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Whine and Dime #0028

Wine and Dime #0028

Whine

I’ve long had disdain for baby boomers as a population, but this article does a great job of capturing my whine: “Baby boomers have been a disaster for America, and Trump is their biggest mistake yet”. Baby boomers (at least in Australia) spent their youth lapping up full employment, free healthcare, and free education all the while treating the world like a toilet. Now they’re spending their dotage deconstructing the very institutions that gave them such a comfortable life.

Shine

This is truly amazing: “Google AI invents its own cryptographic algorithm; no one knows how it works”. I know I don’t have a flying car yet, but that opening paragraph definitely reads like something from the future.

And speaking of flying cars … well, almost. Watch this demo of someone commanding a Tesla Model S using an Amazon Echo. Wow.

Hiatus

This is the last Whine and Dime for 2016, and also the last one for now. I’ll continue to post on Twitter and Tumblr from time to time, but full-time work takes up so much time that I just can’t do this at the quality and frequency that it needs. Have a great holiday break, and all the best for 2017.

News

#ai-ml

#blockchain

#economics

#fintech

#livinginthefuture

#payments

#retail

#security

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Whine and Dime #0026

Whine

The standard layout on the UK MacBook Pro laptop keyboard is one of the dumbest bits of design I've ever seen from Apple. The shift key is reduced in size by 1/2, the section key '§' - which I have never used - is given pride of place at the top-left of the keyboard, and the '~' key has been squashed in next to the anaemic left shift key so that it is impossible to tap.

Shine

Its good to see a regulator doing something useful. The ACCC has officially ruled that the country's 3 largest banks can't collectively negotiate with Apple about Apple Pay. Well played, ACCC.

News

#applepay

#blockchain

#investment

#machinelearning

#payments

#retail

#security

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Whine and Dime #0025

Whine

It's been a good week! I've been a part of the launch of Coup (see below), and now I'm going on holidays for a week in (hopefully) sunny Sicily. I certainly have nothing to whine about! However, the late news that this idiot has been elected to the Australian Senate is almost enough to cast a pall over the week.

Shine

I've had the great privilege of working with some really talented people in Berlin over the last 8 months or so on the Coup Electric Scooter Sharing Network in Berlin. The project is in soft-launch at the moment, with a view to kicking off later this month. It's not all that often that a project you work on gets a write-up in Wired Magazine. #chuffed

News

#banking

#blockchain

#brexit

#fintech

#machinelearning

#payments

#startup

#mobility

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Meta

A slight change of format from now on. Industry News and Blog Posts are combined into News, and I have simplified some of the other section headings (eg 'Nerding out' to 'Development'). Also, the linked news items will be categorised under relevant hashtags. I might try to do some stats over time against the hashtags, time permitting.

Credits

  • Image source: 'Do electric scooters dream of robot sheep?' (a photo I took in the garage while we were setting up for the launch of Coup this week)

Whine and Dime #0024

Whine and Dime #0023

Whine

The UK EU referendum vote can't come quickly enough. I am sick of unelected idiots like Nigel Farage occupying my TV screen. And I'm sick and tired of the leave campaign cherry picking data to suit their arguments. Like talking about government outgoings to the EU without considering private sector income to businesses. And I'm even more exasperated with the media giving them airtime without holding their confected arguments to account. Curiously, as an Australian living in London, I get to vote. So there.

Shine

I really like simple and elegant solutions to tricky problems. The Bullet Journal system uses a traditional pen in conjunction with a notebook and a simple icon system to help with recording notes. No matter how advanced our phones and tablets become, it strikes me that the simplicity of a pen and paper will always be hard to beat. So, if you use a pen and notebook on a regular basis, Bullet Journal is well worth checking out.

Industry News

Satan’s Credit Card: What The Mark Of The Beast Taught Me About The Future Of Money. Silicon Valley has sold us on a cashless, cardless, walletless, supposedly frictionless future. Is it possible to live entirely cash free?

Here is a list of use cases for Ethereum. Mostly stuff you will have seen before, but "stablecoins", where you can make use of blockchain technology without the risks associated with cryptocurrencies seems like a good idea. Wills (as in 'last will and testament') also seems like something curious to explore, if a little bleak.

Given the changes brought on with private browsing and ad blockers, and the thorough trashing of the social contract of using the web by programatic advertising technologies, can advertising continue to sustain the Internet? David Brin (renowned scientist, futurist and author) takes a two-part look to see if micropayments can be the 'secret sauce' that saves modern journalism. Here's part 2.

'Motion AI' is a service that allows you to create chatbots with ease. After being bullish about this as an interface paradigm, I wonder if we might be overdoing it slightly. Not everything needs a conversational interface. It will be interesting to see how this pans out as a UX trend over the summer.

Practical uses for blockchain, from Airbnb to stock markets.

Police use new device to seize money used during the commission of a crime.

This is simply amazing: Starbucks has more customer money on cards than many banks have in deposits.

Here is the future of Apple Pay. It shouldn't be too much of a surprise that Apple is playing a long game with Apple Pay.

Why Central Banks Will Issue Digital Currency. This does seem inevitable, but it's not obvious quite what form it will take.

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Whine and Dime #0022

Whine

Wow. I've seen some service incompetence in the past, but last night's LAX-LHR flight with United will go down as one of the worst. I travel a lot, and so I am fully prepared for delays and the general inconveniences that happen with airports. Between the ineffective security theatre of the TSA, the jet lag, and the MTBF of aeroplane parts, things are going to go wrong from time to time. These are incredibly complex machines, surrounded by complex systems, and littered with tired and grumpy people. And that's just the staff.

But this was different. First of all, departure was delayed by 2 hours because of a warning light while the plane was prepped. Given that it arrived just after midday for a 5:30pm flight, why it took until just after 5:30 to discover this is the first mystery. After a two hour wait in the lounge, we board the plane and we're ready to go. Except the plane doesn't move. A message from the Captain informs us that another warning light means further checks are required. Another two hours goes by with a full plane sitting at the aerobridge. Unlike Monday's LHR-LAX flight which sat at departure for nearly an hour without even an announcement from the crew, the Captain at least made the odd PA to let everyone know that things were not progressing.

