Category: banking

The role of banks in the future of money

This is a repost of a comment I posted in response to @venessamiemis post.

The money we use is Government money or levered Government money (bank credit). Government money is backed by legitimate force. The question is: what do this money become when force becomes not only illegitimate, but ineffective?

I think that we may have or be closed to have reached the limit in using legitimate force (Government) to back our money.

There are several reasons for this evolution: dwindling returns on the use of force in driving the success of large organizations, gridlocked political processes, environmental limits, difficulty to monetize the growing immaterial economy, and many more.

If so, the current monetary system used is likely to continue to deflate, as debts are paid or defaulted on, with regular bursts of inflation by fiscal/monetary authorities but with decreasing marginal returns.

The good news is: we are bound to continue to grow, to pursue Happiness, and we will need systems to continue our growth. But more likely around “soft power” systems, where reputation plays an increasing role.

In other words, the future of money is less money and more not so random of kindness. In other words, we can deflate in monetary terms, but inflate in terms of social currency.

There is a lot for bankers to do here. Banks are not going to go away. As trusted intermediaries, they will likely play an increasing role in providing us with convenient, actionable and reliable access to data about other people and organizations, not just the money we owe or are owed.

This evolution will take time. Money is here to stay, but over time, it may decrease in relative importance to social currency. It’s time for banks – big and small – to leverage their assets and position themselves in this space.

Good banks and meaningful money today in France

While I’m very interested in the future of money, I’m even more interested in the future of money now: the very practical things that we can do with the banking and monetary system as it is today.

I have come to realize that the ideas I believe about the future of money, in particular making money more meaningful, are very well understood by small community banks and credit unions. They have incredible assets, one of which is the human-sized organization, which allows you to quickly talk directly to the decision-maker. What they lack are simply the resources of the large banks and the sense of urgency of startups, but I know they are open to partnerships to workaround these issues.

Below is my corrected Google translation of a recent post by JCPhilippe, who is Managing Director of the Credit Agricole in the region of Pyrénées Gascogne in France on how the bank he manages is becoming a good bank.

As part of  a week on “socially responsible savings”, we organized a symposium on 3 November. Distinguished guests, Father Bernard Devert,President and founder of Habitat Humanism , François De Witt,founder of Finansol , and Pierre Scherek, Director General of Ideam convinced us of the usefulness of their actions and this form of savings, still limited in use in France. Socially responsible savings consists in selecting financial investments by adding meaning and socially responsible as a requirement in addition to performance.

We fully support this approach. When I say this, I understand it is difficult to believe a banker is telling the truth. If he speaks of social responsibility, ethics, faithfulness to pledges, and sustainable development, how can we not think that he is only doing so to better profit? The mega-banks have left such a strong mark in people’s mind for their subprime profits, losses, their traders and their bonuses, that it is easy to forget the local bank dedicated to a particular geographical area, which serves, people of modest means, small businesses , artisans, shopkeepers, farmers. The headlines make us forget that finance and banking are first and foremost here to help with daily life. So when a banker says: “I want to be useful!”, Who can believe him? Who can believe that a bank, a banker can have be well-intentioned?

A Pyrenees Gascogne, we believe in the good and useful bank, local solidarity, local cooperations. This idea of a good bank can be seen in everything we do. When we say that advisers are not paid on the products they sell, it’s true, or that we advise our customers products that suit them, it’s true. And because we want a good bank that we have developed a consulting business in how to save energy. And when we provide help to non-profit in our area, it’s because we believe their action is vital to the social fabric.

So if we offer our customers financial products around solidarity and socially responsible investing ( here on the site talking about heritage ), it’s because Pyrenees Gascogne invests itself in these products, it’s because these products are purchased by our employees employee for their own savings, it’s because we believe in the value of these investments for ourselves. We do not follow fashion, we are not trying to conquer a market, we try instead to share a belief with our customers.

