An European In New York – A Story Of Convenience Versus Security

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This post is about my experience as a consumer and a client of both a US bank and European banks. It is striking how the experience is different. It is a battle of convenience versus security.

Last week I was in New York to meet a number of innovation contacts and for a debrief of Innotribe@Sibos with journalists.

I landed on the Sunday between Black Friday and Cyber Monday, two major shopping events kicking off the Xmas frenzy, and the city was in full shopping dress. The Fifth avenue’s storefronts were rivalling each other to attract onlookers. Later in the week, I was also part of the tens of thousands of people on the streets near Rockefeller centre for a cold but nice evening to watch the new Christmas tree.

So, on the Sunday afternoon I went for my own Xmas shopping, which brings me back to the subject of this post. I have an account in a US bank, and when I shop in the US, I use a debit card of that bank.

As an European using a US debit card for shopping, you immediately notice a big difference in the way things happen. It is clear that in the US everything is done to make the payment fast and convenient. You tap or swipe the card. If the amount is less than 10 dollars, off you go. If the amount is more, you will be asked to sign (on paper or on a device) and that’s it.

Occasionally, a clerk will ask you: “Debit or Credit?”. I could not figure for a while exactly what I was supposed to answer. Eventually I understood that if I answered “Debit”, I would be asked to enter the PIN code of the card.

As in Europe, where no transaction can happen without a PIN code and a smart (chip) card.

But in the US, people don’t want to be bothered to remember all these pin codes. You just say “credit” and off you go. Also, the card I have is not a smart version, it just has a magnetic strip. But it is smart in a another way: I can tap it on a POS terminal- no need to always swipe it.

See the pattern? It’s all about convenience.

The European in me got, at some point, a little worried about so much simplicity and convenience. What about security? What about if my card gets stolen and misused?

In one of my previous trips, something very interesting happened that put my mind at ease. In that past trip, after I made a couple of purchases, the next one was refused. Immediately I got a phone call – from my bank. The call was triggered by the unusual pattern of the card’s usage (I used it after a long period, and the amount was bigger than usual). The person on the phone asked me the traditional questions to verify it was indeed me using the card, and re-enabled the card immediately.

At the end of the call, he told me “Sorry for the inconvenience”.
I said: “At the contrary, I thank you for taking care”. I was indeed happy that they were on the ball.

No, the US banks are not less security conscious. They just do things differently. I must say I was quite impressed- this bank in the US must have quite some tech to be able to spot patterns of people’s spending and react in real time.

How about online banking, you ask? Same- convenience trumps. There’s no security gizmos or calculators to authenticate and sign your transactions. You login with your user id and password. But they track which devices and computers you connect from. If you try using a different device, a special procedure kicks in to authenticate you.

In Europe, there’s no way you can access online banking without some security gizmo, most often a calculator-like device in which you insert a debit or a credit card. Every time you sign a transaction, you type in sequences of digits from the computer screen into the device, and then copy other sequences of digits displayed by the device back into the computer.

My long time readers will see my usual complaint coming- indeed when I sit down to do my weekly payments in front of my computer, I have 4 different gizmos to deal with, because I’m client of 5 different banks. I want to use this occasion though to congratulate AXA and CBC in Belgium, who decided to use the same gizmo for their web sites (Yay!). If only all banks would decide to do the same…

There are other interesting things that are possible in the US system. Companies like Yodlee, Mint, Wesabe and others are empowering banking customers to mashup data from all their accounts and aggregate them in a single integrated view. A little bit like SWIFT does for CFOs of large companies connected to their network.

Something like this would be very difficult in Europe, because of the security concerns. But also, perhaps even more importantly, because banks are not ready to relinquish this immediate and close relationships they have with their consumers, thought the specific websites and gizmos.

What will prevail? Openness and convenience? Or security and closed systems?

The young hyper-connected generation coming up as our new customers and employees will “vote their feet”.

My prediction: openness and convenience. What is yours? Comment below.

 

How’s This For A Change: A Startup That Surfs The Wave Of The Crisis

I love writing about startups and their path and challenges. This post is about a Belgian startup, founded by an ex-collegue of mine at SWIFT. The startup is called INTIX,  and has a solution for a challenge specific to the financial industry: manage, access and analyse a financial institution’s accumulated financial messaging data.

