San Francisco!

ClairMail - Secure, Efficient, 2-way Mobile Banking & Payments [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

ClairMail - Secure, Efficient, 2-way Mobile Banking & Payments [NACHA Payments]

ClairMail enables two-way customer interaction via mobile phones, regardless of the type of phone and the wireless network, using the phones existing software and standard features, including email and SMS messaging, mobile web and native client applications. No new mobile phone software is required.

The big news from ClairMail at the NACHA Payments is that it is partnering with WAUSAU to extend the WAUSAU remittance platform to the mobile channel. ClairMail Mobile Lockbox technology enables an alet message sent to the payer's mobile phone with details such as payee name, dollar amount, and due date. The payer replies to message to instantly pay the bill from their mobile phone. If the biller is fortunate (and the consumer not particularly adept at cash management) the payee may respond immediately to the alert, rather than paying on the due date.

Regardless of the desire or need for consumers to pay their bills from their mobile phone, I do think that mobile alerts for corporate payments make a lot of sense. Because the payment amounts are larger and the stakes of missing a payment are often higher, corporate payments are particularly suited for mobile transactions - they have the added benefit of being discrete, enabling corporate finance managers to quickly and quietly respond to urgent payment matters from meetings, on the road, and off hours. In particular, positive pay confirmations, wire payment confirmations, and lockbox exception handling are well suited to the ClairMail solution.

One particularly cool feature overcomes the awkwardness of entering a URL and username + password combination into a mobile browser. Using the ClairMail solution the customer can send a text message "go" to their financial institution and receive in reply a dynamic link. Upon loading the dynamic URL the mobile user enters an encrypted session and only has to enter a PIN rather than their username/pw pair.

>> Return to index of my posts from NACHA Payments 2008

eGistics - Scalable, Flexible Hosted Document Management [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

eGistics - Scalable, Flexible Hosted Document Management [NACHA Payments 2008]

I had an opportunity to speak with Bob Lund, CEO of eGistics, and discuss the company's transition from a payments-centric archive to a more holistic document-centric model, encompassing not just images of check payments but the accompanying remittance and correspondence, as well as other key business documents,  thereby enabling its financial institution and payment processing vendor customers to better serve the needs of billers and retailers.

Through its hosted business model, eGistics provides a scalable, secure, redundant document image archive to support payments applications such as retail and wholesale receivables processing, check processing/Check 21,medical payments processing (EOBs) and records management, and loan processing and management. Because it is a hosted solution, customers do not need to make a capital investment and simply pay a one-time fee to load each image. Subsequent viewing of the images is free, thus customers can predict their archive costs based on transaction volume rather than usage of archived images.

I was particularly impressed with eGistics workflow and business rules capability. Customers can define escalation procedures for the timely review and resolution of exception items. For example, a brokerage that receives a payment a their lockbox with a letter requiring exception handling can provide email addresses for employees that should be alerted with a link to the item for review. And if the initial contact does not respond, a second employee will be contacted. Similarly, if the deadline for resolution of a particular item is approaching, additional employees may be contacted.

eGistics is in partnership with ChoicePay (more on their latest offerings here) and US Dataworks, as well as other payment firms and many of the top financial institutions. The company has already gained traction within the healthcare industry and is well positioned to continue to serve the growing needs of that vertical.

>> Return to index of my posts from NACHA Payments 2008

International Payments - The Changing Landscape [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

International Payments - The Changing Landscape [NACHA Payments]

Ralph Dangelmaier
President, Americas, ACI Worldwide
Debbie Smart CTP
Senior Product Consultant, ACI Worldwide
John A. Jaye
First Vice President, Channel Technology, Bank of America

Synopsis from Conference Program

International trade is growing rapidly as more companies source goods and services overseas. In terms of volume, international payments are estimated to represent approximately 8% of total payments and they will continue global growth at a rate of 10.2% annually. As nations' economies become increasingly interdependent through trade and investment and as funds and people become more mobile globally, the need to move money across borders efficiently, securely, inexpensively and in a timely way intensifies. Using compelling statistics and trends, speakers discuss the five most significant influences of international payments which include: government-led initiatives and mandates like SEPA; the upswing in outsourcing driving operational efficiencies; emerging transnational systems reducing the dependency on corresponding networks for payment; the increase in managing security of risk and liquidity management; and the expansion of multinational banks and corporations. Shifts in payment trends, such as remittance and open account trade payments, are also discussed.

My Observations & Comments

Three trends are driving increasing focus on International payments:

1. Growth
   Primarily around trade but also government transactions. Ten percent/year growth in international trade, 7.8% within the Americas. By one estimate, cross border payments make up 8% of total payments. [The speakers haven't posted their slides to the conference archive so I can't confirm the source of these figures, I will update this if I can get a hold of them and their sources. For now this is what I've got in my handwritten notes.]
2. Government & Regulatory Mandates
   Regulatory mandates and government-led payment efficiency initiatives are driving bank and vendor solutions for International payments. For example, SEPA and PSD in Europe, FasterPay in the UK, Basel II, and the Patriot Act in the USA.
3. Globalization
   Multinational companies pressure their bankers to provide truly global solutions, just as many of the largest banks become global themselves. Operational efficiencies are sought by multinationals and financial institutions alike through outsourcing. And increasingly, large banks are able to clear International payments internally.

Trade Finance as an Opportunity for Financial Institutions

2007 US Trade statistics: Export = 1.132 Trillion vs. Import = 1.953 Trillion. There are 7 states with exports greater than $40 billion. We are experiencing record exports due to the weak dollar.

Traditionally international trade was conducted via Letters of Credit (see diagram here) whereby intermediary financial institutions absorbed the risk of conducting business with far off, unfamiliar trading partners and often provided funding to suppliers. Today, most international trade is conducted on open terms, via purchase orders. Open trade reduces costs and shortens the time frame (assuming payment terms are short). But suppliers/exporters assume the risk and may have a hard time finding funding.