About 1.5 hours into the second delay (3.5 hours in total now) we get a message that the crew had gone overtime and would have to be replaced. This takes about an hour to complete so we're now upwards of 5 hours behind schedule. Finally, the new crew arrives, the doors close and the plane begins to move. We taxi for approximately 3 minutes before stopping. The plane returns to the aerobridge. There there is an announcement from one of the cabin crew that the Captain had now gone overtime.

It is impossible to conceive that United "management" did not know this at the point when they realised the cabin crew were going to go overtime TWO HOURS EARLIER. The Captain makes a quick exit and the cabin manager announces that we have to get off the plane (or "deplane" as they like to neologise in the USA).

It's now just before midnight and I'm still in LA along with a 777 plane-load of very unhappy travellers. I've missed my son's birthday party and have to mill around in the departure lounge with no idea what's going on and zero communications from United. Two people on the "customer service" desk attempt to process everyone. They fail. I give up and call corporate travel. They get me a hotel for the night.

I understand that things can go wrong with aeroplanes, and I'd much rather have them go wrong on the ground than in the air. But the combined and coordinated levels of incompetence needed to stuff up a departure to this level is truly staggering.

Bottom line: I won't fly United again.

Shine

And in other news, the greatest minds of our generation have come up with a new chat program that allows you to whisper or SHOUT by changing the size of the font. What a time to be alive. #sarcmark

Industry News

Inside the Secret Meeting Where Wall Street Tested Digital Cash

Consensus 2016 Panelists Debate Blockchain's Business Impact

Following up from last week on the Big Questions on Blockchain and Bitcoin, here are some answers to ponder.

Is same-day fast enough for Faster Payments?

Seeing the really big guys in financial services make broadside statements against 'disruptive startups', you have to wonder what they're worried about.

Exclusive: Technicians from SWIFT left Bangladesh Bank exposed to hackers - police

Four Genuine Blockchain Use Cases

The Impact of the Blockchain Goes Beyond Financial Services

World’s largest payments network Visa plans blockchain push from India

ANZ, Westpac, Google prepare to launch Android Pay

Are ATMs on the way out? Analysis from Australia indicates that ATM use is declining as shoppers shift to cashless payments.

UK shows off prototype of digital iPhone driving license using Apple’s Wallet app

$1B Bangladesh hackers implicated in attack on Vietnamese bank, Sony hack

Once Again, Thieves Enter Swift Financial Network and Steal

And finally, straight from the #nosurprisesthere department, we now say bye-bye To MCX CurrentC. It was always too complex, but more importantly, MCX was simply not solving an actual user friction.

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Whine and Dime #0021

Whine

If you have been playing along at home, you would have noticed that things have been very quiet with the blog over the last month or so. That's because I've been doing a ludicrous amount of international travel from the UK into Europe. I'm back in London this week and it will be the first time since the 18th of January that I have spent more than 3 nights in a row in London. For practical reasons that should be obvious, I'm going to have to cut down on the frequency of the blog to monthly (ish), rather than weekly. I'm pretty sure no one will notice.

Shine

After having missed the 2015/2016 Summer in Australia, Spring in Europe is really lovely. And sometimes there's even some sun around.

Industry News

Debate has kicked off again that Craig Steven Wright is Satoshi Nakamoto. According to Hacker News, Reddit, and the Economist itself, there's almost no way that this is true. But it sure is an odd story, and it looks set to continue.

Cheques are on their way out in Australia. And Facebook wants to partner with Aussie banks on mobile strategy.

Is Bitcoin really frictionless?

Was SWIFT compromised by Bangladesh bank hackers?

Here's a few numbers from Tim Cook on Apple Pay.

The financial industry is having its Napster moment, says Bloomberg.

Check out Appii. They're doing something novel: binding resume and qualification details into the blockchain. It's certainly an interesting idea.

Digital money hasn't (yet) killed cash. Here are some reasons why.

Here's a really good discussion on the A16Z podcast on bots and conversational commerce.

Blog Posts

Worth Following

  • @FinMktg - financial services, top-5 'most followed fintech persons on Twitter'

Nerding Out

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Whine and Dime #0020

Whine

It happened again: one of the bag check "clerks" at Heathrow airport pulled out my cabin luggage bag (which has gone thru the check at least 16 times in the last two months) and questioned the plastic bag containing my toiletries. Just to be clear: he checked the plastic bag, not the contents of the plastic bag. Apparently, even though I had the correct number of items, and each of the items was less than 100ml in volume, this person thought it necessary to check the actual plastic bag that they were in "because it was not an official plastic bag." The lunacy of this is just mind blowing. Whatever it was we were allegedly fighting against, this kind of behaviour tells me we have already lost.

Shine

Mondo had a great outcome with it's latest crowdfunding effort. They raised £1m in 96 seconds, making it the fastest crowdfunding raise in history at more than £10,000/second. Impressive.

Industry News

Blog Posts

Worth Following

  • @leonk1 - technology and digital business strategy (thanks for the 'RSCoin' article)

Nerding Out

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Whine and Dime #0019

Whine

The process of getting into a departure lounge at an international airport has descended further into farce. I've been doing a lot of travel lately between London, Paris, and Berlin, and so I have a small plastic zip-lock bag that I keep in my backpack that can be easily removed to go through security. On one occasion, one of the trumped-up purple-jacket officials at Heathrow (on the outside of the customs check!) attempted to tell me that the plastic bag was not going to be allowed because it was not one issued by Heathrow Airport. On another occasion, a small container (<100ml) that had been through multiple airports around the world multiple times, including the one in question, was summarily removed, no reason given. This whole process is totally crazy, and it's little more than security theatre.

