A Silicon Valley company has created a mobile payment system called FaceCash that it hopes will one day displace credit cards.
Here’s how it works: You can download the FaceCash application on any leading smartphone — it will be available on iPhone, BlackBerry or Android phones beginning next week. Then you type in your bank account information, Social Security number, and driver’s licence number, and upload your picture. That’s it. You can now use your phone to make pretty much any in-person transaction, whether at a restaurant or at a grocery store — as long as the merchant has signed up for the service. To accept your payment, the merchant simply scans the FaceCash barcode on your phone with a scanner, and your picture will pop up on their computer screen — which helps them avoid fraud. They then approve your payment.
FaceCash has a tough road ahead of it in the short term, because it needs to sign up lots of customers and merchants before it can be useful to either side. On the flip side, if it devises some smart marketing tactics, and cuts deals with banks so that it can become a credit instrument as well as a debit card, this company has a very nice chance. And we should wish it well, because it offers a more open, useful, and inexpensive technology than the gouging credit card companies.
Thursday, 22 April 2010
Wednesday, 21 April 2010
A working ATM - in Lego
An American man has built a working cash machine out of Lego, tapping the toy firm's NXT programmable robotics kit.The ATM - made entirely from Lego and a HiTechnic IRLink and Codatex RFID sensor - can be used for cash withdrawals and to make change, dispensing notes and coins.
It includes a fully functional numeric keypad, a banknote scanner that can be calibrated to accept any currency and a note separator.
The 22 pound machine took Ron McRae four months to build and program, incorporating around 8000 pieces and 1800 lines of NXC code.
It includes a fully functional numeric keypad, a banknote scanner that can be calibrated to accept any currency and a note separator.
The 22 pound machine took Ron McRae four months to build and program, incorporating around 8000 pieces and 1800 lines of NXC code.
Saturday, 17 April 2010
Financial Innovation, Technology, Regulation and Public Policy
As the recent financial crisis begins to fade from memory we are starting to see behaviors in the world of financial innovation reverting to old methods and practices. Is it a good thing? Perhaps…
However, misunderstood financial innovations such as securitization, which led to the financial crisis through the sub-prime debacle in the United States, pose an ever present danger to the financial industry. Regulators and supervisors everywhere, as guardians of the various components of the world’s financial system, do still not clearly understand the implications of financial innovation. Often too this is clouded by public policies which as the basis for such oversight are suspect as to which “public” they are intended to benefit. This is especially the case in the uses of technology in the provision of financial services.
The word “innovate” means to bring in novelties or to make changes. Financial innovation extends this simple definition to the financial world. However, here the simplicity ends with a plethora of products, processes and methods that have been applied to the spectrum of the financial world – some good and some bad.
What drives financial innovation? Simply put – self interest, which finds expression through Adam Smith’s “invisible hand”. Financial institutions seek out, through the innovative process, the most efficient cost effective way to maximise their profits either on existing products or potential new ones.
There are two basic drivers of financial innovation which result from the barriers that a bank faces in reaching its financial goals – competition and regulation. To beat these barriers banks engage in completion of two sorts – competitive or circumventive. The first is pretty obvious as all banks seek to maximise their profits and they do this by competing with other players in the market.
The second, circumventive, is a little bit more obscure. In all jurisdictions financial firms are faced by a plethora of rules and regulations, imposed by the banking and regulatory authorities on how they conduct their business. These are the regulatory barriers that a bank faces. These barriers may often be overcome by innovation – hence the term “circumventive innovation”.
The classic illustration of this is the development of the humble Automated Telling Machine (ATM) which was introduced first in the United States as a circumventive innovation, to get past retractions on branch banking. The idea was quickly picked up, first in Europe, and then globally as a competitive innovation. European banks had no restrictions on the number of branches they could have but labour policies created limitations on for example working hours among many other issues. In the ATM the European banks found a new “staff member” who (1) was cheaper than a human teller, (2) could work all day and night, (3) was accurate, (4) did not need a physical branch to support it. There were many other plusses a well, not to mention the ability to widely expand the range of products and services that could be offered.
In essence, one type of innovation (circumventive) morphed into another (competitive). This interaction goes on constantly and is a key feature of the dynamics of a constantly evolving financial system. And technology has been a leading driver of this process. We see this in action all the time in many different ways.
