Payments

What’s next for Paypal, and why should banks care

Colin Henderson

I recall last year hearing a CIO, when asked whether he should care about Paypal, reply – they are American aren’t they? In fairness, its worth performing a bit more detailed analysis, because as I will show there are issues, and they are not clearly understood. However I believe they are a real threat to all Banks, including the Citibanks, Barclays, and BofA’s.
Where next for PayPal? – Financial Services – Breaking Business and Technology News at silicon.com

Online payments company PayPal is looking to extend its reach beyond its online shopping beginnings.

Continue reading “What’s next for Paypal, and why should banks care”

Payments1 Comment

Changes at Dexit suggests challenges, but the micropayment opportunity remains

Colin Henderson

Dexit is a Canadian operator with a smattering of ex BMO executives, albeit one less with Persofsy’s departure. Dexit is a contactless micropayment service, used for purchasing coffee, lunch and similar. The merchant must have a Dexit acquiring device/ terminal to participate, and I suspect this is limiting Dexit’s growth. Also the customer must carry the Dexit tag. Other micropayment operators, such as Cardis, lever existing infrastructure, ie the debt card terminal acquiring device. Payments News: Dexit Announces Board, CEO Changes – March 20, 2006 Ms. Martin replaces Renah A. Persofsky, the founder of the company, who has served as … Continue reading Changes at Dexit suggests challenges, but the micropayment opportunity remains

Payments, Security

Lower limits are not the answer to fraud

Colin Henderson

Barclays are following the normal pattern of mitigating risk through reduction in transaction limits.  This is inconvenient to customers and drives up costs, by insisting on manual intervention for “above limit” transactions. And of course, the limit doesn’t solve the fraud .. it just forces the bad guys to be even more creative at being high volume, low cost operators, functioning within the lower limits. Finextra: Barclays limits online funds transfers to fight phishing fraud Barclays has lowered its online transfer limit from £2000 to £1000 to protect customers from fraud. Relevance to Bankwatch:In order to compete effectively, and be … Continue reading Lower limits are not the answer to fraud

Payments

Single Euro Payments Area (SEPA) – significant implications for Banks with Euro presence

Colin Henderson

McKinsey study compares different approaches to banks’ making money, and found three broad approaches. The McKinsey Quarterly: How Europe’s banks should prepare for payments reform 1. Institutions in the United Kingdom and France are “balance earners.” UK banks earn revenue largely from the interest on credit card balances, while their French counterparts generate income from interest rate margins3 on current accounts.2. “fee-oriented” banks, including institutions in Italy, Poland, and Spain—charge their customers for everything from transactions to account maintenance. Such activities are largely profitable for institutions in Italy and Spain (2002 profits totaled €3.9 billion and €1.5 billion, respectively) but … Continue reading Single Euro Payments Area (SEPA) – significant implications for Banks with Euro presence

Payments, Security

Fujitsu Transaction Solutions software may have stored PIN and customer information

Colin Henderson

This story indicates that Fujitsu software may be part of the problem with the Citibank ATM fraud last month. Visa warns software may store customer data | CNET News.com A popular software that retailers use to control debit-card transactions may inadvertently store sensitive customer information, including PIN codes, says Visa. Relevance to Bankwatch: Banks have to worry about information as much (more) than they do about money. Banks need Chief Information Officers, and corporate principles to govern storage, and use of information.  This includes specific rules surrounding authentication, and authorisation of services. These principles must be applied to third parties … Continue reading Fujitsu Transaction Solutions software may have stored PIN and customer information

Payments

Google payments now in limited release

Colin Henderson

Its now official. Most banks haven’t figured out how or why they should worry about Paypal, and now Google is here. Help Center: How do I accept payments through Google? This feature allows individuals based in the United States to sell commercial items on Google Base and accept payments for these sales through Google. So lets consider the consequences here … Purchaser can pay seller through Google. But the actual money is coming out of the purchasers credit card. So in effect Google is in competition here with the payment networks, the card acquirers. The card issuers have to ensure … Continue reading Google payments now in limited release

AI

Social networks – a business paradigm shift ?

Colin Henderson

Charlene talks here about applying the power of social networks and extrapolates that into the world of business. My business, banking, is the very antithesis of these concepts today, yet I believe banks that consider them in the future, in their product & channel development, will win. Banks can no longer sit behind desks in big buildings and expect customers to flock inside. Banking was a captive market, but that is shifting rapidly, and internet is the driver. Charlene Li’s Blog: Forrester’s Social Computing report “Easy connections brought about by cheap devices, modular content, and shared computing resources are having … Continue reading Social networks – a business paradigm shift ?

Innovation, Security

Banks set up text, email fraud alerts for customers

Colin Henderson

Customer loyalty has been established by face to face relationship in the past.  With the advent of internet, and pervasiveness of electronic theft, and multiplicity of payment methods nowadays customers want greater attention paid to their spending patterns and many want control over unusual amounts, or significant changes in their accounts. Enter automated alerts, customised to the their preferences, that provide the assurance of confirming customers activity, and importantly notifiying them immediately of anything that was not them. Banks set up text, email fraud alerts for customers – Financial Services – Breaking Business and Technology News at silicon.com The threat … Continue reading Banks set up text, email fraud alerts for customers

Uncategorized

For the first time, a financial institution …. a C-level data executive position.

Colin Henderson

Wriston, head of Citibank several years ago stated that banks would be about information, not money.

1986 – The basis for wealth, has evolved from land to labor to information. “Information about money has become almost as important as money itself,” a famous remark now inscribed in the lobby of New York’s Library of Science, Industry, and Business.

So its apt this development takes place first at CitiGroup … expect others to follow suit.

Citigroup Names Bottega CDO

Rare in any industry, Citigroup is the first financial institution to formally create a c-level data executive position.
By Greg MacSweeney
March 16, 2006For the first time, a financial institution has formally created a c-level data executive position. CitiGroup’s Corporate and Investment Banking (CIB) unit has named John Bottega as its Chief Data Officer (CDO). Bottega, who has 20 years experience managing and transforming reference data functions at Credit Suisse, Merrill Lynch and Lehman Brothers, will be responsible for planning and managing the CIB’s data strategy, policies, line functions and data investments and working closely with the Citigroup’s Global Infrastructure Conversion and Alignment Program (GICAP) team, CIB Technology and the CIB Data Council, according to a Citigroup statement.

Continue reading “For the first time, a financial institution …. a C-level data executive position.”

Payments

The future of credit card networks – An AEI/ Brookings Paper

Colin Henderson

Fascinating paper, based on the introduction.  its seems to be an excellent primer with clearly written background to the credit card industry, with explanations about the three components; issuers, acquirers, and networks. It provides five scenarios for consideration: Merchant Plaintiffs Prevail: No More Uniformity in Interchange Fees Regulation of Interchange Fees Nationalization of Credit Card Networks Breakup of MasterCard/Visa Reorganization of MasterCard/Visa Conclusion: We are not sufficiently clairvoyant to predict which of the multiple scenarios for the card industry will come to pass. Our educated guess at this point is that if the interchange fee cases eventually go to trial … Continue reading The future of credit card networks – An AEI/ Brookings Paper