Shine

In contrast to the "air-travel-as-shopping-mall" experience salted with ludicrous security theatre provided by most airports, Berlin's Tegel Airport is a revelation. Notwithstanding the usual bag check crap, the physical distance between the check-in gate and the aerobridge is no more than about 20 meters. The airport has a check-in, bag-check, and customs desk for each gate at the airport, a design that is unique as far as I know. This 'distributed' design means that you never have to wait longer than about 5 minutes to get through the whole process, and there is not a single shop anywhere along the way.

What's the relevance to payments? Well although the airport is a pleasure to use from a passenger perspective, it's (apparently) not great for shopping. Sadly, because the new Berlin has outgrown its original capacity, it is due to be replaced. Probably with a shopping mall that allows planes to land.

Industry News

Some sense from a national patent office? A new guideline from the Indian Patent Office's says that if the contribution of the invention lies only in computer programme, the examiner should deny the patent claim.

Could Amazon be making a play to run infrastructure for banks? Assuming the massive regulatory and compliance issues can be overcome, this is a potentially huge win for Amazon, and an even bigger win for the banks. If they can just get over the issues with running software on someone else's computer. The big losers would undoubtedly be the multinational outsourcers.

BPay's initial convenience service (ICS) offering on top of the New Payments Platform (NPP) will allow peer-to-peer (P2P) payments that may finally bring an end to cheques in Australia. Interestingly, Fastacash plans to have a competitive service up and running by the end of this year, which is a full year before NPP is ready (assuming it can be delivered on time). Fastacash already has a similar system running in Singapore, India, and Britain.

This is a pretty impressive number: “China Apple Pay Launch: 3 Million Cards In 2 Days”. Apple is playing a very long game with Apple Pay.

Check out some of the keynotes from the recent Mobile World Congress. VR/AR plays a huge part.

Oops: Bitcoin's nightmare scenario has come to pass: the network's capacity to process transactions has maxed out.

The large investment banks (and in particular JPMorgan) are doing a lot of work on bitcoin and blockchain technology. Investment bank activity is often a leading indicator of significant change: Jamie Dimon on Finance: ‘Who Owns the Future?’ Worth a read.

Blog Posts

Worth Following

Nerding Out

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Whine and Dime #0018

Whine

It's really quite hard to get a weekly blog post out when you have a proper job. Particularly one that requires you to spend half a normal working week in airports, airplanes, or fast trains. From now on, Whine and Dime is likely to live up to his byline of being a "(semi)regular" newsletter.

Shine

It's no surprise that the Germans have a great reputation for engineering. The attention to detail of the Rails programmers on my current project is World class.

Industry News

These are the most innovative UK startups to watch in 2016. The full list is here.

Basic income: the idea that we should pay all people an unconditional wage, instead of most other forms of categorized social security. Has it's time come? When Y-Combinator starts asking questions about the idea, it's probably a sign that it is something worth paying attention to. Of course, not everyone agrees.

Chase in the US is going to roll out cardless ATMs. It will work via a smartphone app in which the user effectively remotely controls the ATM. Another step along the way to getting rid of plastic.

More ATM news, this time in the form of support for Apple Pay, with both Wells and Bank of America apparently integrating their ATMs. It's not entirely clear how the integration will work, but going cardless as per the Chase example above would seem to make sense. One advantage of such an approach is that it might make it harder for card skimmers. Obviously, a good thing.

Australia's Reserve Bank says Australian dollars could come in digital form in future..

The Power of Visa Network Delivered as an API.

Conversational User Experience. This just keeps coming up. Watch out for a change in the way we interact with machines based on text. It's a short walk from here to conversing with systems using speach and natural language. And here come the #fintech conversational commerce start-ups: “Meet Cleo”. See also @meet_cleo.

Will the rise of conversational UIs be the downfall of designers?

This man wants to upend the world of high-frequency trading. Best of luck.

The Never-Ending Story: Europe’s Banks Face a Frightening Future.

The Open Bank Project is an interesting attempt to provide a unified interface to banking systems.

Blog Posts

Worth Following

  • @meet_cleo - conversational commerce comes to financial services

Nerding Out

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Whine and Dime #0017

Whine

If you have ever built a web or native app that prevents paste functionality for password fields: pick a new career. Because seriously, if you think that preventing paste into a password field somehow improves the security of your app or site, you really haven't got a clue what's going on.

Shine

The Europeans really know how to do trains. The Eurostar is just fantastic. London-Paris (and vice versa) by train has to be one of the best international capital city routes in the world. And speaking of Paris, I'm spending a bit of time there each week at the moment, so I'm making some #ParisObservations about the quirky and interesting differences that make it such a great city.

Industry News

What is the Australian Payments Plan? Watch the video and read the material to find out where the Australian Payments Council think payments will go in Australia over the next 10 years. Seems to have a lot in common with the UK's World Class Payments.

Are you thinking about applications other than banking for blockchain technologies? Try this: Banking Is Only The Start: 12 Big Industries Where Blockchain Could Be Used. Note: not all of the twelve ideas discussed present a strong case, but a couple of them are quite interesting.

Elsewhere: this is a cracking idea for a non-financial use of blockchain tech: The GIF That Fell to Earth.

I keep hearing more and more about IBM's Bluemix. One of the advantages it has over public or hybrid elastic infrastructure (the term 'cloud' should be banned!) like AWS, SoftLayer, Heroku among others, is that there is an on-site version. Bluemix Local has all of the same features as the hybrid and multi-tenant versions, but it can run behind an organisation's firewall. This makes it attractive for banks and financial institutions that are generally prevented by regulators from using public or multi-tenant infrastructure. Expect to hear a lot more about this in the near future.

Look out for a new term: "conversational commerce". This article explaining why: "2016 will be the year of conversational commerce" lays out the concept and the reasons why it will be a thing this year. I agree. Definitely something to watch.

And finally, it looks like millions of e-commerce sites are at risk from a new Magento bug. E-commerce is hard.