Recently I came across a news item that indicated that Citibank had embarked on a project to make deep inroads to consumer banking in India – a vast market. Notwithstanding the size of the market in India, which is on a par with that of China, anyone trying to establish or expand their business in the world’s largest democracy has a massive hurdle to overcome. For a bank one of these hurdles is very tight regulation and the restrictions placed on banks in growing their branch networks.
The Reserve Bank of India, which is the country’s central bank, tightly controls the number of new branch licenses that are granted to foreign banks. This has a massive restrictive affect on the ability of such banks to grow their distribution networks.
To get past this limit on its physical presence Citibank has begun targeting India’s almost six hundred million mobile users. Now this is the “circumventive innovation” that I spoke of.
Citibank, who is one of the leading foreign banks in India with 42 branches and more than 450 ATMs – recently completed a six-month program in Bangalore to test the appetite of customers to make transactions through phones. The program was called the “Tap and Pay” pilot project.
During the project, the bank sold more than 3,000 phones especially enabled to make transactions over the mobile network. Customers made Rs26m (US$585,000) of purchases from 250 merchants. Citibank is now considering rolling out such services to its wider client base.
This case is a classic illustration of how financial innovations can be used an adapted to achieve other needs.
So, what is the message to bank regulators, supervisors and their policy makers? Well put simply “financial innovation or its implications are not always clearly understood”. These facts are critical to bank supervisors and regulators because innovative actions on behalf of the financial industry are not always benign or made for the general good. Equally so, public policy makers need to understand why some financial innovations take place and review their policies in the light of this. Very often restrictive practices are created for the wrong reasons – protection against genuine competition is often disguised as consumer protection.
However, misunderstood financial innovations such as securitization, which led to the financial crisis through the sub-prime debacle in the United States, pose an ever present danger to the financial industry. Regulators and supervisors everywhere, as guardians of the various components of the world’s financial system, do still not clearly understand the implications of financial innovation. Often too this is clouded by public policies which as the basis for such oversight are suspect as to which “public” they are intended to benefit. This is especially the case in the uses of technology in the provision of financial services.
The word “innovate” means to bring in novelties or to make changes. Financial innovation extends this simple definition to the financial world. However, here the simplicity ends with a plethora of products, processes and methods that have been applied to the spectrum of the financial world – some good and some bad.
What drives financial innovation? Simply put – self interest, which finds expression through Adam Smith’s “invisible hand”. Financial institutions seek out, through the innovative process, the most efficient cost effective way to maximise their profits either on existing products or potential new ones.
There are two basic drivers of financial innovation which result from the barriers that a bank faces in reaching its financial goals – competition and regulation. To beat these barriers banks engage in completion of two sorts – competitive or circumventive. The first is pretty obvious as all banks seek to maximise their profits and they do this by competing with other players in the market.
The second, circumventive, is a little bit more obscure. In all jurisdictions financial firms are faced by a plethora of rules and regulations, imposed by the banking and regulatory authorities on how they conduct their business. These are the regulatory barriers that a bank faces. These barriers may often be overcome by innovation – hence the term “circumventive innovation”.
The classic illustration of this is the development of the humble Automated Telling Machine (ATM) which was introduced first in the United States as a circumventive innovation, to get past retractions on branch banking. The idea was quickly picked up, first in Europe, and then globally as a competitive innovation. European banks had no restrictions on the number of branches they could have but labour policies created limitations on for example working hours among many other issues. In the ATM the European banks found a new “staff member” who (1) was cheaper than a human teller, (2) could work all day and night, (3) was accurate, (4) did not need a physical branch to support it. There were many other plusses a well, not to mention the ability to widely expand the range of products and services that could be offered.
In essence, one type of innovation (circumventive) morphed into another (competitive). This interaction goes on constantly and is a key feature of the dynamics of a constantly evolving financial system. And technology has been a leading driver of this process. We see this in action all the time in many different ways.
Recently I came across a news item that indicated that Citibank had embarked on a project to make deep inroads to consumer banking in India – a vast market. Notwithstanding the size of the market in India, which is on a par with that of China, anyone trying to establish or expand their business in the world’s largest democracy has a massive hurdle to overcome. For a bank one of these hurdles is very tight regulation and the restrictions placed on banks in growing their branch networks.
The Reserve Bank of India, which is the country’s central bank, tightly controls the number of new branch licenses that are granted to foreign banks. This has a massive restrictive affect on the ability of such banks to grow their distribution networks.
To get past this limit on its physical presence Citibank has begun targeting India’s almost six hundred million mobile users. Now this is the “circumventive innovation” that I spoke of.