Marc Braet, one of the co-founders of INTIX, and I met recently at Sibos and talked about his firm’s entrepreneurial journey and what motivates their specific brand of innovation. Marc Braet has worked in the financial industry from 1996 at SWIFT and other financial-related firms. His partner at INTIX, Wouter Van Santvliet, also has experience in the financial services industry at companies such as Beyers & Partners, Trax and Sungard, with his expertise focused more on the technology side. Together they decided to found INTIX in 2011.

“We were motivated to start our company because we had detected this opportunity in the market, and we believed we had the ability to offer a solution for it,” says Marc. “We have an entrepreneurial mindset and ambition that could best be satisfied by starting our own firm.”

“Our INTIX Message Warehouse solution is truly comprehensive in allowing institutions to access and analyze all types of financial messaging data,” says Marc. “Our solution supports all financial domains, such as payments, treasury, securities, trade, and includes the full spectrum of financial standards that apply. It delivers a qualitative support for large volumes of data.”

So far nothing that jumps out as big innovation. But I was intrigued by INTIX’s approach in developing their solution, since traditional development methods would have been too costly.

“With traditional development methods, supporting such a huge variety of data standards would have required a massive investment in R&D, which was more than we could have done as a small startup firm, and which would by default not be economically viable,” said Braet.  “So instead, we applied a declarative approach based on formal specifications of these standards, which could be achieved through a relatively limited effort in R&D.”

Marc and Wouter developed the initial concept for the INTIX solution in 2010, and met with financial institutions to gather feedback and ideas for key features. They debuted a demo of the solution at SIBOS 2011 in Toronto, which was well received. In 2012, INTIX received an innovation subsidy from the Belgian Flemish government, which enabled INTIX to scale up its R&D efforts.

At SIBOS 2012 in Osaka, INTIX announced that they have signed a contract with KBC Bank in Belgium to deliver the INTIX Message Warehouse solution for that banking group, which is one of the largest banks in Belgium.

Marc told me about their journey from initial concept to thriving startup, and he offered some surprising lessons for other entrepreneurs.

“We started our company at a time of full economic crisis,” says Marc. “Although it might sound strange, this was actually an advantage to us. Because the economy was in recession and there was so much uncertainty, we were able to do a lot of R&D work in a slow, not very demanding market. As such, we were able to focus on improving our solution and we did not really have to miss any opportunities. Now we feel that the market is gearing up again, and we are ready to deliver a finished solution to our customers. So in a sense, the timing has been perfect for us.”

Marc also told me that one lesson of his company’s early stages is that you always need more money than you initially expected. “Almost every technology startup is going to be faced with delays in the R&D process, often because you end up doing more with the solution or offering different features than you initially planned. R&D is a discovery process of learning and adapting as you go along. We were fortunate to be awarded an innovation subsidy from the Belgian Flemish Government, which enabled us to keep refining our solution and keep hiring people. It takes time to hire good people for a startup firm, but it pays to be selective about who you hire. You need to hire people with the right skills who also have the right temperament and dedication.”

Very much echoing Pam Pecs Cytron, the CEO of PendoSystems, who I wrote about earlier, the key challenge the INTIX team encountered was that larger banks would say they were interested in the solution, but were reluctant to do business with a relatively new, unknown startup company. “We would be confronted with statements like, ‘You have a great solution, but you have to understand that we cannot buy from such a small player,’” says Marc. “However, it’s important to get your first contract and your first good customer reference – after that, your company and solution have more credibility. The first customer contract is the hardest to sign.”

I have been writing previously about the 3 Ps of innovation – patience, perseverance and passion.

The 3Ps of Innovation

Marc has learned the value of the 3Ps. He says: “One of the most important characteristics for startup success is to never give up and to believe in what you are doing. In our opinion, if you want to start a company in order to quickly become rich, that is not the right motivation. We are building a strong foundation for sustainable growth. We are a 100% privately funded startup firm with no third parties involved, and we are determined to grow in a financially healthy manner.”

INTIX is already making inroads into the European financial sector, and has also set up partnerships in regions like the Middle East and Russia. “We are working to cover the market outside of Europe by forming distribution channels and partnerships with established players,” said Braet. “We are still a young company, but we have global ambition!”

Good luck to Marc and INTIX.