SWIFT's Trade Service Utility was developed to enable banks to "reintermediate themselves" by delivering value-add trade services to support open trade worldwide. [Fifty banks participate worldwide, but the uptake has been relatively slow.]

Remittances as an Opportunity for Financial Institutions

A second, growing opportunity for banks to expand International transactions is Remittance services. Consumers working overseas send money home at ever increasing rates (research by Aite suggests that global remittances will reach $456 Billion by 2010). The top four remittance destinations are China, Mexico, the US, and India.

Non-financial institutions dominate the market (Western Union, MoneyGram, Euronet, and Xoom) but the speakers suggest that banks can compete effectively by offering lower transaction fees, better exchange margins, while expanding their customer base. One suggestion was to target the employees of banks' corporate customers, offering a direct deposit option for payroll that would fund an account (or prepaid debit card) in another country.

Inexplicably the second half of this presentation was devoted to BofA's payments hub strategy. It was interesting, but I won't cover that here, as it does not pertain to International payments.

>> Return to index of my posts from NACHA Payments 2008

Peter E. Raskind, President and CEO of National City [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

This year's keynote presentation was by Peter E. Raskind, President and CEO of National City. The topic was supposedly "Executing Payment Strategies in a Changing Environment" but it sounded a lot like an infomercial for National City. I tuned most of it out, but the Q&A was quite interesting.

Q&A with Peter E. Raskind, National City

There were many questions about subprime housing and the credit crisis and regulatory response. Raskind expressed faith in the free market, and emphasized that the industry "must do the right thing in a timely manner" or regulators will step in.  One questioner cited a recent Economist article advocating a "countercyclical" approach to bank regulation (building reserves during good times in anticipation of the eventual bad times) and Raskind agreed that a more modulated measurement of capital adequacy (a sliding scale based on bank risk profiles) rather than a binary threshold makes sense.

With regard to banking competition (and consolidation, in particular the Chicago market) Raskind stressed that banks must focus on execution in order to earn the right to survive. Raskind acknowledged the "real fear" of  bank disintermediation by PayPal, Google Checkout, telecoms and mobile startups. He characterized the access to payment systems for consumers and businesses as the last great franchise left to the banking industry and an enormously profitable one. He said that the competitive threat is relevant and of enormous concern. Banks must "earn their customers business by providing safe, reliable access to payments at competitive cost."

He endorsed the consolidated payments hub concept, but did not think it would come to fruition in during the course of his career. He believes that mobile payments are a viable substitute for currency, particularly small value transactions, but predicted a more glacial rate of mobile adoption rather than cataclysmic change.

Raskind deferred that representatives from BofA and Wells Fargo would be better positioned to comment on their recently announced plans to consolidate their ACH processing, but did wonder about the two banks' ability to differentiate their brands with their customers.

>> Return to index of my posts from NACHA Payments 2008

Overall Observations & NACHA Leadership Interview [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

Overall Observations &
NACHA Leadership Interview

ACH Transaction Growth: Over All and B2B - More than 18 billion automated clearing house (ACH) payments were made in 2007, a 12.6 percent increase over 2006. Business payments increased to 2.5 billion, up 8.5 percent over 2006. Financial EDI records (remittance data passed through the ACH network) increased by 11.9 percent and the number of Financial EDI payments increased 18.1 percent over 2006. That means that a whole lot B2B payments were made via ACH but the remittance information traveled from buyer to seller via other means (mail, email, fax, phone, etc.).  Details here.

Leadership Transition at NACHA - At the end of the year, Elliott McEntee will step down after 18 years as CEO of NACHA. He has led the ACH organization through unprecedented growth as the payments industry transitions from paper to electronic. Many innovative, non-bank payments solutions leverage the ubiquity of the ACH network in ways unimaginable eighteen years ago. McEntee's successor, Janet Estep, formerly an Executive with US Bancorp, is charged with defining a vision for NACHA's future. A future that, according to NACHA's Board Chairman Steve Ellis, will not only continue to focus on the migration of paper payments to electronic, but also, increasingly focus on mobile and global payments.

I had an opportunity to talk to McEntee, Estep, and Ellis on Tuesday afternoon. After only one week on the job, it is too soon for Estep to outline her plans (I'll check in with her in a few months), but my first impression is positive. She emphasized the need to collaborate with all of NACHA's constituencies - member banks, technology partners, consumers and businesses - in order to ensure the ACH network provides reliable, secure payments that meet the needs of both senders and receivers in a number of contexts. And she vowed to rid future conferences of showgirls and Cher impersonators.

When asked about the tension between NACHA's role in defining standards and rules and its efforts to develop products, Estep made a distinction between traditional product management (from concept to development, including pricing and going to market) and what she would term "initiatives" at NACHA, which does not imply full ownership or include pricing and go-to market execution. Her view is that NACHA has a unique role in collaborating with its constituencies to enable new payments initiatives. Ellis also views NACHA's efforts as distinct from products, seeing the organization as an enabler of new products, leveraging the rails that already exist to do more and more. He characterized the NACHA efforts (EBIDS, Secure Vault Payments) as proof of concepts/pilots - not unlike a laboratory.

Increased Focus on B2B - I was particularly pleased that Ellis, Estep, and McEntee all stressed the importance of B2B payments to NACHA's future strategy. NACHA is increasing its focus on B2B, not only conducting research to determine small business payment needs, but also launching a number of its own payments initiatives focused on B2B, e.g. the proposed BIZ transaction that enables invoice flipping. I will be attending the NACHA Councils "MEGA Meeting" in June to learn more about the organizations B2B efforts.

Meanwhile, in the exhibit hall mobile and remote deposit capture had the most buzz. I had a number of interesting one-on-one conversations with  representatives from eGistics, ChoicePay, ClairMail, OB10, Wausau, NetDeposit, and GoldLeaf. And of course, the recent announcement of Wells Fargo & BofA's plans to merge their ACH operations was the subject of much discussion.