Blog Posts

Worth Following

  • @elPedroMajor - has a lot of good things to say about how to build an agile digital organisation

Nerding Out

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Whine and Dime #0015

Whine

Welcome to 2016. And welcome to ridiculous mobile phone pricing. Virgin Mobile refuses to give me an additional pay-monthly SIM, even though the amount I have paid topping up the prepaid SIM over the last three months is approximately 3 to 4 times the pay-monthly tariff. Their line that it is because of my 'credit rating' is clearly nonsense, as they won't let me pay in advance, and easily debunked because they will allow for my wife to get her own pay-monthly SIM on a separate account, but not for me to have two on the one account. It's obviously designed as a cynical way to extract higher rates. What a nasty little scam. Any mobile carriers out there want a new customer? Drop me a line.

Shine

What about this English weather, eh? The warmest December on record was also one of the wettest.

Industry News

Paul Graham started the new year with a pair of posts on Y Combinator that address the issue of economic inequality: 'Economic Inequality' and 'The Refragmentation' are both well worth a read. There have also been a number of rebuttals that are equally worth reading, some with more venom than others. For example: Paul Graham is Still Asking to be Eaten. The bottom line here: people are talking constructively about inequality, and that is a good start.

Apple and China UnionPay will bring Apple Pay to China.

There was a bunch of cryptocurrency activity over the break, including:

London is still buzzing with fintech activity. For example, "in last five years, out of $9.8 billion of investments in FinTech across the European region, 55% are invested in UK FinTech."

Insurance is a terrible investment, but one that the majority of people are forced into for cash-flow reasons. You only have to look at what large corporations do with insurance: they mostly underwrite themselves. So, is 'microinsurance' the answer to the insurance industry? Notwithstanding that "the insurance industry" is not a question, the changes afoot in banking and finance could mean that insurance is ripe for disruption, too.

In a move that foreshadows a move towards financial services by one of techs Big 4, Amazon is to start offering loans to customers with pay monthly option.

Blog Posts

Worth Following

Nerding Out

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Whine and Dime #0012

Whine

Same-day delivery with Amazon Prime is really one of the wonders of modern e-commerce. But what's crazy is that a single order, made up of multiple items, can still end up being delivered by multiple couriers on the same day. I'm sure the Amazon brainiacs are onto this, but it shows just how complex logistics must be underneath that it makes sense to split an order up into three separate deliveries, all of which occur on the same day, rather than aggregate them into a single delivery.

It strikes me that there is an opportunity for Uber et al to really disrupt household deliveries. With a massive fleet of vehicles already out on the road it seems like a very short walk from on-demand taxis to on-demand courier deliveries.

Shine

The UK does e-commerce really, really well. The suburb where I live has a constant stream of white vans making deliveries throughout the day, well into the evening, and also on weekends. Population density does amazing things to economics.

Industry News

One more digital bank has joined the ranks of challengers in the UK. These folks seem to be very well capitalised, mobile-first, and plan to offer current accounts and mortgages. Back in Australia, Tyro wants to beat the big banks at small lending. This is another front on which the big banks will need to defend against startups: business banking. @NicoleWill100 had a neat tweet here: "The fintech who does front end innovation is just sustaining the major banks." Great perspective.

In South Korea, a pair of online-only banks gets preliminary regulatory approval.

What would the technology of a disruptive bank look like? It's a great question. Here's a (admittedly, very high level) shot at answering that by Jack Gavigan. Microsoft also has a view. And apparently, @pmarca is dying to fund a disruptive bank.

Disrupting retail banks is one thing, but what about business banking? Is Small Business Banking Next in Line for Disruption? This startup founded by a few ex-Simple folks thinks so. Also, check out their API docs. Really, really well done.

Another jurisdiction is heading towards real-time, immediate payments with the EPC publishing a proposal for the design of an instant credit transfer scheme.

Whilst Australia has traditionally been quick to embrace new payments technologies, the country seems to be lagging on person-to-person payments, according to Visa.

Also in Australia and also with Visa, there is an opportunity for push payments over the Visa network. They are (presumably) putting this up an alternative to NPP.

Why does Apple want to get into the unprofitable world of payments between friends when there really isn't any money to be made? In fact, there's lots of money to be lost. However, Apple's motivation for moving into P2P is more likely to be about shoring up Apple Pay, and providing yet another reason to buy into the Apple ecosystem.

Back when we started Tillless, Jason and I thought that iBeacons would change retail. So did a lot of people. The truth turned out a bit differently.

"Uber for ..." is ridiculously overused. So, how about "Uber for ATMs"? Crazy? What could possibly go wrong? If the idea of using regular people for ATMs sounds a little bit too unlikely, then perhaps with a few tweaks, this could work. Who knows. Developing countries have been the source of some fascinating innovations in payments in recent years.

After getting its IPO out of the way, Square is hiring in Australia.

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Whine and Dime #0011

Whine

"The blockchain doesn't matter."

Shine

"The blockchain is the future of finance."

Industry News

There has to be something going on with blockchain technology when you start to get massively polarised views on what it is, and what it isn't. CapGemini think that it is a fundamental shift for financial services institutions. Simon Taylor, Vice President for Entrepreneurial Partnerships at Barclays, presenting at the first public meeting of Whitechapel Think Tank, thinks that blockchain tech will have a big impact on reconciliation, premissioning, and privacy. And a whole bunch of other banks have similar perspectives. Even the Bank for International Settlements has a view. Almost everyone thinks there's something deep going on.

Well, almost everyone. Constellation Research's Steve Wilson is more bearish, particularly with respect to the use of blockchain tech for identity. Skepticism is warranted when a proposition is little more than "add blockchain to X" (particularly when "X" is "identity"). However, there are some blockchain startups solving real problems. And add to this the focus on blockchain tech from Tier-1 global banks. There is an awful lot of activity in this space at the moment.