 

This work by Kosta Peric is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

 

I Want My Data Back! (A Vision Of Data Vaults, APIs, Open Systems And Standards)

Have you stopped and thought about your data out there on the internet? When I say your data, I really mean data about you. Your Twitter followers, your Facebook friends, your eBay reputation. Or, data about your company: purchase record, customer lists, customer credit card numbers.

I think a lot about these data, and in fact I worry. I’ll use LinkedIn to illustrate my point (and I don’t want to single them out, all I’m going to write below applies to many other companies that have your data). I’ve spent countless hours building up a “persona” on LinkedIn, fine tuning my profile, searching contacts and adding them as connections. Adding and receiving recommendations, and, most recently, endorsements.

My LinkedIn profile is a very, very precious asset to me.

So, what if -

- (god forbids) LinkedIn goes bust and disappears?

- LinkedIn somehow destroys this data (say, due to a bug)?

- My account on LinkedIn is hijacked by hackers and they use my connections for their own purpose?

- LinkedIn is hijacked by hackers who destroy all the data?

My worry is that I depend on LinkedIn, and an increasing number of other companies (Apple, Google, Facebook, Twitter to name a few), to make sure my data is safe and not compromised. Most of them I trust as I would trust my bank with my money. So my worry is really about statistics – the more there are, the more likely one will screw up.

There’s an additional topic for consideration- the above companies own some of my data and they make money by aggregating it with other data and selling to companies eager to know many details about me. I don’t get to have any share of that revenue. I’ll write about this in another blog.

Innotribe’s Digital Asset Grid (DAG) project could help with my worry. The basic assumption behind the project is that you get to control your data – the digital assets such as my LinkedIn connections or my company’s purchase record. You get to truly own your data and choose where to store it, or who to entrust with this data. The DAG acts a as global directory, tracking your decisions. You also get to control who can access your data and what they do with it.

I’m a big fan of the DAG project. I was thinking about how LinkedIn (again to pick them as an illustration) would work in a DAG world.

Here’s a list of things that need to happen for this to be possible:

1. Data classification: in the DAG world, LinkedIn would publish several classes of data. To name a few: profile, connections, status, endorsements.

2. Empowerment of the user: LinkedIn would provide to each user the ability to choose,  for each of the classes above, where to store it. The user could choose to let it in LinkedIn (for example, the status updates, very public and short lived, can stay), or choose some other digital asset storage provider (for example, the sensitive connections data would go to another storage provider, more trusted by the user).

3. Availability of an open,  API based standard for digital asset storage access. The API (application programming interface), available publicly on the internet, would allow LinkedIn to fetch my data from the relevant storage provider. The standard encompasses how to get to the data, and how LinkedIn authenticates itself to the storage provider.

4. A thriving economy of storage providers, offering all degrees of services, security, convenience and trust. The key tasks of the providers are to store the data, check whether any party requiring the data has been authorised to do so, and to provide the data. The DAG acts as a secure directory on the internet, connecting LinkedIn and all the providers. On top of these very basic services, one can easily imagine may value added services that can be provided (long term storage, archival, monetization, cross-referencing with other users, etc). In fact, I can envision a user building her own storage based on open source standards and code, for data that she absolutely doesn’t want to store anywhere else but with herself.
The DAG project positions banks as data storage providers – truly a very natural evolution from their mission of today (safekeeping monetary assets) to the mission of tomorrow (safekeeping digital assets)

How does all of this change the user experience in LinkedIn? This is the best part: it does not. LinkedIn looks the same to you as it was. Everything happens behind the scenes. For example, when you login, LinkedIn fetches your connections from the relevant storage provider (if you have chosen to have this asset stored elsewhere). It then queries the statuses and updates of your connections, in the same way as today. The difference is that fetching this information may imply going to other data storage providers, based on the choices your connections have all made for themselves.

The software architect in me sees some issues with this architecture -

- the traffic on the internet will increase exponentially, as LinkedIn (and all others who have your data) have to go through additional steps to get to your data (rather than simply getting it from their own local storage): request the DAG to identify the relevant storage provider, and then go to the storage provider to actually get the data. The next step in my thinking will certainly be to try to assess how much more traffic this means.

- the architecture does cover data ownership, but doesn’t cope with the privacy of the data. Each provider such as LinkedIn could “cache”  the data that is being transferred (in fact, storing temporary data for a longer period) and still end up knowing a lot about you. The good thing is that you still end up owning the master copy of the data, a major benefit compared to the current situation.