>> Return to index of my posts from NACHA Payments 2008

NACHA Payments 2008 - Forte Blog Index

I took a slight detour en route home from Las Vegas (via Death Valley and Yosemite - spectacular!) and just finished writing up my observations.

This year is the largest NACHA Payments conference to date (they get bigger and bigger each year) with nearly three thousand attendees. There were sessions devoted to ACH, check electronification, card solutions, global payments, corporate payment solutions and the payments industry over all. Over the course of the conference I attended eight sessions and had one-on-one conversations with seven vendors. I also participated in a press conference with the NACHA Leadership.

General Sessions & Overall Observations

Summary & NACHA Leadership Interview

Keynote/Peter Raskind, National City (general session)

Break Out Sessions

International Payments
ACI Worldwide & BofA

Global Remote Deposit Capture
Goldleaf Financial and Global Concepts/McKinsey

Corporate Mobile Banking
Celent & Wells Fargo

XML All Stars
BofA, JPMorgan Chase, GE Corporate Treasury, Upper Midwest ACH Association, ABN AMRO Bank

B2B Outlook
Federal Reserve, AFP, Cal State AAA, Costco

Remittance for Wires
Federal Reserve, CHIPS, SWIFT

NACHA's B2B Strategy
NACHA, Celent

How To Turn Your Online Bill Pay Expense into a Revenue Stream
eCom Advisors

Vendors

Bob Lund/eGistics

Elspeth Bloodgood/ChoicePay

Joe Salesky/ClairMail

Rob Peyton/OB10

Kathy Strasser/Wausau

Danne Buchanan/NetDeposit

David Peterson/Goldleaf

NACHA Payments 2008

Whoa, it's hot in Las Vegas - 106 degrees to be exact - but thankfully the MGM Conference center was comfortable today. I'm here for NACHA's Payments 2008 Conference, checking out the corporate payments sessions, interviewing industry leaders, and seeing demos of the latest offerings from vendors. I'll blog in more detail when it's all done (too hectic to attempt to live blog) so check back in a day or so.

In the meantime, I have to run because I'm going meet up with one of my conference buddies and see the 10:00 PM show of Cirque du Soleil's LOVE featuring the music of the Beatles. (When in Vegas...)

[UPDATE - The Cirque de Soleil show was outstanding. Highly recommended.]

Meet up at Payments 2008 in Las Vegas?

I'll be at NACHA's Payments 2008 conference in Las Vegas May 18-21. I'll be blogging from many of the sessions and checking in with vendors.

If you will be there, too and want to meet up please let me know.

Live Blogging from Finnovate - Best of Show

I am live blogging from Finnovate Startup in San Francisco. Jim Bruene and his team at NetBanker gathered 40 startups, rebrandings, and company debuts in online banking and finance. Each participant had a brief 5 minutes to demo their product.

We're back from the networking and eagerly anticipating the best of show announcement (based on audience votes)...

BEST OF SHOW

• 3rd Place (tie) - Zecco and First ROI/BancVue 
• 2nd Place - Jwaala 
• 1st Place - Zopa

More coverage here:

• Intro
• Morning Session 
• Afternoon Session 
• Observations & Trends [coming soon]

Live Blogging from Finnovate Startup - Morning Session

I am live blogging from Finnovate Startup in San Francisco. Jim Bruene and his team at NetBanker have gathered 40 startups, rebrandings, and company debuts in online banking and finance. Each participant has a brief 5 minutes to demo their product so I’ll be typing as fast as I can. (Please forgive typos!)

MORNING SESSION

Authentium

Demo'ing SafeCentral. Prevention of online identify theft. Patent-pending desktop software, engage with networking security component to prevent phishing

First demo'd login to PayPal with a PC infected with a key logging software - show that keylogger captured screen images and all text entered into PayPal's site.

Then, launch secured browser session with SafeCentral which blocks keylogger. Dedicated browser session with no URL address, user can only connect to sites they have setup in advance. We were able to view Ray's personal accounts at BofA.

Afterwards, opened keylogger software and demonstrated that it was blind to transactions conducted via SafeCentral.

Everything can be private labeled.

Credit Karma

Completely free credit score - with no hidden fees - and provide consumers to monitor and improve their credit score over time. Allow consumers to monetize credit score by offering them discounted prices based on the consumers profile.

Fewer than 20 questions - takes 2 minutes to setup. Over 56% of site visitors start sign in process; 86% get free credit score. All queries against score are "soft" so they do not impact score. Provide consumer education about credit scores, how their score ranks in a national distribution - e.g. 712 credit score is in the 45 percentile over all, 38% in Credit Karma.

Karma Offers are customized discounts based on profile (geography, credit score). For each offer, show user approval (how compelling), how exclusive the offer is, and the percentage of users are taking advantage of the offer (subscribing, or using). Consumers must explicitly submit their own info to the sponsors. Credit Karma does not provide data to advertisers.

WorkLight

Server behind financial institution firewall that allows secure interaction with bank and investment firm via RSS, personalized home pages (iGoogle, Netvibes), widgets, and instant messages, etc. Enable consumer to access banking information from within page where they spend their time, rather than open a separate browser session or tab. Enables personalized messages, advertising, etc. 

In addition, enables social networking with customers - via Facebook. WorkLight secure overlay via Facebook allows discussion board where customers can interact with one another. Opt-in customer channel.

Prosper

$136 million in transactions, 670K members thus far. Allow borrowers to make a loan listing and allow anyone to bid on the loan. Similar to a bank loan application, but - like eBay - you can post pictures and personalize your listing to attract investors. Feature demo'd today - you can also create social capital by inviting people to endorse you as a borrower. Lenders can do an advance search to see only those borrowers with social capital. Borrows on Prosper are 35% less likely to default if they have a social endorsement.

