Information on the Mexican mobile banking guidelines mean?

It looks as if the first press release that mentioned the Bank of Mexico guidelines was published on the 13 July was the one written by Noel Randewich and published by Reuters. (Read here). Subsequent press, added very little to the Reuters article. (Read here and here, as other examples). A search on Noel Randewich seems to indicate that he is a free lance reporter based in Mexico that have reported on many different aspects, but very little about banking. The analysis and interpretation should therefor be taken with some reservation.

The most interesting quote in these articles is the following:
"The rules stipulate measures to promote competition and inhibit possible discriminatory practices in transferring funds within a bank and from one bank to another," the Bank of Mexico (Banxico) said in a statement. This possibly means that an Operator will be forced to offer mobile banking services with every bank, or at a minimum that an Operator can not stop a bank from offering a service on the network. If any of these are true, the following should be considered:

• it is extremely short-sighted as it would take away free-market forces and the competitive incentive to launch product quickly
• it would be impossible to police as the bank have little control over the actions of the Operator, as the Operator is not governed by the financial regulator and
• it would create extremely complex technological interpretations in order to give substance to the guidelines (for instance the definition of fund transfer, the routing and clearing of transactions etc.)
  

The articles refer to a statement made by the bank on Monday, but I could not find the original statement and it is thus not possible to comment on the implications, not having had an opportunity to study the statement. I would appreciate any opportunity to see the statement and any of the supporting information.

Eradicate poverty according to Muhammad Yunus

The seventh Mandela Memorial Lecture was presented by Muhammad Yunus, the Nobel prize winner and the founder of the Grameen Bank recently. (Read more here). This was particularly meaningful to me as a South African. First, because this was a lecture in honour of Nelson Mandela (The icon of South Africa), who as Prof Yunus put it: "...inspired the whole world". Second the lecture was given by some-one that has done so much to help human kind achieve what I also believe in and that I have been working on for the past ten years. Some of the messages of the lecture rung true:

1. … those who told us it (Grameen Bank) would collapse – they collapsed.
2. ...that poverty does not lie in the person but rather is a result of systems put in place by society.
3. ...capitalism needs to evolve such that it encourages businesses that incorporate the selfless aspects of the human condition.
4. Let’s make South Africa the first county without poverty,” he said, “and let’s do it fast, let’s do it in the next 20 years,”

However, I still believe that the community based model of Grameen Bank is not really scalable and that the only way that we can truely bring financial inclusion to every-one is via mobile banking, as I have been quoted saying.

Thoughts on Heartland's end to end encryption

During January of this year Heartland Payment Systems announced a major security breach on their systems. An estimated hundred million card-numbers may have been compromised in this attack based on malicious code installed on Heartland's systems. This made a dent in the trust that ordinary consumers have of payment systems. Heartland must be congratulated that they announced the event and took immediate actions to rectify. (I am sure other events like these in other companies don't always reach the media).

Recently, Heartland CEO, Robert Carr indicated that the company is working towards the implementation of "end to end encryption". This move would enable security in Heartland's systems that are more secure than what existing standards (like EMV and PCI DSS) ensure. This is once again moves in the right direction. (One should ask the question why a major breach should first happen before the right actions are taken, but this is a topic for another time).

What is of more interest to me, is the implication of this to mobile payments. It is possible to (if done correctly) implement "end-to-end encryption" with mobile payments. This should be a major consideration for all mobile banking deployments as the cost of retrofitting this can be exuberant. The distribution of keys and the encryption algorithms all should be considered carefully as it will not only have an impact on security, but also performance and cost.

It is also important to think about all the potential attacks that mobile banking deployments should defend against. The most difficult one I believe, is to design for the path running trough the mobile operator infrastructure. It is here that the payment transaction can most easily be intercepted. It seems almost impossible to design secure mobile payment solutions without some collaboration with Mobile Operators.

Mobile Money Africa - online resource

Mobile Money Africa is a source of information about the progress with financial inclusion in Africa. (Read here). One must complement Emmanuel on pulling together the impressive advisory board with expertise ranging from US to Afghanistan. Seeing at the information is focused on Africa, it is interesting that, with the exception of Amaka Agbakoba Ofume, no Africans are on the advisory board. I know for a fact that we have many specialists and experts in this space on the continent. It would be great to consider a more representative sample of the brilliant experts in mobile banking on the continent.

For the rest, the sample of initial articles and the exposure on Twitter, interest groups on LinkedIN and search engines were very good for a new publication. Best wishes and keep up the good work.

The Kazang for Mobile Commerce

I visited the guys from Psitek this week. They are the inventors of that trusted voice access device that anyone that ever travelled to Africa would know about: the Adondo. Designed for Africa with anti-insect electronics, high temperature and humidity tolerance, their devices still ship with car-battery ready clamps. In many places in Africa, car battery power-source is the most reliable source of electricity available.

They have recently developed a new device called Kazang that I found very interesting. Once again built to withstand the realities of emerging economies, this device is ideally configured for proper Mobile Commerce, ala third world. It basically consists of a keypad, display and printer and it comes with lots of services bundled into the total package. Anyone can buy this device and start their own business selling pre-paid airtime, electricity and tickets. It can be utilised for bill payments and much more.

Clever little thing.

Announcement index and actual delivery

The deployment of mobile banking solutions is extremely difficult. This is especially true when the solution requires the deployment of a comprehensive wallet solution, as well as card issuing. These projects are often late and launch dates delayed. As the industry grows and solution providers become more experienced, this will of course improve.

What is interesting to me is the rate at which suppliers announce the intention to deploy mobile banking solutions. What is being reported on, is mostly what will be done in the future, rather than what has been done. While this is a common practice and a mechanism to ensure exposure, it should be backed up by actual delivery, which is often not the case.

I was thinking, maybe some-one should calculate an announcement index. This would be the ratio of pre-announcements vs post-announcements of the deployment of a mobile banking solution. If the ratio is less than one, it means that the company in question demonstrate a track-record of actual delivery. If the ratio is more than one, it would indicate a propensity to talk about things, but not always doing it. The higher the index, the more the talk.

Philippe Lerouge - Mobile banking pioneer

One of the great things of attending conferences is just meeting people in real life. Modern technology (Twitter, LinkedIN and Blogging) is a major tool to share information and to learn, but nothing compare to actually meeting the people behind the thoughts. I attended MP09 in Paris recently and met a number of people that I just read about in the past.

Amongst others I met Philippe Lerouge on the stand of PaybyPhone. I have scanned his blog a few times (be warned it is in French) and have spoken to him via e-mails. Now I had the time to meet him in person and to discuss some of the more intricate aspects of the industry. It was a good meeting. Philippe, I wish you luck with the new venture.

The innovation vs reliability debate for mobile banking

Any industry is created by new inventions. Consider the establishment of the motor car industry. The first cars built and sold were extremely unreliable but were brand new. The concept of a carriage without a horse was extremely innovative. After some time, the design of the car started stabilising (a vehicle with four wheels - one at each corner, with passengers in the middle). Cars started looking more and more like each other. At that stage, buyers started realising that what they actually needed was reliability. During the initial stages of an industry, innovation is a prime driving force, but as the industry matures, reliability, predictability and solid engineering grow in importance.

It is probably not correct to think of the mobile banking industry as a mature industry, but it may be important to start considering the reliability of solutions a bit more. The big emphasise on innovation and originality of ideas should be tempered with an appreciation of the importance of robustness and solid design. At some stage, decisions taken only on the basis of novelty will come back to haunt.