I am increasingly convinced that of of the key levers to make companies more virtuous, more accountable to the future is to channel savings into those companies that subscribe to the principles of sustainable development, and integrate this philosophy in their decision and accounting. It is more useful to invest in such investments than to give a little to non-profits, (although each donation is helpful) because that way, they have means to improve their ambitions. We can put more solidarity in the economy and the formula of Phocion “private virtues become public morals” is truer than ever. Of course, we must still dare to believe and decide to build!

Understanding the consequences of quantitative easing

Lately, there has been a lot of talks about Quantitative Easing, the Fed’s purchase of assets, as a way to fight disinflation or deflation. People talk about it as the Fed printing money, and the media and the population conveys images of Weimar-style wheelbarrows of cash and Zimbabwe. This has fueled an accelerated frenzy in all asset classes, equities, bonds, commodities, including Gold prices, which have reached ($1380/oz).

My take is that this frenzy is essentially based on a misunderstanding by most people of how the U.S. monetary system actually works. QE itself isn’t inflationary at all. What is inflationary is expectation of inflation. But because people believe it is inflationary, it can excite speculation, and in turns, generate inflation, if enough people believe it, particularly those creditworthy enough to get in debt.

Inflation is the result of too much purchasing power increasing at a faster rate than goods and services available to purchase. Deflation is the reverse: purchasing power decreasing faster than products and services available to purchase.

This purchasing power is composed of bank money and paper/coins, bank money being the lion’s share of purchasing power. This purchasing power is bank “created”. The bank takes promises of people on one hand, and gives credit to these promises in exchange for interest and collateral, so that they become acceptable by other people. Because some of this bank money is convertible on demand in paper or transferable on demand to other financial institution, people have the illusion that bank holds their money and actually transfers it. This is not the case. Holding an account at a bank with a positive balance is like holding a different currency than your Fed reserve notes. It’s pegged to the USD i.e. it’s convertible 1:1 for Fed reserve notes, but it’s not the same. The only true USD are the Fed reserve notes and their electronic version, the reserves, held by the Federal Reserve Banks. These Fed reserves are the banks’ currency: this is how they settle debts between one another. No one but banks and the Federal government use the Fed reserves.

So, in a nutshell, because most economic agents are not banks and they use bank money to pay, not reserves, only if bank “created” money increases relative to goods/services production is there a risk of inflation. Another way to say is that reserves have not effect until they are “transformed” into bank money. I’m using quotes again here, because there is no actual transformation, it’s just two sides of a balance sheet.

If we agree on this, let’s see what QE is and what effects it may have. When the Fed buys $1T of assets for Fed reserves, whether private (mortgage-backed securities) or public (Treasury Notes), what the Fed does is does is enter the following accounting entry:

  • they record a new reserves as liability, on the account of the bank they purchased from.
  • they record the purchased assets as assets.

So technically, the bank ends up with an excess of Fed reserves, which they are forced to seek yield from, which some people say they can lend to borrowers, which is inflationary.

Actually, this assumes that creditworthy entities are willing to borrow. Let’s assume 3 types of entities: households, goods/services producing companies, speculators, Government.

  • If creditworthy households do not anticipate asset prices to increase, or have just been spooked by the housing crisis or worse lost they home, they are unlikely to borrow against such assets. If households are unwilling to borrow or if banks feel that they are not creditworthy enough, then no new bank money here.
  • Companies will only borrow if they can invest in productive capacity to satisfy a need they identify.
  • The increased liquidity at banks may end up in the hands of speculators. Problem is: speculators do not consume anything so they don’t really represent real demand. To make money, they need to buy low and then they need to sell to someone who actually values the asset for longer than a few microseconds or even days. It is possible to have commodity prices exploding then crashing just based on speculation, but not actual demand (ex. oil in 2008)
  • The government can borrow money, but in practice the government (in the US) isn’t constrained to borrow to spend. They spend first, then borrow. So the government, represented by Congress, must be willing to spend. This requires political agreement.

