OK, so some of you may know I spoke at SXSW in Austin, Texas on Monday. But before I get into
the gist of what I talked about - I attended three panels - all looking at various angles on the theme of money.
- Taming the market in your pocket
- Credit Coins Cash: Social currency and Finance 2.0
- The Future of Money
As you can guess, most of the panels focused on 'How we are going to disrupt traditional banking and transactions' - so there were no traditional financial services people anywhere (unless you count Visa who were on the Credit Coins Cash panel - the best
of the bunch, if you ask me)
Now I'm not arguing against disrupting banking. If fact I'm all for it. There is a lot that is wrong with modern banking and a good dose of combative competition is good for everyone in the industry.
What struck me was the juxtaposition of the bravado coupled with the fairly shocking display of ignorance on how international banking and payments happen.
For example, Andrew Vilcsak, Mobile Platform Lead, Airbnb (an online B&B finder and booker) in the first panel described teething problems the site had when they launched the site in Europe because 'international payments are complicated' - No shit, Sherlock.
At the next panel, Ren Reynolds of the TerraNova blog (who was actually very good) warned the audience that their Facebook credits were not secure and did not offer any consumer protection. While that is correct, it took Jeremy Nusser Sr. Director, PlaySpan
BD Visa to make the point that '90% of Facebook credits are bought using cards, mobile, PayPal or prepaid - and those things do offer consumer protection'
See where I'm going with this? It took the guy from Visa to point out that it is payments services offered by banks and the established financial services players (by which I mean PayPal) that offer this consumer protection. It is the banks (and PayPal)
which develop and manage the established regulated payments processing networks.
Moving on - the first 20 minutes of the Future of Money Panel was basically a bitch fest about PayPal (having two online payments start-ups on the panel Stripe and WePay - it wasn't surprising)
But it was this statement from Dave Boyce, CEO, Fundly that sums up what I think is wrong with all this 'disruptive banking' boasting.
Fundly is an online social fundraising platform that does partner with a bank for its payments processing. At the end of the panel Boyce said the site was wary of putting 'bank-type' logos on their site because - 'we were about fun and giving - not boring
banky stuff'. However, they had to relent because the site found people seemed to be reluctant about handing over bank details to a website without some sort of visual reassurance that the payments were supported by a bank network. (I guess some people
still trust the banks).
This guy has an MBA from Harvard Business School and he thought it was unfashionable to reassure people that their payments were secure and protected? Huh?
So anyway, moving on to my panel - I started out telling my little story about building communities (it was captivating) - however I wanted to make a point that many people forget while they're trying to be cool, hip, fashionable, and disruptive.
SXSW is a Film, Music and Interactive festival. If you are a young person who plays guitar or who has made a film, I don't care how much you go on about your art (or how much you want to disrupt the status quo), someday you will want someone to buy tickets
to your show. Let me repeat that - YOU WILL WANT SOMEONE TO PURCHASE, WITH MONEY, TICKETS TO WATCH YOUR SHOW. Guess how paying for a ticket happens 99% of the time (in the first world)? - Correct, via a bank account.
Banking is the platform that lets all the 'fun and fashionable' stuff happen.
Yes, payments and transactions will most likely become a commodity in the near future. Yes, customer front ends, such as Simple, Google Wallet or Movenbank, may be how you access you bank account in the coming years. But those railroad tracks, the aging
legacy infrastructure that everyone moans about, are not going away anytime soon.
Dismissing the importance of established infrastructures or ignoring the experience of firms who have trodden the potholed path of complicated regulations - doesn't make you a rebel, it makes you naive.