Andera

All the way from Rhode Island "a suburb of Boston" - online account opening and funding is a top priority for banks but is notoriously hard to get right due to complexity and risk. Implemented by over 200 banks so far. Demo fictional bank, ABC Bank, but is typically branded. Electronically sign disclosure and application to start, then complete application data. Select account types/features that you want. Variety of 3rd party checks, confirm ID, credit check, - meanwhile, validation questions. Then based on 3rd party evaluation,offer additional products. Once approved, prompt consumer to fund new account. For example, with ACH debit from existing checking account. Validate that you own that account by entering user name, pw, multifactor ID as appropriate (enabled by Yodlee). Then allowed to enter amount to be transfer. Account created on bank's core system, account numbers generated, accounts funded.

Boulevard R.

Providing personalized financial advice and insight into financial planning. Online, 3 step process, to provide online actionable, unbiased financial advice. Allow banks and brokerages to position products in front of highly qualified consumers.

Goals, Plan, Support - developed in conjunction with a leading behavioral economist at MIT. Determine goals, outline vision for retirement (or whatever the goal is), and then outline steps necessary too archive the goal. Work with certified financial planners to create unique actionable plan for each user. Key next steps, high level advice, how much they should be savings. Detailed next steps - with links to products that are appropriate for the user. Specific advice, simulations for portfolios. Finally, dashboard to track progress, monitor next steps, and provide access to advice videos that address specific situations. Highly personalized based on questions.

Clear path to financial security - painless and affordable.

Diversinet

Today's first demo on a mobile phone. Secure mobile financial applications, secure access to healthcare, and secure authentication. Today demo remote remittance (send and receive) as well as remote access to "personal vault"

Sending funds: Enter PIN and view account balance. Decide to send currency to another account (demo sending to himself, in order to show receipt as well). Send 100 Euros - application provides US - Euro exchange rate, service charge, and ability to add note to recipient - with invoice number or any other notification. Technology used to secure the application is same technology used on desktop for bond trader. 

Receiving funds: Upon receipt, accept fund and choose to 1) pick up cash at branch, 2) deposit into Euro account (a couple other options I missed).

Next demo'd secure vault of personal healthcare information. Doctor name, allergies, emergency contacts, immunization status, as well as any other critical documents. For example, passport numbers and scanned image of passport or other document. Ability to email documents from

Secure authentication on phone - rather than separate token that must be carried.

SocialPicks

Not available today due to development delays.

FindABetterBank (Facilitas)

Helps banks and credit unions find customers, helps consumer switch banks fast, and provides feedback to banks and credit unions on why consumers are switching.

Enter location, features you want (online bill pay, overdraft protection, etc.) and save this information in order to provide to banks. FindABetterBank estimates for consumer fees for each account based on questions regarding behavior/usage. Once again information is made available to banks. Then site lists potential bank options, including breakdown of estimated fees, percentage of requested features offered, etc. Once consumer has made their selection, FindABetterBank provides everything they need to open an account - address of local branch, phone number, etc. Banks can customize interface to interact with customer when they've chosen them as their new bank.

Enabling switching - demo leaving Citibank. Upload to FindABetterBank a standard Quicken or MSMoney file downloaded from Citibank website. Bankswitcher analyzed transcation activity file to determine which trx need to be switched and which can be ignored. Cleans up payee data as necessary. Distinguish between online bill pay and automatic withdrawal transactions. Where a form is necessary to change withdrawal, form is included in PDF for consumer to submit to Biller.

This is going to make the bankers crazy!

Buxfer

Track online accounts, transfer money between your accounts, send money to other people (e.g. roommates). Attempted to demo using Google account to sign into Buxfer but technical difficulties. Can store pw on Buxfer, or download Google Gears or Firefox extension that allows one to save pw securely. Support connection to 300 banks and FI (although possible to use with others).

Guardian Analytics

Concerns about fraud are the main concern about online financial services. FraudMAP solution allows financial institutions to protect and ensure trust via online channels. Real time monitoring of transaction activity, both real time and after the fact. Allow risk manager to view suspect transactions, see full timeline of user activity (sites, ISP, how often they log in, what time of day, what they do online) and decides whether or not the activity is suspicious. Non-suspect activity is color coded green. Risky activities are color coded red. Shows that fraudster has taken over consumer account and is attempting to create fraudulent transactions.

FraudMatch feature allows linkage between suspicious transactions. Financial institutions can identify as potential fraud and stop transactions before they occur.

Impressive user interface, immediately scan a lot of data and pin-point issues.

Jwaala

What is most important factor in determining which 1) rates and fees, 2) Online banking capabilities, 3) customer service, 4/5) branch & ATM locations. Most FIs only offer real time statement and  bill pay. Very few innovations over the last few years. Small handful of banks are using Jwaala money tracker. Either extension to existing online banking/bill pay cabilities or replace them.

Web 2.0 features - dashboard, with multiple widgits (like iGoogle, Netvibes). Customize widgit to show transaction history by vendor, dollar amount, etc. (e.g. Costco transactions over threshold). Once you've created a specific snapshot view in a widgit, you can put that widget anywhere - your homepage, your blog, your iGoogle page, your Netvibes page, etc.

Important to be able to find things. Online banking search is cumbersome - if it exists at all. Jwaala provides native language search, for example "costco around 100 last quarter" or "date to date"

Transaction list features logos of vendors, categorizes, etc.

Bank of Credit Union website looks a lot more like Quicken.

Zecco

Free stock trading coupled with Web 2.0 community.

Demo'd buying one share of VISA. Fast execution (less than 1 second). $2500 limit, 10 trades a month. After that $4.50. There has always been a strong financial community online. But how do you know about community members own investment success? Users can share their  Zecco portfolio performance (e.g. up 30%) so that you know how much you want to value their opinion. For instance, lets say you question your recent VISA transaction. Look on Zecco to see who else is trading VISA. You can view their profiles - showing holdings, performance, trade history, etc. Users can annotate trades and share their notes with others. Zecco integrates Motley Fool ratings. Like other Web 2.0 sties you can make "friends" so you can track activity of other investors. You can also communicate directly with other members via email or via real time chat. Can post on their wall (e.g. Facebook). Join a group, etc.