In contrast, Duena Blomstrom thinks that blockchain doesn't matter. Whilst her comments on the primacy of cultural transformation are fundamental to banks dealing with their manifest issues, she also goes on to say that "technology in itself does not matter". This is at the very least arguable, given that technology is one of the defining traits of humanity. "Culture" and "communications" are both "technologies" invented by humans, albeit emergent phenomenon. Given that, the advice to pay particular attention to the cultural and emotional impact of technology is well made.

McKinsey also has some insights onto disruption in payments: "How the payments industry is being disrupted". An interesting insight here is that "transaction-related revenues" (directly linked to transactions) will grow more quickly than "liquidity revenues" (derived from outstanding transaction account balances), at least in part reflecting how the move to mobile will increase the total number of payments transactions executed. The report also calls out 'non-bank digital entrants' as a source of disruption, modernisation of domestic payments infrastructure (eg NPP in Australia), inefficiencies in cross-border payments as an opportunity for new players, and how the digitisation of retail banking will spread beyond payments into transaction banking. Great detail, and well worth a read.

Why is Visa Europe testing remittances on the Bitcoin blockchain? Visa's Jon Downing said it was the need to identify a "human use case" with potential global value that led the project to focus on the remittance industry. This strategy appears to be a common theme as larger institutions test the water with blockchain technology. This is also a good point: "... bitcoin offers a creative solution to the 'last-mile' problem, in which it is argued the majority of remittance costs come in the form of physical kiosks that deliver hard currency."

Continuing Samsung's storied tradition of emulating the work of others, they are now taking a leaf out of Wells Fargo's payments marketing playbook, giving shoppers a $50 Best Buy gift card if they activate Samsung Pay on their phones. It's an idea worth emulating because of the power of defaults.

As much as we like to think that startups can and will disrupt the banking industry, it's sobering to look at just how difficult bureaucracy and entrenched thinking can make that task. Just having technology, or even money, is not enough, you also have the crack through the molasses of regulation and incumbency. Even seasoned entrepreneurs like Brewster Kahle have had so much trouble that he has decided to call it quits on the Internet Archive Credit Union. There are certainly some lessons here for upstart banks. Perhaps, rather than fight head on, it makes more sense to join up with the established players? Or more likely, there is a role for both: one to foster ideas, and the other to supply the kind of capital needed to operate a bank.

And in a move that has the potential to confound the rollout of Australia's NPP, PayPal shoppers will soon be able to make real-time, point-of-sale payments via the Eftpos network. PayPal will be integrating with Eftpos's new payments hub to make this happen.

Blog Posts

Worth Following

  • @sytaylor - Vice President for Entrepreneurial Partnerships at Barclays
  • @duenablomstrom - blogger, VC, consultant, creating "emotionally connected customers"

Nerding Out

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Whine and Dime #0010

Whine

I've often felt uneasy about high-frequency trading. Contrary to claims from those participating in HFT that it increases liquidity, intuition suggests that having someone jump in and out really, really quickly between trades would end up reducing total market liquidity. But who am I to question these mechanisms? I am little more than a naive observer, unschooled in the dark arts at the confluence of physics and finance.

That's why reading an article like this is so compelling:

Nanex ~ 15-Jul-2014 ~ Perfect Pilfering - A detailed data-centric exposé on how the market is rigged

After taking that in, is it not worth asking a few questions about market fairness when the physical distance of a trading platform from its exchange has a material impact (due to the speed of light) on who gets to buy what, at what price? Especially given that access to said real estate is preferentially dished out by the same exchanges to the highest bidders?

Shine

Whoa. My life is complete: Smiths Frazzles. Think: bacon flavored bacon. In a crisp. Or "chip", for the Australians in the audience.

Industry News

Should the anonymous creator of Bitcoin get the 2016 Nobel Prize for Economics? Bhagwan Chowdry from the Huffington Post thinks so, saying "I (shall happily) accept the 2016 Nobel Prize in Economics on behalf of Satoshi Nakamoto". Maybe Satoshi isn't just one person, but if he is, then the SEK10,000,000 Nobel Prize pales into insignificance compared to the (alleged) one million bitcoins that he is sitting on.

Nasdaq is looking to Estonia for its new blockchain services.

Australia's largest telco Telstra is having a say on mobile identity. There's also an infographic to summarise the report. The report provides details on how security and identity issues are gaining increasing attention, particularly in the Gen-X / Gen-Y crowd. However, there's not much to say on whether or not security concerns are actually changing people's behaviour or preferred financial institution. Banks have done such a great job convincing people that any security problems experienced online will be handled by the banks that most consumers think security is somebody else's problem.

According to Royal Bank of Canada head Dave McKay legacy systems are a bigger threat to banks than startups. This is almost certainly true, but those legacy systems still manage to fund massive profits. So there is little incentive to change, until the profit engines start to come off the boil.

Also Canada related, check out the difference in worldview between the Canadian and Australian banks when it comes to blockchain tech on the latest A16Z podcast: Blockchain vs./and Bitcoin. One is thinking economics, the other about politics. I'll let you decide which is which.

Starbucks is having quite a bit of success with its mobile payments functionality. How? By driving functionality entirely from how it improves the user experience in buying coffee in a Starbucks store. Obvious when presented like that. It's a real shame more product development isn't driven from the glass.

"Approximately 70 percent of consumers across all generations (85 percent of millennials) believe banks that are current with the latest technology are more trustworthy than banks that lag; however, nearly 4 out of 5 Americans say when it matters most, they value people more." An interesting result given the amount of time and money that most banks spend on tech.

Will Apple’s new money transfer idea leave Visa and MasterCard in the dust?. What a great question. Given how much banks (generally) make from their credit card businesses, there will be massive internal resistance to anything threatening. However, there are also those within banks and regulators who are very wary of the card schemes' power, particularly in Europe, given the US-centricity of the three biggest players. Grab some popcorn. This will be a hoot to watch.

Apple Pay finally gets a run in Australia, thanks to Amex. It will be very interesting to see how this plays out in Australia given the much higher penetration of NFC/contactless terminals in retail.