Citibank, who is one of the leading foreign banks in India with 42 branches and more than 450 ATMs – recently completed a six-month program in Bangalore to test the appetite of customers to make transactions through phones. The program was called the “Tap and Pay” pilot project.
During the project, the bank sold more than 3,000 phones especially enabled to make transactions over the mobile network. Customers made Rs26m (US$585,000) of purchases from 250 merchants. Citibank is now considering rolling out such services to its wider client base.
This case is a classic illustration of how financial innovations can be used an adapted to achieve other needs.
So, what is the message to bank regulators, supervisors and their policy makers? Well put simply “financial innovation or its implications are not always clearly understood”. These facts are critical to bank supervisors and regulators because innovative actions on behalf of the financial industry are not always benign or made for the general good. Equally so, public policy makers need to understand why some financial innovations take place and review their policies in the light of this. Very often restrictive practices are created for the wrong reasons – protection against genuine competition is often disguised as consumer protection.
Friday, 16 April 2010
Teaching Banking to Kids
Commonwealth Bank of Australia recently launched Coinland, a fascinating virtual online game for junior school children to learn about money management and banking.
Mark Murray, general manager consumer marketing at CBA says Coinland creates a virtual world where children can have fun while starting to build their knowledge about money.
"The once simple lessons of personal finance have grown more complex, and the ways children learn has evolved," he says. "Coinland teaches children in a format they can easily relate to and have fun along the way."
Children create a personalized avatar which represents them in the game, alongside their guide Platy, who shows them how their actions impact their savings goals. The Bank's saving super heroes, the Dollarmites interact with players to bring money management to life. They also meet Mr. Save-a-lot who teaches children about money, while Gobbler - Platy's nemesis - entices them to spend.
Players develop their money management skills through a series of challenges and games, visiting eight different zones with the aim for each player to earn and save coins.
The site also offers social media tools, so that children can connect with friends by adding other players to their buddy list via safe chat using pre-defined messages.
Mark Murray, general manager consumer marketing at CBA says Coinland creates a virtual world where children can have fun while starting to build their knowledge about money.
"The once simple lessons of personal finance have grown more complex, and the ways children learn has evolved," he says. "Coinland teaches children in a format they can easily relate to and have fun along the way."
Children create a personalized avatar which represents them in the game, alongside their guide Platy, who shows them how their actions impact their savings goals. The Bank's saving super heroes, the Dollarmites interact with players to bring money management to life. They also meet Mr. Save-a-lot who teaches children about money, while Gobbler - Platy's nemesis - entices them to spend.
Players develop their money management skills through a series of challenges and games, visiting eight different zones with the aim for each player to earn and save coins.
The site also offers social media tools, so that children can connect with friends by adding other players to their buddy list via safe chat using pre-defined messages.
Sunday, 11 April 2010
Italy orders American Express to stop issuing credit cards
Central bank of Italy has ordered American Express to discontinue distributing new credit cards after the payment network failed to comply with the regulation on money laundering, usury, and transparency.
The move came after customers’ complaints about overbearing rates, and the use of confusing and complicated wordage by the credit card industry.
American Express acknowledged the actions and reported that at the moment the company is introducing some amendments to its information-technology systems and other procedures in order to "adhere more closely to the regulations applicable to payments service providers and financial intermediaries".
The move came after customers’ complaints about overbearing rates, and the use of confusing and complicated wordage by the credit card industry.
American Express acknowledged the actions and reported that at the moment the company is introducing some amendments to its information-technology systems and other procedures in order to "adhere more closely to the regulations applicable to payments service providers and financial intermediaries".
Friday, 9 April 2010
Mobile Banking - Inventor files huge claim for infringement
Two of South Africa's largest companies, Standard Bank and MTN, have been served with summonses that could result in a claim nearing R1 billion (US$ 137 million).
The claim is for alleged infringement of technology patents in establishing and running the joint Standard Bank-MTN cellphone banking venture, MTN Banking.
The claim is by 3MFuture Africa, a company controlled by a German information technology expert, Wolfram Reiners, who is a South African permanent resident.
Reiners claims that Standard Bank and MTN used technology developed by him and two others in 2000 to launch and maintain MTN Banking.
The technology allows for credit cards to be securely used where the credit card itself is not present. With the technology the card can be briefly activated electronically when a transaction takes place and then deactivated when out of use. This effectively prevents fraudsters from using the card, even if they have the card details.
