The Economist provides an Op/ed piece from Eric Schmidt, CEO of Google.  It is remarkably simple in its obvious point – that most companys (and people) still try to place internet within existing paradigms, and that is a mistake. 

The changes internet brings are little to do with technology.  They are social and behavioural.

The internet is much more than a technology – it’s a completely different way of organising our lives. But its success is built on technological superiority: protocols and open standards that are ingenious in their simplicity.

But what’s surprising is that so many companies are still betting against the net, trying to solve today’s problems with yesterday’s solutions. The past few years have taught us that business models based on controlling consumers or content don’t work. Betting against the net is foolish because you’re betting against human ingenuity and creativity.

Source: The World In 2007 | Dont bet against the internet

Three examples Eric uses are, applications, competition, and content:

1. First, most new applications can be created using existing software and protocols. Reinvention can be even more powerful and pervasive than invention. Mash-ups—websites that use existing online content to create something entirely new—are becoming the norm.
2. Second, competition has increased and intensified. That stimulates innovation and ensures that products improve faster and become cheaper. If they don’t, users go to a new entrant offering free or better versions.
3. Third, the creation, consumption and communication of content have increased exponentially. Researchers at the University of California at Berkeley estimate that the world generated five exabytes of data in 2002, double the output in 1999. To translate that into something more familiar, absorbing five exabytes of data on TV would require sitting in front of a screen for 40,700 years.

Relevance to Bankwatch:

Automation of existing transactions is the easy part of online banking.  Getting inside the minds of consumers, and how their purchasing patterns, and service expectations evolve in the internet world is where the real money lies.