Zecco community sentiment metric: Bear vs. Bull based on amount of buying and selling. Most held vs. leas held, worse performing portfolios, better performing. See sentiment trend over time.

Guard ID 

Product is called ID Vault. It is a small device with smart chip that securely stores login credentials for financial institutions, e-commerce sites, online news services, etc. Select financial institution and enter IDVault PIN. Utilize GuardID network to track financial institution websites and determine that consumer is connecting to actual IP address associated with the bank.

Once logged into bank website, not using Internet Explorer. Instead using private browser "SecureView" without any plug-ins. No need to enter URL. Also protects from Phishing by preventing login to bogus sites. But what if you lose your IDVault and it comes into the wrong hands. If guest PIN wrong three times IDVault is locked.

Sold via BestBuy and other consumer outlets - 150K units sold so far.

VaultStreet

Allow FI to save money by eliminating printing and mailing of paper statements, bills, and other documents. Why are so many financial documents still being printed in mailed when banks are trying so hard to truncate paper. For consumers, electronic is more time consuming and frustrating than current paper process.

Automatically collect and organize documents. No scanning. No need for consumer to click and download from multiple sites. Securely share documents with trusted advisors; ability to revoke sharing at a future date as necessary.

Secure login, then collects historical documents from consumer's financial institution.

File cabinet to manage documents. List by financial institution and account. User never has to enter data - VaultStreet downloads from financial institution and automatically tags with metadata (FI, account, time period, document type, etc.). User can modify metadata if necessary to correct.

Authenticates documents (easy to modify electronic documents).

Cake Financial

Consumer investment - help nearly 90 million American investors who currently spend #150 billion to have someone else manage their investments. 3 key take aways:

1) See everything in one place. Proprietary aggregation platform. Link unlimited number of investment accounts, including up to 10 years of transactional history. Calculate daily. monthly, YTD, and average annual return. Takes minutes, is free, and you don't have to move your assets. See your gain/risk on individual holdings, plus over all aggregate. Get ranked vis a vis other people to see your ranking.

2) Community with credibility. See overview of all activity in my network (friends, family, people I trust). Facebook news feed on your investment. You don't have to visit site. Email them to you or available on Facebook. View someone else's profile. See graph of how your performance is doing against his (graphed over time). See his metrics vs. ours.See all his positions - when purchased, how much, how it fits in his portfolios. Can see his recent journal postings. And can tie transaction history to his opinions posted in community. Look up VISA - see who is buying, activity metrics.

3) Cake Take - one consolidated metric to show

SmartHippo

Let's you leverage power of community to save money and make better decisions when shopping for financial services. First vertical: mortgages.

No adds, no sponsored links. Does not sell your personal data. Rate database based on information from banks on a daily basis. Consumers can post the rates they have received on their loans. As a user you can sort by rate, consumer rating, pricing, mortgage term, etc.

Show rate data that matches your specific financial profile - not just teaser rates. See rates based on your info and what people like you have received in the past.

Consumers can rate banks, based on user experience and other

Banks would like to post local rates. Loan officers would like to have a blog (but would take months to get thru bank legal and marketing departments). Bank can monitor user comments/reactions on their brand (get alerts). Can reply to specific comments.

Mint

Mint was launched 7 months ago. Leader in online personal financial applications. 2  min to setup, alert via email or SMS if their are any issues with your account. Looks cool compared to bank sites and other personal financial software.

Updates since Mint was last demo'd at Finnovate (October 2007)

World's easiest budgeting system. Compare average spend vs. national average.

Patent-pending categorization has been improved.

SpendSpace - see spending across time, compare against people in your community, other locations. For example, in San Francisco, people spend an average of $30 a month on coffee. $35 in Seattle.

Business model is to help users spend less and save more. Recommend financial products and services. For example, move money in checking account to and eTrade account and earn up to $ per year.

12% click thru rate for Mint advertisers

Moving into mortgages and student loans, offering coupons based on spend.

Mint now supports not just balances but investment portfolio across various brokerage accounts. See whole portfolio. See individual accounts and holdings. Expose all the fees that your brokerage is charging you (Not just commissions - account closings, etc.)

GreenNote

Preview of a new service that will be launching in June.

Student loan service. Tuition fees rapidly increasing. Credit turmoil is making it harder for students, with limited credit history. Help students get low cost loans from friends and family. Formalize the loan and get funds to the school.

Social networking component - Pledge Process - to reach out to friends and family and request loans. Register and build your profile. Share activities, why worthy of a loan. Then enter email addresses and contact info for potential lenders to send link to web page. Student can use template or customize look and feel. Borrower dashboard to see status of loan, who has committed, who has funded.

Potential lender receives email, can click to view profile, three choices pledge, remind me, cannot help. Lender registers to create a GreenNote account. Sees progress against students goal.

Later, provide confidential info to formalize loan. GreenNote creates documentation and facilitates loan process. [Unclear whether GreenNote facilitates the subsequent payback of the loans or not.]

Closed pilot working with a number of schools. Not evaluating student's credit. Only helping them to connect with people they already know. Saving 500, 600 basis points vs. private loans available in the industry. Encourage students to first get grants and federal student loans, then use GreenNote to access funding from friends and family.

Motley Fool CAPS

CAPS is first and foremost about community generated stock ratings. Includes analyst data from 200 brokerage and portfolio managers. 6000 rated stocks. Average 5 star CAPS have rated stocks returned 30% over the last 6 years.

Similar to CAKE you can track friends and their portfolio, track specific stocks, etc.

CAPS makes daily stock recommendations personalized for you based on your preferences, your portfolio,

Drill down by company to see detailed financial data and recommendations.

Stock Screener that enables combination of community sentiment and fundamental financial research metrics.

Find new stocks, validate stocks you already hold. Integrate with website, etc.

That concludes the morning session... off to the exhibit hall to learn more.