Given this, how can we have a sustainable creation of bank money (hence inflationary) scenario:

  • households as an aggregate decide to take on more debt. Not likely in my opinion for the next few years.
  • companies seeing that household are not taking on more debt do not borrow (or borrow but to invest abroad).
  • speculators bid each other rapidly, which creates an asset speculation frenzy. Some households or companies who actually need these assets feel that they are missing and decide to buy and hold. To me, this is possible but unlikely given the current lack of confidence by retail investors in financial markets.
  • last, the government, is unlikely to spend or reduces taxes if there is a gridlock, which seems to be the case at the moment.

In conclusion, it is my belief that QE is more likely to not spur inflation in the coming months. I believe it will indirectly contribute to inflation after a new crisis prompts the Government to go on a new huge spending program. New government spending combined with QE does equal new money, but not QE without expansion of credit.

This is not an investment advice.

BarCampBankSF2

We just released the PR for BarCampBankSF2. Please re-blog, re-twit, re-send, …

Dear Innovators,

It’s been a year since we had the first BarCampBankSF at the UC Berkeley campus — and given the current state of the economy, the collapse of the stock markets, the credit crunch hitting the global markets and the issuing severe slowdown of activity — the timing couldn’t be better for a second BarCampBankSF.

BarCampBank aims at bringing together the Bay Area’s smartest technologists and industry insiders from all over the world for a great day of networking to discuss the impact of emerging technologies in the Banking and Financial Services space. BarCampBankers will present projects, confront ideas and participate in lively conversations around the innovations in the Banking and Finance world. If you are an innovator, a technology disruptor or a professional in the banking and finance industry we’d love to have you join the debate and share in the experience.

We believe that innovation happens in any economy. We’d love to hear your ideas and share how your organization or institution is doing to ease the financial mess we are in right now.

Regards,

The BarCampBankSF Team.

More info and the wiki for the event can be found at http://barcamp.org/BarCampBankSF2
Registration takes place on eventbrite: http://bcbsf2.eventbrite.com/

Good Banking

I’m reading the live blogging of the Bernanke hearing today, and I’m pretty shocked by the following conversation:

Bad lingo | 3:59 p.m. Emanuel Cleaver, a Democrat from Missouri, condemns the term “bad bank.” He says the term does not exactly inspire support for the program. Maybe it should be called the “Damascus Road” bank, he says, or maybe the Fed should have a linguist look into something else more appealing.

Mr. Bernanke replies that it’s officially called an “aggregator bank,” not a “bad bank.”

Mr. Cleaver says that term is unlikely to catch on, and that perhaps a three-year-old should come up with something that rolls a bit more trippingly off the tongue.

Well, what about “Good Bank”, and what about making it more than just a sweet name?

I’m convinced Americans want good, ethical banking, the kind of banking that focuses on developing healthy communities where they can live and raise their kids. Just like anyone else on this planet. More importantly, they want HOPE, and good banking IS hope.

Bruce Cahan says it very well:

What We Had

The earliest banks were built by business, civic and religious leaders to grow hometowns, in regions they knew best. Community banks and bankers exist as a minority, often still independently-owned.

What We Lost

Today, most deposits (upwards of 80%) in America’s large cities are held by banks headquartered elsewhere, accountable to no one locally, except regulators in Washington or the state capitols who are easily outmaneuvered through lobbyists, industry political donations and complex financial instrument structures that camouflage the transparency needed to see simple causes and effects.

America’s banking system has lost its roots, has lost its way. “Safety and soundness” used to mean bankers living in and knowing their home regions and the people, businesses, governments and nonprofits there. Now Wall Street financial services mega-banks and investment professionals have fractionalized underwriting, ownership and obligation to the point where hedged bets on leveraged obligations (e.g., home mortgages or corporate bonds) create a rapidly cascading morass of multiplexed risk, drying credit up for other purposes in places where the risks are less or could be underwritten more safely and simply. As rogue traders have shown, the whole house of cards can easily unravel, with the use market capitalization and Federal Reserve costs unwinding such positions entails.

What We Need: An Ethical Bank

We need more ethical banks, where decisions are made transparently, its allegiances trace back to community concern and its pricing of credit and investments is directly tied to the contribution each transaction makes to growing regional health.