The architecture is promising – it delivers the basic benefit of user empowerment, and creates a thriving new economy of storage providers. What we urgently need are the open standards.

Who can help?

 

The Future Of Doing Good In Banking, Inspired by Muhammad Yunus

This post is about the “Banks for a Better World” Innotribe incubator project. Innotribe have showcased it at the “Future of doing good” session at Innotribe@Sibos 2012 in Osaka, where we had the privilege of having Prof. Yunus on the panel. The event was exciting in itself, but what is even more exciting is that there is a traction to continue the project and concrete ideas about how to do so.

Banks for a better world represents a new trend in Innotribe topics, very much away from fin-tech. In essence, it is about:

• Bridging traditional and social finance, a kind of “fair trade” but for financial products and services.
• Connecting the unbanked – the people who are not part of the financial system because they don’t have any bank relationship or account. In many developing countries, the unbanked form the majority of the people.
• Establishing a community, or movement, to influence the governments and global companies for more transparency in the way they invest.

“Bypass to social impact” (by Mariela Atanassova) – bridging systems

The project is run in partnership with Ashoka (www.ashoka.org), a global organisation supporting what they call “social entrepreneurs” – people focused on driving social change by using entrepreneurial principles.

Through our contacts with Ashoka and other inputs from the Innotribe network, it became apparent that:

• There is a major gap between the domain of traditional finance, very well known in the developed countries by everyone, and social finance – very much unknown in developing countries with notable exceptions such as Grameen bank and their micro-credits.
• There is a lack of adequate financial instruments to support small SMEs and social enterprise. This was equally valid, to my surprise, in developed countries as well as in developing ones.
• There is a major issue of financial inclusion, illustrated by the situation in India where pretty much the entire population has, or has access to, a mobile phone, but only a third of the eligible population has a bank account. The so-called “unbanked” are thus isolated from traditional financial instruments, giving rise to many initiatives and instruments to serve that market with more or less good intentions.
• Bridges between the social and traditional finance can only be established through a collaborative efforts, as any single bank wouldn’t have the power to resolve all these problems on their own.

The Banks for a Better World project, under the leadership of Martine De Weirdt in the Innotribe team, explored in the past year several angles on how to tackle these issues, and also tested the appetite of the financial community to act.

Where does it stand?

The idea is to create sustainable products, services, companies that solve problems related to “social” finance by bridging it to “traditional” finance.  I want to emphasise this – it is neither about Corporate Social Responsibility (CSR) nor charity.

The person who explains this most eloquently is Prof. Muhammad Yunus.

Prof. Yunus relaxing near the Innotribe tent at Innotribe@Sibos 2012

Martine first met Yunus at the World Economic Forum in Davos 2012, where Innotribe was hosting a private session on the Banks for a Better World subject. He was interested by the Innotribe approach of a collaborative innovation, and eventually agreed to join the Banks for a Better World session at Innotribe@Sibos 2012 and also deliver a speech for the Sibos closing plenary. He says that “charity money never comes back” – giving money doesn’t guarantee a sustainable improvement of the persons or entities receiving that money. He told me about a recent trip to Haiti, where he observed that despite massive amounts of donations and charity given since the catastrophic earthquake, the situation on the ground has improved only marginally. His solution is the “social entreprise” – an entreprise like any other, except that the dividends are re-invested into the company. So, the mission of such social entreprises are to solve problems, and not to make money. This makes a big difference, and he has more than 60 social entreprises behind him to prove the point – most notably the Grameen Bank and Grameen Danone Foods. The focus is on long term sustainability – the initial money is invested into the entreprise not as charity, but as a means to get the social entreprise off the ground and hopefully able to sustain itself.

Based on all of this, the following idea emerged at Innotribe@Sibos 2012: Banks for a Better World becomes a collaborative project whose goal is to create a number of social entreprises focused on bridging the traditional and social finance worlds. The project would be co-ordinated by Innotribe, as follows naturally from the collaborative innovation mission it has. The following ingredients are needed – funding, agenda setting, idea generation and, finally, creation of the social entreprises.