More coverage:

• Intro
• Afternoon Session
• Best of Show
• Observations & Trends [coming soon]

Live Blogging from Finnovate Startup

I am live blogging from Finnovate Startup in San Francisco. Jim Bruene and his team at NetBanker have gathered 40 startups, rebrandings, and company debuts in online banking and finance. Each participant has a brief 5 minutes to demo their product so I’ll be typing as fast as I can.

• Morning Session
• Afternoon Session
• Best of Show
• Observations & Trends [coming soon]

VENDORS REPRESENTED

The 40 leading startups that will present are as follows (grouped by industry niche):

Checking/savings:

• Andera
• First ROI
• SmartyPig

Financial shopping/comparison:

• Credit Karma
• FindABetterBank
• SmartHippo
• SimpleTuition

Investing/asset management:

• Boulevard R.
• Cake Financial
• CAPS (Motley Fool)
• SocialPicks
• TradeKing
• Vestopia
• Zecco

Lending/credit:

• Lending Club
• Loanio
• Prosper
• Wonga

Mobile banking/payments:

• Aradiom
• ClairMail
• Diversinet
• Tyfone

Personal financial management:

• Buxfer
• Expensr
• Jwaala
• Mint
• Wesabe

Security:

• Authentium
• Guard ID
• Guardian Analytics
• TrustedID
• VaultStreet
• Vidoop

Other:

• IP Commerce
• Unified Money
• WorkLight

Plus four stealth startups

We're starting momentarily...  

MORE live blog coverage from Finnovate:

• PaymentsNews
• NetBanker
• BankTastics

Are you coming to Finnovate? April 29 in SF

FinovateStartup will showcase dozens of the startups that are innovating at the intersection of finance and technology to an audience of hundreds of press, bloggers, analysts, VCs, industry leaders and banking executives.

Come check out demos by these startups:

Details here

GTNews Explores How the Corporate-Bank Relationship Is Evolving

Five new articles at GTNews this week explore how the Corporate-Bank relationship is evolving:

The Changing Nature of Today's Corporate-to-Bank Relationship
Suzanne Hurt, Bottomline Technologies
How can banks balance meeting the needs of clients with charting the right course for their business?
http://www.gtnews.com/article/7234.cfm

What Do Corporate Treasurers Expect of Their Banks?
Vesa Kalliokoski, OpusCapita
What expectations and requirements do CFOs and treasurers currently have of their banks?
http://www.gtnews.com/article/7230.cfm

Driving Forward Corporate Adoption of SEPA
Andrew Reid, Deutsche Bank
How can banks bridge the gap to make migration to SEPA as painless as possible for corporates?
http://www.gtnews.com/article/7233.cfm

Single Bank Model At Any Price?
Peter Cunningham, Citi
A framework to help corporates compare the single bank model with the multiple bank model.
http://www.gtnews.com/article/7232.cfm

B2T: Banks Thinking Outside the Box
Sanna Outa, Exidio
This article argues that banks must really understand what corporates want in order to survive in today's market.
http://www.gtnews.com/article/7231.cfm

There's lots more at GTNews

SunTrust Launches Enterprise Spend Platform for Commercial Card Management

Two commercial card posts in a row...

SunTrust (a VISA corporate card issuer) announced today the launch of its Enterprise Spend Platform for commercial card management. There are five modules, allowing companies flexibility in implementing and scaling the solution to meet their needs.

Statement Manager allows clients to view and act on detailed statementsfor SunTrust and compatible multinational Purchasing Card and Corporate Card programs. Statement Manager also provides actionable transaction detail of compatible third-party statements such as cellular/mobile providers -- all on the same screen.

Transaction Manager provides tools to manage outstanding transactions that require attention. Clients can add General Ledger coding and comments, manage transaction disputes, break out sales tax, check for corporate policy compliance, submit expenses for manager approval, and confirm approval status.

Expense Manager allows detailed reporting of card and cash transactions against extensive travel and expense policies. It also supports General Ledger allocation, workflow approval, compliance monitoring and automated reimbursement directly to a SunTrust Corporate Card account.

Payables Manager helps clients integrate purchasing card into the payables payments mix by automating invoice payments to a dynamically funded purchasing card for direct settlement to the supplier. A/P personnel can manage supplier cards as well as payables files and exception transactions from one dashboard.

Requisition Manager allows clients to create custom requisition forms to fit any buying need. Requisitions can be developed with custom business rules and workflow, where upon approval, dynamically fund specific SunTrust cards for immediate spend capability that auto-match back to the requisition.

Learn more

• SunTrust press release

Amazon Launches TextBuyIt

Browsing at Best Buy and suspect there is a better deal at Amazon.com? Now savvy consumers can comparison shop and order Amazon.com products from their cell phone via text message. Of course it's handy when you are simply out and about, or more likely in my case, reading the Sunday New York Times book review in a cafe and want to buy a book.

[graphic from Amazon]

Learn more:

• Amazon TextBuyIt

My Experience at BarCampBankSF

A few weeks ago I mentioned BarCampBankSF - an unstructured, participant-organized, conference on banking and payments - and promised to share my observations. The event was this past Saturday and I thought it was great.

BarCampBankSF

• BarCampBankSF wiki
• Crowdvine discussion group, specific to BarCampBankSF 
• GoogleGroup, specific to BarCampBankSF
• Learn more about the BarCamp concept

The Format

Approximately 60 of us gathered at UC Berkeley. The day started with informal networking and after everyone introduced themselves we each had an opportunity to suggest session topics. The resulting grid of post-it notes on the wall served as the official schedule/agenda:

The sessions themselves were loosely moderated and participants were articulate, well-informed, and enthusiastic (as one would expect from payment and banking aficionados that came on a Saturday). Participants represented a wide range of experience in payments (just starting out to industry leaders), age (undergrad to semi-retired), and company size (start-up to large financial institutions). No one individual dominated any session and although not everyone agreed with one another, the dialogue was always respectful. We were in one big room and rearranged the furniture to accommodate three simultaneous session groups. Volunteers picked up pizza from Zachary's and coffee from Peet's. It was casual and worked very well. The only suggestion I have for improvement is name tags.