Improving the home loan application process

I recently was very fortunate to purchase a house in San Francisco. As most home buyers, as part of the process, I had to get a loan approval  and to provide a lot of paper-based information. Unsurprisingly, I submitted this information in the form of electronically scanned print outs of various online Web services (thank Science I didn’t have to mail printed statements). This pile of information was then manually verified for accuracy and authenticity, and the relevant information was manually fed to a mortgage approval system.

Here is the information I had to provide:

    1. Hazard insurance policy
    2. Complete institutional statements covering most recent months + as applicable, reasonable explanation and documentation for any large deposits within the last 60 days
    3. Copy of the purchase signed agreement
    4. To verify salary: 1) paystubs for the last 30 days 2) last 2 years W2s
    5. Landlord reference verifying payment history for the past 12 months
    6. Verification of stocks/bons as stated in application
    7. Evidence of residency and employment status in the US
    8. Verified employment with employee through verbal conversation or electronic verification of employment
    9. Verification of applicant’s identity (identification certification document signed by authorized bank representative and faxed)

      I won’t talk about #9, which is simply ridiculous since I’ve applied for this loan at a bank I’ve been banking with since 1998 and who also handles my brokerage account. I don’t know how many times they have verified thoroughfully my identity. I won’t comment on #7, but needless to say that when I know very well that the INS has this information accessible in real-time. Regarding #3, it might already be possible to directly extract from a digitally signed pruchase agreement PDF form the relevant information. If not today, probably very soon.

      What’s really interesting is #1, #2, #4 and #6.

      #1 is information I received from my insurer, but I assume it is available from my insurance’s Web service in HTML/PDF format.

      #2 and #6 (and partially for #4 since I receive my paychecks by wire transfer to my checking account) is information that can be retrieved today directly from my bank or brokerage’s firm Web service.

      There are several building blocks needed to achieve this:

      • Information can be extracted from content. This assumes that the HTML content is either semantically tagged using a (yet to define) microformat, or available in alternative format, say some industry XML standard like ACORD XML for insurance or OFX for banking/brokerage information.
      • I can tell my bank to authorize the inquiring party that they can retrieve specific pieces of information. Also, I can specify to the inquiring party who they can inquire this information from. This is were an authentication delegation protocol like OAuth can be useful.

      #4 (Landlord reference verifying payment history for the past 12 months) is interesting. My current landlord and I banking at the SAME bank, I would have enjoyed the possibility of being able to tag some of my transactions with “rent” and share it with him so that he could validate them.

      The future of the BofA iPhone app: besides better iPhone support, personalization?

      I recently went through the 350 or so reviews of the BofA iPhone app. Here are my conclusions.

      First of all, BofA should have called this app “ATM locator” instead of “Mobile Banking”, as the ATM locator capability is praised by most as a way to save on fees when traveling out-of-town or when in unfamiliar neighborhood, but the overwhelming majority comment on the fact that the application provides a very poor mobile banking experience on the iPhone.

      What is meant by iPhone-specific experience?

      iPhone-specific experience is the single most requested feature. I’m careful not to talk about implementation details here (native app versus iPhone-optimized Web app) as I still don’t have a strong opinion about which approach would ultimately bring the best user experience (native app developed in-house would require a learning curve that would certainly impact the quality of the app, while a Web app would have to be provided with JavaScript API wrappers of some of the SDK APIs like CoreLocation to provide an interesting user experience).

      For most what iPhone-specific experience means is:

      • More finger-friendly (avoid pinching, which is a sign that the app is not optimized for the iPhone)
      • iPhone-specific styling like buttons instead of tiny text-based links
      • Consistency across the whole app (not a mix of a native for ATM locator and Web for mobile banking that does not instill confidence)
      • More condensed information per page using table views

      Other interesting requested features

      Here are the other interesting features requested:

      • Add support for customers in Washington and Idaho states.
      • Faster login (one suggested using a PIN instead of a long password)
      • Transaction reconciliation via mobile banking
      • Background download of information such as balance for quick one-click look
      • Better support for credit card accounts (currenly only balance is available, not transaction list)
      • Support for My Portfolio feature
      • “Something like E-Trade on the BlackBerry”.