The banking community would provide the funding, based on a voluntary basis (banks willing to participate) or a community-wide mechanism. Two ideas have been mentioned for the latter, involving SWIFT -

• Rounding the value of the payment instructions transmitted on the SWIFT network to the upper currency unit, and making the difference available to Banks for a Better World (e.g. an amount of 143,36 EUR is rounded to 144 EUR and 0,64 EUR is kept)
• Making the SWIFT refund available for Banks for a Better World. SWIFT being a co-operative society (thus not for profit), SWIFT refunds its member banks each year with any surplus income made that year.

The agenda setting for Banks for a Better World – in other words, the focus of innovation – of course will depend on the way it is funded. However, it will be important to have Enablers, people with experience on the ground such as Prof. Yunus, to drive the agenda as well.

Next is actual idea generation – spot the social entrepreneurs or startups who have ideas relevant to the above agenda, engage and encourage them to step forward and enable them to create solutions and social entreprises. This sounds easy at first, but it is not – from Innotribe’s experience in the startup challenge, it does require an extensive network and work to produce quality ideas. In fact, inspired by the startup challenge, and in collaboration with Ashoka, the Banks for a Better World session gave five social startups the opportunity to pitch their ideas to Prof. Yunus and the other panelists.  These ideas were in the following domains:

• Providing young people in developing countries with financial education and bank accounts – tomorrow’s future customers
• Developing mobile banking to reach the word’s unbanked communities
• Building partnerships between specialist community lenders and mainstream banks to improve access to finance
• Providing working capital funding to high growth SMEs and social impact organizations
• Issuing municipal impact bonds to finance high impact social projects

Another interesting idea came from Julius Akinyemi, a panelist in the same session. Julius is the initiator of a project called Unleashing the Wealth of Nations and a resident entrepreneur at the MIT Media Lab in Cambridge, Massachusetts. Akinyemi is proposing leveraging new technology – such as the Digital Asset Grid -  to create a local and nationwide “eRegistry” of all assets such as land, real property, farms and even cows and goats, that could be converted into a globally-understood and accepted common currency.

Finally, when the ideas are on the table, it is necessary to empower and enable the ideas owners to progress these ideas by creating a social entreprise focused on the subject. We can all draw heavily on Prof. Yunus extensive experience and advice in this domain.

I’m curious about where this goes, and very much looking forward to it. For sure the Innotribe team and I were tremendously encouraged by Prof. Yunus’ incredible faith and drive.

 

Taking No Risk Is The Greatest Risk Of All

— update on 5 November 2012 —

PlayMoolah has won the grand finale of the Innotribe Startup Challenge at Innotribe@Sibos in Osaka! They were selected first among 10 startups that were pitching to a senior jury of bankers and venture capitalists.

Here are Audrey and Min with the $50,000 prize awarded by Innotribe.

Well deserved Min and Audrey, wish you luck.

— end update

— update on 1 October 2012 —

Min came back to me today with some great news, showing PlayMoolah’s progress since I wrote the original article back in June.

PlayMoolah has its first bank partnership, with OCBC.  The bank will sponsor PlayMoolah for their customers, and will provide digital and retail space in all 55 branches across Singapore.

Excellent news for Min and Audrey. I wish them a continued success and, most importantly, hitting their target to educate thousands of children in Singapore. And elsewhere!

Here is an extract of their press release:

Technology start-up, PlayMoolah, is today announcing that it is working financial institution, OCBC Bank. This tie-up will see young customers from OCBC Bank’s Mighty Savers programme gaining access to PlayMoolah’s fun online platform that educates 6-12 year olds on financial literacy matters. In order to provide financial empowerment to more young people, PlayMoolah is partnering with financial institutions around the world and OCBC Bank is the first financial institution to sign up. Through this partnership alone, PlayMoolah target to educate over 50,000 children in Singapore.

— end update —

Forbes is running a “startup month” and this week is about turning an idea into a real business.

Immediately I thought about the PlayMoolah startup and its co-founders Min Xuan Lee and Audrey Tan. Playmoolah was a winner in the Innotribe Startup Challenge in Singapore earlier this year. I was inspired with what they do – a tool to help parents educate their children about the value of money – and the energy and passion of Min, so I asked her to tell her story.

Giving the floor to Min -

It was an eye-opening experience to learn how different cultures use money. Coming from Singapore to California during the height of the financial crisis, we uncovered more and more horror stories over casual conversations about debt and over-leverage, fueled by relentless, uninformed optimism. It was evident how this generation was fast becoming the most indebted generation in modern history. This sparked one simple question – what is the root cause of financial illiteracy in our world today?