To get a better sense of the atmosphere, check out photos on Flickr

I moderated a couple session and floated back'n'forth between others (it was hard to choose).  Here are my (admittedly sketchy) notes on the sessions I attended:

Business Payments

Bottom-up solutions, from smaller companies rather than large financial institutions are more likely to succeed. Big banks are not motivated to challenge the status quo as they are profiting from today's environment. Bill pay vendors (Check Free, Metavante, Online Resources) are likely to address the problem with consumer to business online bill payments dropping to paper  by collaborating on a means to pass a unique transaction ID with an ACH payment. The ID would be used to access customer information from a shared web repository.

And finally, we had an entertaining and informative tangent into the "financial crypto-underworld" and learned about alternate currencies and off shore efforts to avoid know your customer rules, e.g. e-Gold.

User Driven Development

By involving users in the development of financial products bankers can ensure that their product development efforts are more successful. Representatives of banks, credit unions, and marketing/product development firms shared their experience (pros and cons) of getting customers involved in product development. All agreed that web-enabled sessions (via WebEx or similar tools) are useful, but not nearly as effective as gathering face to face. Input gathered online can easily be summarized/shared online with other customers that were not able to attend. Suggestions include putting mock ups of 4-5 products out there and asking customers to rank them.

One must always be cautious - what customers say they want and what they actually use is not always the same.

Blogs are often used to share information with customers and encourage feedback (via comments) although bankers expressed frustration that it was hard to get customers to participate. Participants shared their success in tracking how readers find blog posts (search terms, links from other blogs or websites), how long they remain, which pages/links the explore while visiting the blog, and where they go afterwards. This data can be even more telling than comments generated by viewers.

We had a good discussion about generational differences in interfacing with banks/credit unions via text message, mobile browsers, etc. Younger people are more interested in having their financial data come to them (via RSS or a personal financial management widget) rather than visiting their bank or credit union's website.Blog and Facebook widgets like ChipIn enable you to set a savings goal and allow others (friends and family) to contribute. The widget tracks your progress against the goal. Something like this would be a great feature for credit unions and banks to offer student and youth customers. We also talked about SecondLife and the experience banks have had in its virtual world.

The group also discussed using RSS feeds to cross link via Flickr, podcasts, YouTube, and iTunes.

Strategy Execution: why some efforts fail and others succeed

We shared both success stories and dismal failures. In hindsight, some of the disasters may have been averted if only...

1. Everyone had agreed on the right metrics up front and they were measured
2. Incremental results, rather than one big bang is often easier to develop and allows teams to incorporate feedback
3. It is critical that sponsor and senior management expectations are managed effectively to avoid surprises
4. If things are really going bad, it's okay to cancel/kill/stop the project
5. Communication is key
6. Every project / product / initiative must be grounded in a solid business model
7. Senior leadership must not only be aware of the effort, but need to provide active support to ensure success
8. Organizations with formal project management methodology fared better than others (assuming the methodology includes a fast-track option for smaller projects)
9. Technology developers must work closely with business owners/customers in order to ensure appropriate solutions, rapid response, and agile problem solving.

[This is a topic near and dear to me, see related posts here.]

P2P Venture

... or how to raise funds without a Venture Capitalist.

This discussion focused on a repeatable process for vetting ideas and accelerating fundraising for entrepreneurs. Just as P2P lending allows individuals to loan money to one another, the goal of the P2PVenture project is to help create a platform enabling ordinary people to invest a small part of their money (prudential investments are the rule) in startups and small businesses.

[from P2PVenture.org GoogleGroup home page] Following the Pyramid metaphor, we are seeking to create: 

   1. a place for exchanges - where interested people can freely exchange on the subject of p2p investments
   2. a think-tank - that creates noteworthy white-papers
   3. an incubator - where a full-blown business model can be elaborated and where hopefully money can be collected to finance a team that will start implementing it.

Learn more about P2P Venture here. If you think this is interesting, see also these related efforts:

• YCombinator
• SeedCamp
• MakeOrFund.com

Time Banks and Time-Based Currency

The P2P Venture session also featured a discussion of community-based TimeBanks that are dependent upon an alternative time-based currency. This social change movement provides a mechanism whereby for each hour that a person delivers doing service for someone in their community they earn an hour of service from someone else in the community. The process is dependent upon all participants agreeing that their hour of work is equal to another person's hour of work, regardless of expertise and/or training. 

Business Models

Futurist Melanie Swan led a discussion of emerging business models including

• Free - just as it sounds. No revenue from users directly. But monetize links, traffic, etc.
• Freemeium - mostly free, but charge a subset of the subscribers a premium fee for additional services, more storage, etc. For example: Flickr, Craigslist.
• 3rd Party Funded - Advertisers underwrite free services. For example: Google, traditional TV and Radio.
• None - launch the product or service and figure out the business model later (!)

There was a very good discussion of the meta data that accompanies many free services that makes them "sticky" and how businesses choose to either allow users to export their meta data or not. Implications for financial services include a service from CheckFree that allows consumers to move their bill pay data to mycheckfree.com. Jason Knight, CEO of Wasabe indicated that his service allows users to take their data with them if the service is no longer useful and has an API to encourage interaction with the financial data uploaded to Wasabe. It was interesting to note that most participants agreed that it is critical that users/consumers know that they can extract their data if they leave your service, but many are unlikely to do so (they just feel better knowing they can if the time comes).

One other interesting tidbit from Wasabe: The way they handle inappropriate posts in their community forums is to hide the offensive posts so that only the person who posted them can see them. The poster thinks that no one responded when in fact, the rest of the community cannot see the inappropriate posts. It's like ignoring a child's bad behavior - if they don't get the attention they desire they will stop.

[Note: if future payment schemes and market economics interest you, see Melanie Swan's website for a number of presentations and links to further information.]