      Further thoughts: personalizing the mobile banking experience

      The one thought that came out of this analysis was that mobile users have fundamentally different needs in terms of the information they want to see after clicking the BofA logo on the iPhone homescreen.While most expect to be able to do everything they can do with online banking, all expect to do much faster the things they do most commonly in online banking. And that’s where the design problem of shrinking online banking into a mobile app is in my opinion. On one hand, what everyone does most commonly is very different from customer to customer. On the other hand, an intuitive interface design principle is “Human interface cognitive load is proportional to the number of clicks/keystrokes/gestures“, which means that people won’t like the user experience unless they get to do what they want to do in the least number of clicks and keystrokes. This includes login in, selecting a transaction, entering amounts, etc.

      To give a few examples from the reviews: those who travel don’t care about the ATM locator. Those who travel love it. Some only have a Credit Card account with Bofand don’t care about Checking/Savings.

      Which leads me to think that the future of the BofA iPhone app or any mobile banking app for that matter will be in the ability for the user to personalize their experience by providing to BofA the shortcuts to the transactions they do most.

      This may include just a transaction identifier and an account identifier (ex. “view balance” “checking-1234″) or more complex shortcuts that borders on programming/querying: for instance “view transactions” “CC-8456″ “Last 10 posted transaction” or “transfer” “$100″ “to John”.

      Online banking will most likely be the place where these personalizations will be programmed. Until then, getting that 5 star rating on iTunes app store and getting everyone happy might be difficult.

      Banking-related panel proposals for 2009 SXSW Interactive Festival

      I searched the SXSW interactive panel picker for “banking”, “money”, “finance”, “financial”, etc. Here are the panels I found:

      • Banking 2.0 – Algorithmically Fixing the Sub-Prime Mess (suggested by Christopher Hughes, PennyMac): Sub-prime debt may be causing the collapse of the worldwide economy. Speculators, investors, banks, mortgage brokers, honest home-owners have all been duped into believing that that the real estate market was a “sure thing”. Can a solution be found with a computing cluster, open source software, and a semi-complex algorithm? Yes.
      • Future of Money: Life after the Fed (suggested by Blake Stephenson, Flow): Ron Paul’s presidential campaign shone a light on the impossibility of central banks to “regulate” the economy and the inherent problems with fiat money (paper money). The internet is playing and will continue to play a critical role in the creation of the future of money. What is the future of money?
      • Mobile Ubiquitous Banking and the Future of Money (suggested by Kyle Outlaw, Avenue A | Razorfish): Nearly half the world’s population now has a mobile device and more than a thousand cell phones are being activated every minute. The ubiquity of mobile devices will make new services available to billions of people worldwide who have not had access to traditional banks or credit cards. In developing countries such as Kenya – where nearly 80% of the population is excluded from the formal financial sector – text messaging is being used to transfer money to friends and family living in other countries. Moreover, new forms of currency are being created – trading cell phone minutes for goods and services, for example. This panel will explore the challenges and opportunities as banks go mobile, and how the revolution in mobile financial services will change the way we think about money.
      • Strategies for Establishing Social Media in B2B Relationships (Brad Garland, The Garland Group | Banktastic.com) Social media in the consumer space is clearly talked about and prevalent. What is barely getting addressed is how these technologies can be implement in the business world and what are ways to do it successfully. This panel will explore that concept and how B2B relationships can be formed using these tools.

      About SXSW:

      SXSW Interactive Festival features five days of exciting panel content and amazing parties. Attracting digital creatives as well as visionary technology entrepreneurs, the event celebrates the best minds and the brightest personalities of emerging technology. Whether you are a hard-core geek, a dedicated content creator, a new media entrepreneur, or just someone who likes being around an extremely creative community, SXSW Interactive is for you!