Our curiosity led us onto a path of inquiry, into the homes of American families, volunteering to teach in public schools, and speaking to anyone who had done work even remotely related to the field of financial literacy. Over one year, we spoke to hundreds of researchers, entrepreneurs, investors, teachers, and parents. The problem was clear – children lack financial education, school intervention had not proven effective, and only 32% of American parents talk to their children regularly about money.

Volunteering in schools and seeding questions about money

The solutions were staring in our face. First, the problem is not simply about literacy, but in following through with real action and cultivating good habits. It’s also about starting young and involving not just the child but their parents to encourage good role-modeling and healthy conversations about money. At the root of the problem, parents just don’t know where to begin. And if the problems start at home, they need to be solved at home. But why isn’t there a home-based solution to help children and parents work through money matters together?

On the other hand, children are exposed to an avalanche of mass media and games that encourage consumerism and peer comparisons of what they have, even in the virtual world. What are our kids exposed to?

While at Stanford University, we were influenced by the work of B.J. Fogg and his methods for designing persuasive technology –technology that influences behavioral change. We saw an opportunity to nip the problem in the bud and take what kids have come to love, to turn the incentives completely on their head and design good technology that inspires real-world behavioral action.

There is something powerful about an idea whose time has come. So many people rallied around the idea offering us so much encouragement and help, putting us in a position where taking no risk became the greatest risk of all. With gut indignation towards the problem, an agonizing discomfort of the status quo, and the collective wisdom of all that we met along the way, PlayMoolah (http://playmoolah.com) was born.

Kiara, age 9, sitting in to one of our brainstorm meetings

In the PlayMoolah headquarters, there is a little desk with little chairs for the kids, filled with sketch paper, color pencils and markers, lego bricks and all sort of toys for kids to join us in the design process. All our concepts go through prototyping and feedback from the kids before put into production.

Paper prototyping game concepts

We design and develop playtools that put kids in the driver seat of their own learning, empowering them with the curiosity, knowledge, skills and tools needed for financial capability. Separately, parents are provided with a dashboard where they can monitor and track their kids progress, get involved with their kids saving goals, or get ideas on family projects they can do at home. No other solution on the market today is tying important age-appropriate lessons about managing money to real life, real dollar and real impact.

PlayMoolah family time!

There is a famous saying in the valley – ask for money and you get advice, ask for advice and you get money. Through many of these unexpected conversations, we raised our seed round from a diverse group of angel investors across US and Singapore with an alignment in intention and a great humility towards something larger than ourselves. Our first investor wrote a tongue-in-cheek description on our cheque – “Pay to the Order of Play Moolah” for “Saving the world”, definitely one for the archives.

Getting investment to save the world!

We are approaching exciting times as we partner with more schools and financial institutions to offer PlayMoolah to a greater number of kids and parents around the world. As part of the International ChildFinance Movement headquartered in Amsterdam, we also hope to catalyze quality financial education and access to reach the goal of touching the lives of 10 Million children around the world.

Fan mail from one of our awesome moolahkids!

At the end of the day, we hope to inspire a next generation of young people to develop a healthy perspective of money, and to really rethink what money is. To see money as a wealth creation tool rather than an end in itself, money should serve our own dreams, personal growth and happiness. It’s about the enhancing the quality of our experiences, the strength of our relationships, our well-being and our health, and ultimately using money as fuel to create greater value in society. That is the true essence of startups that have served as a vehicle for wealth creation – because every single time we see our Playmoolah kids saving up for their goals, or giving their allowance to charity, we couldn’t imagine trading what we’re doing for anything else in the world.

Audrey Tan, Min Xuan Lee (co-founders) with Playmoolah kids

 

Enabling Lower Cost Peer-To-Peer Money Transfers

Enabling lower cost money transfer and access to new financial services to billions of individuals in developed and developing markets, using mobile technology platforms.

This is the – noble – mission that P2P Cash set for themselves. They may be a startup, but they are aiming high.  P2P cash is one of the winners, in the “early stage startup” category, of the Innotribe Startup Challenge. As such, they will participate to the big final, which is part of the Innotribe@Sibos stream ofSibos in Osaka, 29 Oct – 1 Nov 2012.

