Monday, February 16, 2009

The mobile value store account debate

We tend to forget that when credit card systems were launched during the eighties, these systems were stand-alone systems. Cards was not issued on-top of existing accounts. It was only after a significant period and with a lot of experience that the banking industry had enough confidence to issue cards associated with existing bank accounts. It was also much easier for consumers to think of their cheque account and their credit card. These two type of accounts were (and still often is) two seperate value stores. Sure, it is possible to move money from the one account to the credit card.

So why are banks so determined to have mobile banking/payments integrate to their core banking systems and/or credit card systems? There are so many reasons why it make sense to run mobile off a seperate (new?) value store that is not hosted on the core banking system:
  • A seperate account would enable us to deliver the service much more cheaper by eliminating expensive (unneeded) services (like monthly statements, teller/branch support etc.)
  • It would keep high-volume (potentially unreliable) transactions away from the heart of the bank
  • It would allow banks to offer services to people without bank accounts.
  • It would enable much faster times to market by making use of dedicated, turnkey solutions (like Fundamo Enterprise Edition).
  • It would give the industry the opportunity to learn before attempting difficult and complex integrations.
I am sure that there are other reasons. The only reason why we should not do it, is because it... Sorry, slipped my mind.

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