In issuing the summons for a claim to be heard in the Patents Court in Pretoria, Reiners wants to put a halt to the alleged continued infringement of his internationally registered patents and requires full details of how much profit the two companies have made as a consequence of their alleged use of the patented technology.
Reiners has chosen to take his case to the Patents Court initially because his legal advisers say he can get a court date by early next year while a high court case will be a far more drawn out affair.
The extent of the profits will define the rand amount of the claim that will be made. At this stage the estimate ranges from a low of R300 million (US$ 41 million) up to a maximum of R950m US$ 130 million).
Reiners has retained the services of Heath Executive Consultants, which is headed by former anti-corruption judge, advocate Willem Heath, to do the forensic investigations into the infringements.
Reiners says that between April 2001 and November 2002 he held more than 20 meetings with Standard Bank at its request after an initial meeting to interest them in the technology.
During this period a meeting was also allegedly held with Santie Botha, who at the time was the ABSA Bank director in charge of marketing, who then moved to take over as marketing director of MTN. She was provided with extensive details on the technology.
The claim is for alleged infringement of technology patents in establishing and running the joint Standard Bank-MTN cellphone banking venture, MTN Banking.
The claim is by 3MFuture Africa, a company controlled by a German information technology expert, Wolfram Reiners, who is a South African permanent resident.
Reiners claims that Standard Bank and MTN used technology developed by him and two others in 2000 to launch and maintain MTN Banking.
The technology allows for credit cards to be securely used where the credit card itself is not present. With the technology the card can be briefly activated electronically when a transaction takes place and then deactivated when out of use. This effectively prevents fraudsters from using the card, even if they have the card details.
In issuing the summons for a claim to be heard in the Patents Court in Pretoria, Reiners wants to put a halt to the alleged continued infringement of his internationally registered patents and requires full details of how much profit the two companies have made as a consequence of their alleged use of the patented technology.
Reiners has chosen to take his case to the Patents Court initially because his legal advisers say he can get a court date by early next year while a high court case will be a far more drawn out affair.
The extent of the profits will define the rand amount of the claim that will be made. At this stage the estimate ranges from a low of R300 million (US$ 41 million) up to a maximum of R950m US$ 130 million).
Reiners has retained the services of Heath Executive Consultants, which is headed by former anti-corruption judge, advocate Willem Heath, to do the forensic investigations into the infringements.
Reiners says that between April 2001 and November 2002 he held more than 20 meetings with Standard Bank at its request after an initial meeting to interest them in the technology.
During this period a meeting was also allegedly held with Santie Botha, who at the time was the ABSA Bank director in charge of marketing, who then moved to take over as marketing director of MTN. She was provided with extensive details on the technology.
Wednesday, 7 April 2010
Citadel Advantage & IASeminars partner to offer a week-long joint program in London in June
Citadel Advantage, a global banking solutions provider specializing in payment systems, operational risk management, business continuity planning, and liquidity management, has partnered with IASeminars Ltd, an international leader in International Financial Reporting Standards (IFRS) training and education solutions to offer a week-long joint program in London: Banking Transformation 2010 – IFRS and Process Improvement.
This program on Banking Transformation is comprised of two distinct modules which can be attended separately, though together they are designed to address the challenges facing banking and other financial institutions in the year ahead. Places for this unique event are limited, and advance booking is required.
“Process Improvement and Managing Change in a Banking Environment” will be led by Citadel Advantage industry experts who are experienced in addressing business continuity, compliance, payments, risk, and host of other issues which are faced by banking professionals on a daily basis.
The June 21-22 program is an intensive course on business processes, what they are and how they can be improved. The program also deals with managing the effects that changes to business processes bring about, and gives insights into how to use a specific business process improvement methodology to create successful results.
"Process Improvement is extremely critical for financial institutions, but can only succeed if understood and managed correctly" said Richard Barr, Citadel Advantage Principal Associate. "We are excited to be cooperating with IASeminars in our first offering of a combined training event which truly tackles the needs that financial institutions face and provides invaluable knowledge that all management need in today’s demanding market"
“IFRS for Banks and Other Financial Institutions” will be led by international experts from the IASeminars IFRS banking faculty who have benefited from banking regulatory and international IFRS implementation experience.
The June 23-35 program is interactive, hands-on, and makes use of case studies, exercises, and model financial statements to explore the effects that the current and likely future IFRS requirements will have on the financial statements of banks and other financial institutions.