Alternate Currency

Examples of alternative currency include Second Life Linden Dollars (see remarkable economic stats here) and time based currency (discussed above).

Alternative currencies face the classic chicken/egg dilemma. You need enough network participants, willing to accept the currency as payment and you need enough consumers willing to adopt the currency for their purchases. And you can't have one without the other. Everyone in the group agreed that trust is the key ingredient in developing a viable alternative currency.

There was considerable discussion in this group about Facebook's effort to develop a payment mechanism, although depending on how it is implemented it may not be a true alternate currency.

Mobile phone minutes and airline miles (reward points) can be considered alternate forms of currency.

One BarCampBank participant - Ted Sorom, UC Berkeley Haas School of Business Class of 2008 - is focused on developing  a payment method for kids and teens to use on the web. It is likely to be prepaid and dollar based and be used for micro-payments.

There was also a good discussion of community based lending and reaching the unbanked. The challenge is how to loan funds to groups/individuals far away without knowing your counter-party. One example we explored is that of Grameen Bank and how rural communities judge loan recipients that do not pay up, thus ensuring a high rate of loan repayment. Another example involved merchants providing credit to customers in small villages and sharing with one another information about individuals that fail to pay. The challenge is how to recreate these community level enforcement mechanisms in a non-physical community.

Fellow participants: please add your observations, notes, thoughts in the comments.

Links to notes/observations by other participants:

• Personal Finance Management session (posted by Morriss Partee of EverythingCU)
• P2P Lending session (by Jean-Christophe Capelli)

Over All Assessment

Highly recommended.

I met some great people, was exposed to some alternate ideas about banking and finance, identified a few leads, and gathered a fist-full of business cards. As one would expect from a Web 2.0 gathering, my inbox was swamped with follow up notes and invitations to connect via LinkedIn.

Attend a future BarCampBank event

I encourage you to check out these upcoming BarCampBank events:

• BarCampBank New England (April 5) 
• BarCampMoney New York City (April 12) 
• BarCampBank Paris (May 24) 
• BarCampBank London (date tbd) 
• BarCampBank Dallas (date tbd, targeting June) 
• BarCampBank Charlotte (date tbd)

Fed: Check Volume Decreasing at a Faster Rate

A study released by the Federal Reserve Board's Financial Services Policy Committee  on Tuesday, based on a sample of 30,000 checks from the image archive Viewpointe, indicates that businesses write nearly 40% of all checks and receive nearly three-quarters of all checks. Almost half of the checks written by consumers are for payments to businesses, either for bill payment or at the point of sale (POS).

Most consumer bill payment checks are being converted to ACH: 2.6 billion consumer checks were converted and cleared as ACH transactions in 2006. However, 42% of sampled checks are ineligible for ACH conversion under NACHA rules prohibiting conversion of checks with missing/no signature, checks greater than $25,000, and checks written by businesses or the government. 

(Graphic courtesy of American Banker)

Today's American Banker story also reports that due to declining check volumes, the Federal Reserve is accelerating its plans to close check processing facilities and anticipates that commercial banks will do the same.

The Fed has announced plans to cut back so that by mid-2011 it will have four full-service item processing centers, in Atlanta, Cleveland, Dallas, and Philadelphia; 17 other centers will remain open but will handle only images. The Fed had 45 full-service processing sites in 2003.

Learn more:

• Federal Reserve Press Release (03/25/2008)
• American Banker article (03/26/2008)

Obopay Targets Small Businesses

Obopay recently announced that "customers can now use their existing bank accounts to send and receive money via their mobile phone. With Obopay's mobile money transfer, non- customers can pick up payments without signing up for Obopay. These innovations make it easier than ever for any bank customer to conveniently send and receive payments from their mobile phones."

Obopay is targeting small businesses as well as consumers: "In addition to the obvious appeal to parents (with kids away at school), friends (who split dinner, activity or utility bills) and family (who send money to loved ones far away), Obopay gives small business owners the tools to pay employees, vendors or service providers immediately and conveniently." Obopay charges 10 cents per transaction for these transactions.

Obopay markets to merchants as well, pricing their services at a competitive 1.5% + 25 cents per transaction.

Learn more at the Obopay website.

Who needs VISA?

(via PaymentsNews)

In anticipation of VISA's IPO (scheduled for later this week, as if the market isn't crazy enough) Adam Levitin, a professor at Georgetown Law, has a thoughtful post outlining a payments future no longer dominated by the card networks, one in which the needs of merchants, consumers, and banks are more balanced.

The Visa IPO, along with the 2006 MasterCard IPO and the end to MasterCard and Visa's dual-exclusivity rules, which prohibited banks that issued MC/Visa cards from issuing Amex or Discover cards, is setting the stage for a major reconfiguration of the payments world in the next decade. These changes could have far-reaching effects for consumers, merchants, and banks because of potential shifts in the way payment networks will compete with each other.

Levitin discusses the threat Interchange and the anti-liability motivation for VISA's IPO. Countries worldwide have already moved against Interchange and merchant restraints, and States and regulators in the US are getting started.

He goes on to ask the question: who needs VISA? And argues that consumers and merchants don't. Banks do - but any one of the large issuers could go out on their own and be bigger than AmEx or Discover.  He explains that VISA exists today because of federal banking regulations in the 1960s and 1970s that prevented multi-state banking. Of course, those regulations are no longer and now there are a handful of large, powerful national banks.

What would the world look like if banks started breaking off from the big 4 networks and becoming stand-alones? There's a whole post or two to write about that, but here's one thing to consider: the basis for competition in the payments field might switch. Payments networks need to balance demand from merchants, consumers, and banks. Currently the dominant strategy is to cater to banks, which means catering to consumers in the form of rewards that are extracted from merchant fees. But if a network isn't competing to sign up issuer banks, perhaps the incentives change. This might lead to the development of real value-added services for merchants (data mining, e.g.) or to more meaningful product differentiation (not just variations in rewards programs) for consumers. In short, shaking up the structure of the payments field might encourage payment companies to do a little more thinking