It is astounding that the US has rolled out chip cards, but not PINs. No wonder merchants are up in arms about spending a fortune replacing terminals that cut down only on the fraud shouldered by banks, not merchants.

We have had programmatic infrastructure for a while. Will we ever end up with programmable financial services?

The phrase "cashless society a few taps away" has been uttered so many times, but we are yet to see it. And we won't, until the form factor and user experience of "handing over cash in person" can be replicated electronically. In any case, while the advantages for electronic remote person-to-person transactions are clear (with or without a business model), do we even want to get rid of cash for local person-to-person transactions?

Superannuation is another area where Australia's New Payments Platform may have an impact.

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Whine and Dime #0009

Whine

£0.12 for a single domestic text message is outrageous. Given that there is effectively zero cost involved in sending them, any price, let alone £0.12 (and £0.39 for international!), is a modern form of highway robbery. Coming from Australia, where text messages are generally just included as part of the monthly bill, getting whacked for 12p per message here in the UK is really hard to take. There's a lot to like about the UK, but the cost of mobile phones is not one of them.

Shine

Abel & Cole make the best mince pies.

Industry News

There is a lot going with blockchain technologies this week. There are now 25 banks working with distributed ledger startup R3.

International remittance is one area that appears to hold promise for blockchain technology, and there are a few startups looking into it. 27 according to this list. Visa Europe thinks there is merit in the idea too, partnering with Epiphyte.

A common misconception with international remittance is that it's the payment rails that make it expensive. This isn't really the case as much of the costs that customers end up paying come from hidden uplift fees and atrocious currency exchange spreads. Swift fees are modest in comparison. Identifying payers and beneficiaries is also a big component of the costs. 

Microsoft is also getting into blockchain tech releasing a cloud-based platform to help customers experiment. A smart move, even if it is just to get organisations familiar with the concepts.

The head of the IMF also recently gave support to join the blockchain bandwagon.

Banks should prepare for the Internet of Things, says TechCrunch. New data sources to assist credit scores is one thing, but the potential to use blockchain technology for tracking physical collateral items is really interesting. Everledger is doing just that with diamonds.

In non-blockchain news, there are signs that banks are starting to notice alternative lending firms.

Despite the almost unparseable headline of "Government payday cheques out big time for BPAY", this article makes the point that BPAY stands to pick an enormous amount of new payments volume with the NPP "Initial Convenience Service" to go ahead in 2016.

The phrase "Uber for X" is now a cliche. Here it is applied to banking by the WSJ.

What about AirDrop for Payments? Apple is apparently in talks with banks on a mobile person-to-person payment service ($). Here's some more from 9to5mac (un-paywalled, this time): Apple in talks to launch person-to-person Apple Pay mobile payments system in 2016. The impact of a simple, easy-to-use, and potentially free person-to-person payments mechanism will cast a long shadow over other in-flight, domestic immediate payments initiatives around the world. NPP, for example. Apple doesn't need to make money from the system because it's just another piece of capability that makes the rest of the ecosystem attractive to consumers. This will make it really difficult for other P2P networks that need to clip the ticket somehow.

The Financial Times thinks that banking is under attack on all sides. Maybe it's not "turmoil and decline", but just another case of software the eating world.

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Whine and Dime #0007

Whine

I recently instructed an Oz bank to move a sizeable (for me, at least!) chunk of money from AUD held in Australia to a UK-hosted AUD foreign currency account. This should have been a relatively straightforward AUD-to-AUD international transfer, but because of the size, I was paranoid about getting it right. I went to special effort to validate the form details with the sending and receiving parties. Both of whom told me that it checked out and was good to go.

I even fielded a phone call from my Oz bank at about 10pm London time on the day that the transfer was supposed to happen to validate that everything was Ok. I reiterated with them that because of the size of the transaction I was keen for it to be checked. 'All good', they said. Sadly, I wake up next morning to find an email telling me that the transfer was not made because the form was not filled out correctly.

Now I am sad. I take a quick peek at the exchange rate (which is never a good idea because it's like googling your latest malady) and it has dropped by about £0.07. This doesn't seem like a lot, until you work out what the difference equates to in terms of GBP in my bank account here in the UK. :(

I understand how international money transfers work, and I understand that dealing with one bank in one country can be tricky enough, and I know that the problems just pile up when you have to talk to multiple banks in multiple countries. I get that. I really do. This is not what I am complaining about. Where it all goes wrong for Oz Bank is in their response to a polite email that I sent them about the real £ cost of the delay. I wasn't asking for anything, just querying where the process had gone wrong given the diligence that I thought had been applied.

A chirpy representative of Oz Bank now has an opportunity to atone for their stuff-up, but lets the chance spill out of their hands. I would not have been so upset if they had simply come back with something along the lines of:

“Gee, we’re really sorry there was a delay, and you’re right, it was our fault. International transfers can be tricky, and there’s always the risk of a delay while we make sure that all the data is correct. We'd prefer to do that, then send the money to the wrong place where it can be incredibly difficult to get back. And as you know, rates can move up and down.”

At least that would have demonstrated a modest understanding of what is going on in an international transfer. But no. The reply I got to my question was this:

"In regards to the exchange rate, my understanding is that the lower the rate the more funds you will get on the other side ..."

Really.

There are multiple things wrong with this incident. First of all, how is it possible that someone working for a Tier-1 Australian retail bank does not understand international currency transfer? In fact, it's worse than not understanding it: this person has the mechanics backwards. And secondly, when you have clearly screwed up and it has cost a customer real money, do you a) take the chance to understand the customer's position and help them out, or b) tell them they've got it wrong. This chirpy representative from Oz Bank chose option b).

The lesson for me from this process is if you are moving a sizeable chunk of AUD from to the UK, it pays to move the AUD into a UK-based AUD foreign currency account first, and then execute the transfer into GBP inside the UK. That has the advantage that the movement of value from Oz to Uk happens in AUD with no exposure to an Australian-priced AUD:GBP spread. Then the subsequent AUD:GBP currency exchange can happen in the UK, where it appears that people actually understand how currency exchange works.