"Adopting and complying with IFRS is a key organisational change affecting financial institutions around the world," said Marc Gardiner, IASeminars Managing Director. "We are delighted to be collaborating with Citadel Advantage to offer a combined training event which addresses the issue of banking transformation and also provides the necessary skills for finance executives to thrive and grow in this challenging environment."
This new collaboration with Citadel Advantage expands IASeminars offerings to over 100 international accounting courses available in some 50 cities around the world on topics including:
By cooperating with IASeminars, Citadel Advantage also increases the range of its services. Citadel Advantage offers a comprehensive array of professional training courses for commercial and central banks in the areas of; Operational Risk Management (for Basel II and for back-office risk mitigation), Specific Operational Risk Management areas (including Business Continuity Planning, Anti Money Laundering & Payment Systems), and Liquidity Management.
About Citadel Advantage
Citadel Advantage (http://www.citadeladvantage.com/) provides back office system specialist services, specifically covering operations risk mitigation, fraud prevention, payments, and liquidity & treasury systems. The company provides services relating to the design, functionality, risk mitigation, training and operation (including payment flow control and liquidity management) of Payment Systems and associated Back Office operations activities.
About IASeminars
IASeminars (http://www.iaseminars.com/) has established itself over 10 years as one of the world's leading independent providers of international accounting seminars. With offices in London and Washington, D.C., it offers several hundred public courses each year on six continents. IASeminars events attract thousands of senior delegates from around the world, who are taught by an international faculty of expert instructors.
This program on Banking Transformation is comprised of two distinct modules which can be attended separately, though together they are designed to address the challenges facing banking and other financial institutions in the year ahead. Places for this unique event are limited, and advance booking is required.
- June 21-22 - Process Improvement and Managing Change in a Banking Environment
- June 23-25 - IFRS for Banks and Other Financial Institutions
“Process Improvement and Managing Change in a Banking Environment” will be led by Citadel Advantage industry experts who are experienced in addressing business continuity, compliance, payments, risk, and host of other issues which are faced by banking professionals on a daily basis.
The June 21-22 program is an intensive course on business processes, what they are and how they can be improved. The program also deals with managing the effects that changes to business processes bring about, and gives insights into how to use a specific business process improvement methodology to create successful results.
"Process Improvement is extremely critical for financial institutions, but can only succeed if understood and managed correctly" said Richard Barr, Citadel Advantage Principal Associate. "We are excited to be cooperating with IASeminars in our first offering of a combined training event which truly tackles the needs that financial institutions face and provides invaluable knowledge that all management need in today’s demanding market"
“IFRS for Banks and Other Financial Institutions” will be led by international experts from the IASeminars IFRS banking faculty who have benefited from banking regulatory and international IFRS implementation experience.
The June 23-35 program is interactive, hands-on, and makes use of case studies, exercises, and model financial statements to explore the effects that the current and likely future IFRS requirements will have on the financial statements of banks and other financial institutions.
"Adopting and complying with IFRS is a key organisational change affecting financial institutions around the world," said Marc Gardiner, IASeminars Managing Director. "We are delighted to be collaborating with Citadel Advantage to offer a combined training event which addresses the issue of banking transformation and also provides the necessary skills for finance executives to thrive and grow in this challenging environment."
This new collaboration with Citadel Advantage expands IASeminars offerings to over 100 international accounting courses available in some 50 cities around the world on topics including:
- IFRS Basics
- IFRS Transition and Implementation
- IFRS vs. U.S. GAAP Differences
- IFRS for SME's
- IFRS for Financial Instruments, Derivatives and Hedging
By cooperating with IASeminars, Citadel Advantage also increases the range of its services. Citadel Advantage offers a comprehensive array of professional training courses for commercial and central banks in the areas of; Operational Risk Management (for Basel II and for back-office risk mitigation), Specific Operational Risk Management areas (including Business Continuity Planning, Anti Money Laundering & Payment Systems), and Liquidity Management.
About Citadel Advantage
Citadel Advantage (http://www.citadeladvantage.com/) provides back office system specialist services, specifically covering operations risk mitigation, fraud prevention, payments, and liquidity & treasury systems. The company provides services relating to the design, functionality, risk mitigation, training and operation (including payment flow control and liquidity management) of Payment Systems and associated Back Office operations activities.
About IASeminars
IASeminars (http://www.iaseminars.com/) has established itself over 10 years as one of the world's leading independent providers of international accounting seminars. With offices in London and Washington, D.C., it offers several hundred public courses each year on six continents. IASeminars events attract thousands of senior delegates from around the world, who are taught by an international faculty of expert instructors.
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