Tom Meredith, the company’s chairman and CEO, and I were talking recently about my favourite subject  when it comes to startups – their story. Here is the story of P2P Cash, as told by Tom in answering my questions.

What is P2P Cash delivering?

Tom:  ”P2P Cash is working with partners to create and propagate mobile banking standards to enable 3 Billion consumers worldwide to access low cost financial services via their cellphones.Through the Trusted Agent Network (TAN), P2P Cash enables businesses and consumers  to send and receive mobile payments securely, conveniently and cost-effectively.”

Where does such an ambitious goal come from?

Tom: “we initially wanted to solve the music industry peer-to-peer file sharing problem, from both a security and a payment perspective. We came up with a synthetic form of online cash that could tracked between any two people without being managed by a server; in other words, we invented a form of “Electronic Cash” or eCash. Despite years of negotiating with Hollywood content owners, we lost out to a much larger company who presented a closed server-based system. That company was Apple and the product was iTunes.

Instead of folding our tent, we sought out another market where we could leverage our intellectual property: the international remittance or money transfer industry. Here was an extremely fragmented $500 Billion industry that could greatly benefit from a secure, universal peer-to-peer transaction solution. Economics 101 tells us that this is exactly the type of industry in which the banks could gain economies of scale and create tremendous value by consolidation around open industry standards and a common technology platform.

With the widespread adoption of the mobile phone, especially in the developing world, we saw an opportunity to leverage our technology and significantly lower the cost of money transfer. This approach puts more money into the pockets of those who needed it most: the immigrant worker and their families back home. This also struck us as a much nobler use of our technology to bring inexpensive banking services to upwards of 3 billion people rather than simply making music easier to share.”

Sounds great – but it looks to me as one of the many initiatives in the m-payments space. What are you doing different?”

Tom: “Indeed, we found two hurdles to unifying money transfers around a universal technological standard.

In every developing country, you can find hundreds of software engineers in their apartments working on mobile “Wallets.” In other words, there are too many competing mWallet solutions in the marketplace. More critically, the telecom carriers are getting mobile phones into the hands of just about everyone in just about every country, but established financial institutions are not current with new banking technology and are therefore, unable to capitalize on this dynamic new business channel.

So we shifted our business model again. Instead of competing with the various mWallets with our own mobile wallet, P2P provides the clearing and settlement BETWEEN all the various proprietary mWallets. Leveraging our peer-to-peer technology we became the central hub linking the many banks and THEIR proprietary mobile wallets to the trusted payment delivery agents to solve the looming inter-wallet communication nightmare ahead of time.”

What have you got to show me?

Tom: “This approach is getting traction, with projects in process in Africa, Asia and the Caribbean.

Through contacts in Africa, P2P was fortunate to find Morris Mwanga who was completing his Computer Science Master’s Degree in the US after spending three years building out the most widely used clearing and settlement system in Kenya. P2P leveraged Morris’ expertise to build a world-class clearing system that is capable of 100,000 transactions per second.

We have since added a universal mobile wallet that enables ANY retailer to set themselves up as an ATM location for cash delivery in almost any country without significant capital investment. We designed the architecture to be flexible and it turns out to be a perfect means to route any mobile payment using the new ISO 20022 standard promoted by SWIFT and their SWIFTRemit program.”

You said something intriguing earlier on, about established financial institutions not innovating enough with new banking technology. What can you bring to the table to help?

Tom: “we can combine our third-generation software design and mobile processing expertise with the reach of the SWIFT to over 10,000 of the world’s largest financial institutions. This a perfect marriage of technology and standards from which every financial institution can benefit.”

Your key message?

Tom: “Billions of individuals in developed and developing markets will greatly benefit from significantly lower money transfer costs and access to new financial services that mobile technology platforms can offer.  Financial institutions can see this as an opportunity to access a far wider customer audience with the ability to sell a broad range of new targeted products and services perfect for this new market. I hope P2P Cash can help in this endeavour.”

Good luck to P2P Cash!

 

Open Source Software For Risk Analytics – A Valid Option

Enabling lower cost money transfer and access to new financial services to billions of individuals in developed and developing markets, using mobile technology platforms.