Shine

Note: a 'shine' is something new to balance the whine, calling out a bank for doing something noteworthy.

To balance this week's whine, here's a shining example of a bank who understands that the confluence of security and user experience should produce more than an epic fail. Capital One will now let customers ditch security questions for a phone swipe. Hopefully, UK banks can replace their abominable "nth character" login screens with something as easy as this.

Industry News

A new Apple Pay patent has corporate credit cards in its sights, according to Patently Apple. This looks like a mechanism that would allow TouchId to be used to control authorisation of tasks, as well as allow for "profiles" which give guest users (potentially identified by their fingerprint) access to a subset of the functions on a device. From PatentlyApple:

For example, a guest user A may be allowed to send text messages and access the web to view websites, while a guest user B can access the web to view websites and make purchases on online stores, make telephone calls (when the electronic device is a smart telephone), and take photos. The ability to view photos, change Wi-Fi connections, activate airplane mode, set the alarm clock, and read texts and emails can be denied to one or both guest users through respective user profiles.

The ebook "Day 1 EMV in the US: Current State and What's Next" provides some good background on EMV cards and terminals in the US. The rollout of EMV terminals there will be a big factor in how quickly Apple Pay, and other smartphone-based payments technologies take off. After moving to the UK recently, it is interesting to note that penetration of contactless terminals in Australia is almost ubiquitous, whereas it is quite sparse in the US. The UK sits somewhere in the middle, with far fewer NFC terminals than I would have expected.

Google is going to add loyalty and rewards to Android Pay in an effort to ramp up its promotional push. Contrast this with the recent Whole Foods / Apple Pay loyalty announcement, and it seems like the payments disruptors are looking for ways to add value to payments that go beyond just clipping the ticket on the transaction.

Western Union is trying to make international payments social with a new service that allows cross-border payments to be made from third-party platforms. So far, details on exactly which platforms will be working with "WU Connect" have not been released.

"Fifty billion points of commerce" is the MasterCard vision for payments across the Internet of Things. MasterCard hopes that technology that can turn any consumer gadget, wearable or accessory into a payment device will help them achieve that vision.

Beyond payments, the Economist thinks the the grip banks have over their customers is weakening. Meanwhile, TechCrunch asks "Are Banks Destined To Become The Next 'Dumb Pipes'?". "Yes" is almost certainly the answer unless they can speed up their innovation abilities on the boundaries of their core ledger and payments systems.

In what can only be described as a brave move, RBS is to connect all staff to Facebook at Work. What could possibly go wrong?

In a clever piece of vertical integration, several US Banks have united to form a secure, real-time payments network that will combine the clearXchange payments network with the Early Warning real-time fraud, risk and authentication system.

Showing just how hard it is to keep fraud out of the payments network, an Omaha, US company was responsible for a whopping $5.7m of Square's fraud losses. This single loss accounted for nearly 23% of the company's total fraud losses, which certainly raises some questions about the company's ability to prevent fraud at scale.

"Hey, how about we add QR-codes to payments?", says Chase. Again. Are there any good examples of QR-codes adding anything to payments? Or is it just more roller-skating horses?

Mobile payments are about to take off in South East Asia mainly because mobile is the main mechanism by which people in that part of the world access the Internet, and mobile is huge in Asia, and growing.

Blog Posts

Worth Following

  • @jonas - CTO at
  • @tuo2 - Another Oz security professional with a lot of good things to say

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Whine and Dime #0006

Whine

This week's whine is short. To you, the person that keeps placing non-removable paper stickers onto every product I buy, that peel off badly leaving behind a sticky mess, I have three words for you: Ice. Moon. Prison.

Industry News

More cryptocurrency activity from Tier-1 banks, looks set to see RBS pilot a product based on blockchain technology in 2016. This would make RBS one of first major UK banks to offer a product based on the emerging technology that many predict will radically disrupt the way the banking sector operates.

The UK Government is highlighting the benefits of blockchain technology, with a pledge to inject £10m into "research addressing the opportunities and challenges of digital currencies and their underlying technology as part of its larger pledge to innovation in FinTech." Exciting times for cryptocurrencies, if not for quotable sentences from Government departments.

Looking to the future, here are 10 predictions for bitcoin in 2016. It is refreshing to see someone making falsifiable predictions, even though some of the predictions (eg #3, #4) are far from profound. Missing entirely from the list is the interplay between bitcoin and Ripple over 2016 and beyond.

Are biometrics the future of security? They may be, but there are also some challenges, such as befell this poor dude: Malaysia car thieves steal finger. Ouch. That's the law of unintended consequences at work. Hat tip @caelyxsec.

Maybe the fact that the UK had 2.5 million incidences of cyber crime in the last year explains why everything to do with making payments here is so hard. It would be good to know exactly what the crooks are doing, because it's hard enough to do the right thing and get a payment through. This is contrast to Australia, where only 2% of small businesses are bother about online security. That seems to tell a story about the very different security profile facing organisations in the two jurisdictions.

MasterCard is going to tokenize MasterPass for online and in-app shopping.

Mobile payments awareness is high, but mobile payments usage is low. At least according to Accenture.

Eftpos Australia is trying to remain relevant, but might struggle against the international card schemes. One really interesting tidbit:

"Eftpos has lost market share to Visa and MasterCard. In the two years to June 30, 2014, it carried 2.4 billion debit transactions worth $139 billion, but this represented a 60 per cent share, down from 80 per cent. Eftpos' share of all card payments fell by 10 percentage points to 40 per cent in the same period. Much of this was due to tap-and-go payments, which are now about 70 per cent of all Visa and MasterCard in-person transactions in Australia, as well as more people buying online."

Times change.

An ongoing problem at all levels of banking is the lack of quality, technical depth. Chris Skinner agrees, speaking in Madrid at Innomoney he said "A good indication that change is needed can be found just by booking at the majority of bank executives, in particular CEOs, who tackle financial tasks such as risk management and regulations based on accounting backgrounds; but they have no grasp of, or training in, technology". This gap will become an increasingly serious problem as more and more banking and financial services becomes a technology pure-play.