This is the – noble – mission that P2P Cash set for themselves. They may be a startup, but they are aiming high.  P2P cash is one of the winners, in the “early stage startup” category, of the Innotribe Startup Challenge. As such, they will participate to the big final, which is part of the Innotribe@Sibos stream ofSibos in Osaka, 29 Oct – 1 Nov 2012.

Tom Meredith, the company’s chairman and CEO, and I were talking recently about my favourite subject  when it comes to startups – their story. Here is the story of P2P Cash, as told by Tom in answering my questions.

What is P2P Cash delivering?

Tom:  ”P2P Cash is working with partners to create and propagate mobile banking standards to enable 3 Billion consumers worldwide to access low cost financial services via their cellphones.Through the Trusted Agent Network (TAN), P2P Cash enables businesses and consumers  to send and receive mobile payments securely, conveniently and cost-effectively.”

Where does such an ambitious goal come from?

Tom: “we initially wanted to solve the music industry peer-to-peer file sharing problem, from both a security and a payment perspective. We came up with a synthetic form of online cash that could tracked between any two people without being managed by a server; in other words, we invented a form of “Electronic Cash” or eCash. Despite years of negotiating with Hollywood content owners, we lost out to a much larger company who presented a closed server-based system. That company was Apple and the product was iTunes.

Instead of folding our tent, we sought out another market where we could leverage our intellectual property: the international remittance or money transfer industry. Here was an extremely fragmented $500 Billion industry that could greatly benefit from a secure, universal peer-to-peer transaction solution. Economics 101 tells us that this is exactly the type of industry in which the banks could gain economies of scale and create tremendous value by consolidation around open industry standards and a common technology platform.

With the widespread adoption of the mobile phone, especially in the developing world, we saw an opportunity to leverage our technology and significantly lower the cost of money transfer. This approach puts more money into the pockets of those who needed it most: the immigrant worker and their families back home. This also struck us as a much nobler use of our technology to bring inexpensive banking services to upwards of 3 billion people rather than simply making music easier to share.”

Sounds great – but it looks to me as one of the many initiatives in the m-payments space. What are you doing different?”

Tom: “Indeed, we found two hurdles to unifying money transfers around a universal technological standard.

In every developing country, you can find hundreds of software engineers in their apartments working on mobile “Wallets.” In other words, there are too many competing mWallet solutions in the marketplace. More critically, the telecom carriers are getting mobile phones into the hands of just about everyone in just about every country, but established financial institutions are not current with new banking technology and are therefore, unable to capitalize on this dynamic new business channel.

So we shifted our business model again. Instead of competing with the various mWallets with our own mobile wallet, P2P provides the clearing and settlement BETWEEN all the various proprietary mWallets. Leveraging our peer-to-peer technology we became the central hub linking the many banks and THEIR proprietary mobile wallets to the trusted payment delivery agents to solve the looming inter-wallet communication nightmare ahead of time.”

What have you got to show me?

Tom: “This approach is getting traction, with projects in process in Africa, Asia and the Caribbean.

Through contacts in Africa, P2P was fortunate to find Morris Mwanga who was completing his Computer Science Master’s Degree in the US after spending three years building out the most widely used clearing and settlement system in Kenya. P2P leveraged Morris’ expertise to build a world-class clearing system that is capable of 100,000 transactions per second.

We have since added a universal mobile wallet that enables ANY retailer to set themselves up as an ATM location for cash delivery in almost any country without significant capital investment. We designed the architecture to be flexible and it turns out to be a perfect means to route any mobile payment using the new ISO 20022 standard promoted by SWIFT and their SWIFTRemit program.”

You said something intriguing earlier on, about established financial institutions not innovating enough with new banking technology. What can you bring to the table to help?

Tom: “we can combine our third-generation software design and mobile processing expertise with the reach of the SWIFT to over 10,000 of the world’s largest financial institutions. This a perfect marriage of technology and standards from which every financial institution can benefit.”

Your key message?

Tom: “Billions of individuals in developed and developing markets will greatly benefit from significantly lower money transfer costs and access to new financial services that mobile technology platforms can offer.  Financial institutions can see this as an opportunity to access a far wider customer audience with the ability to sell a broad range of new targeted products and services perfect for this new market. I hope P2P Cash can help in this endeavour.”

Tom is facing tough competition in the finals of the Innotribe Startup Challenge in Innotribe@Sibos. Good luck to P2P Cash and the other finalists, and see you in Osaka!