Citi looks to set up a unit to design a mobile banking solution for consumers.

Sony is going to have a crack at mobile payments with a view to supporting its Asian expansion plans. However, as Square and others have seen, making money in the payments business can be tough, which has forced them to consider other business opportunities beyond payments.

Wrapped in red tape, Aussie banks and other companies lack digital readiness, says PwC. Comments here about 'lack of competition' and 'small local market' certainly ring true.

In the hopes of addressing some of the issues of innovation in the Financial Services industry (and red tape, too), the Australian Government released its response to the Financial System Inquiry. Under new leadership, the Government seems a lot more interested in technology and innovation, and this response has a whole chapter dedicated to innovation in financial services. Of particular note are changes to allow for crowd-sourced equity funding, and reductions in excessive credit card surcharging. Perhaps most interesting is the proposal for a national digital identity. I can hear the old arguments from the mid 1980s against the Australia Card being reheated as we speak.

One of the biggest changes in the Australian banking industry over the next couple of years is the New Payments Platform. Canstar is of the view that NPP is on track for release in 2017, whilst the Australian thinks that new payment systems point to a cashless society. If the banks can sort out their NPP implementations, then both of things could end up being true. If they can't, then this will end up just like M@MBO.

On reading that Microsoft is making another attempt at payments in Windows 10, one could be forgiven for thinking that they have "no chance". Props for trying, tho.

Blog Posts

Worth Following

  • @mattheath is doing great things with golang at Mondo
  • @caelyxsec is one of the smartest thinkers in security in Australia
  • @openbazaar has some really fascinating ideas about distributed reputation
  • @CoinCorner is doing some interesting things to make bitcoin simpler

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Whine and Dime #0005

Whine

Continuing last week's theme of security theatre, a UK bank asked me this week to set a PIN for online banking. One of the rules they have for the PIN format is "no pairs of repeating numbers", amongst a few others. The result of this policy is not that PINs are any more secure, but rather that the search space of possible PINs has been reduced, making it marginally easier for a hacker to guess a PIN.

This misguided security strategy then gets even worse. When logging in to online banking, instead of asking for the PIN as a 4-digit number, they ask for a random 3 digits out of the four. And if that wasn't enough, to make the user experience even more diabolical, they then ask for a random 3 digits for the login password as well.

As a diligent online banking user with a complex, site-specific password managed via 1Password, I am now forced to look up my password on each login and determine the nth, kth and jth letters to type in. This approach is no more secure than simply entering my full password because any attacker with my password can also just work out the nth, kth and jth letters.

These strategies end up having the opposite effect of what was intended. Because this login process is such a UX nightmare, it encourages users to have simpler passwords from which they can easily remember the nth characters, or worse, forces them to write their password down.

This is the same misguided thinking that has organisations come up with increasingly baroque password policies. Forcing a difficult to remember password onto people encourages them to use some kind of generative approach like including the date, or worse, to write the password down or store it in a file on their computer somewhere. Both outcomes end up reducing security rather than improving it.

The best approach for any service beyond specifying a minimum password length (and not a maximum!) is to proactively try to crack every customer's password offline. If a customer password is ever cracked, the system automatically resets the password, informs the customer that their password was not secure, and forces them to choose a new one. This approach will weed out passwords of the "password1234" and "p455w05d" variety, and over time, create a very robust set of passwords reinforced against common dictionary attacks. It also allows people to select cryptographically complex passwords that are easy to remember, but also high in entropy, such as three or four word phrases separated by spaces.

Bonus whine: porting mobile phone numbers here in the UK is also slow and error prone. In Australia, the ports happen straight away, give or take an hour. That will probably be the first time an Australian telco gets a rap from me for service.

Industry News

Here are some thoughts on what law firms can do with the blockchain. The cross-over between the Law and programming is an interesting one. Computer programming languages are about telling computer hardware what to do, and the Law is (loosely) about telling people what to do, or at the very least, facilitating judgements about behavior when it does not meet community expectations. Can blockchain technologies, (particularly 'smart contracts') have an impact on the way laws work? For example, if you can algorithmically specify the terms of an agreement and encode it into the blockchain in advance, then will we end up with a situation where programmers replace lawyers?

Apple Pay Will Soon Work at Starbucks, KFC and Chili’s (Video). Unlike Australia where contactless/NFC terminals are almost ubiquitous, rollout in the UK and US is somewhat slower. Putting them in big name chain venues like Starbucks will have an increasingly large impact on uptake.

Interledger is Ripple's new spin for integrating traditional (private) and emerging (distributed, blockchain) ledgers. It's a bid to offer Ripple's enterprise customers a solution that they argue maintains customer privacy, allowing users to keep aggregate transaction data off the public blockchain by using a connector to move funds between private versions of the Ripple network. Early days, but it sounds interesting.

SWIFT is looking to deliver a 57% price reduction by the end of 2015http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_sibos_pricing.xml. This is unlikely to be because of any actual disruption to the international payments business by cryptocurrencies, but it could well be because of a fear of what is coming next. Curiously, the big costs to the end-customer from international payments are not because of the wholesale costs of making a SWIFT payment, but rather because of all of the kick-back and uplift fees that banks pay each other on top of the underlying SWIFT payment.

"Big banks are far too complicated.", says Anne Boden of Starling Bank. Yep.

The US's $40 trillion (with a 't') ACH payments system is 40 years old an starting to creak under the weight of payments innovation. HBR asks why the way Americans pay for things is so woefully out of date. Perhaps the author of the article (Jordan Lampe, Director of Policy at Dwolla) has a solution to the problem?

And finally, if this week's whine has you worried about security, then JCB is about to pilot palm vein payments in Japan. What could possibly go wrong? There's got to be a pun in there somewhere about 'armed bandits'.

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