      A bank’s payment strategy in 3 words: Convenience, Convenience, Convenience

      The Bankwatch had an interesting post titled Payments – the impossible dream for Banks? this week outlining the importance of payments for banks and the challenges they face in bringing about innovative and user-friendly payment solutions. Colin’s line of thought is that:

      1. Banking has moved to self service
      2. Self-service allows two types of financial activity … view balances, or move money.
      3. Moving money is payments.
      4. Payments, as currently offered by banks, are mostly hell and they cry out for innovation
      5. Payments innovation is not about technology or standards (SEPA), but about customer experience

      I cannot but connect this “hell” experience with one of the most interesting questions raised during the Mobile Web Wars conference last week:

      Why  people are willing to pay for apps on the iPhone, but not on Facebook?
      Why people are willing to pay $3 for ringtones, but not $1 for music files?

      A participant was arguing that the reason was the “mobile effect” i.e. the fact the mobile is a relatively new communications channel that is so personal that people value it more than the PC channel. But at the same time, Bart Decrem, CEO of Tapulous, a social app company for the iPhone, was saying in the background: “Ease-of-use, Ease-of-use, Ease-of-use”, in other words: convenience drives customer value and their willingness to pay.

      Something pretty obvious some would say, but this idea was made to me much clearer in the last few days while trying out two new services: expensure.com, a London-based bill sharing online application, and TipJoy, an online tipping (“micropayment”) service. Both services address different user problems, but they both address it very well with an extreme focus on convenience.

      TipJoy for instance, does not require what you would normally call “payees” to register: you can simply donate to any URL on the Web you want. As Web site owners register and add the TipJoy button on their Web site, they essentially claim by the same token URLs and collect tips. From the payer / tipper perspective, a single click on the TipJob button is required, nothing more: the button is already configured by the payee with a pre-defined amount (in the order of 5 to 50 cents). This is convenience at its best.

      Expensure solves the problem traditionally solved by complex spreadsheet. I used it to share bills between an upcoming WE trip with my friends and I was extremely satisfied with the application. It’s all in the details. For instance, I was able to set a ledger and experiment adding expenses to it without having to invite my friends to the service, something that would have refrained me from starting to use it, b/c my friends are too busy to receive unwanted invites from applications I found not worth using after a trial. In this case, I did, and ultimately send the invite to 5 friends.

      Both applications touch on the problem of payments, but with an extreme focus on a relatively highly context-specific problem and a very well designed solution to the problem. Yes, I could have used my bank’s transfer service, or checks, plus a shared Google Spreadsheet, as I did in the past, but I will certainly not do so now that my social network is almost set up with Expensure. Same thing with TipJoy: while I could have used a PayPal button on my blog, I can see the value of simply providing a pre-defined amount to users willing to tip me, and will most likely go with them in the end if I ever want to be tipped for writing these articles (I’m not really and I’m doing this on the side of my day job).

      What was the most interesting to me, what the following FAQ excerpt from Expensure:

      Can I pay somebody back using Expensure? Soon. Right now we are focusing on making Expensure the best shared expense tracking app out there.

      and from TipJoy:

      Why can’t I withdraw cash from my Tipjoy account? There are legal implications to allowing this transaction which we are currently working through. We expect that you will be able to withdraw cash very soon. In the meantime, if you have a minimum of $5 in your account after removal of applicable fees, then you can do the following with your earnings: 1. Donate to any official charity you’d like 2. Purchase an Amazon gift

      Both of these companies are clearly focused on providing the best customer experience first, then only will they figure a way to monetize it. They probably have listened very well to this presentation from Paul Graham on how being benevolent and focusing on solving problems is more important than thinking about making money when starting a business.

      The only thing that these companies are missing is that they are not a bank or Credit Union, but as good entrepreneurs, starting a new CU or bank is probably not an option they will choose. Just like PayPal partnered with Wells Fargo, I would not be surprised to see an innovative bank or CU partnering with them to handle the back-end aspect of their solution, in particular legal compliance in each legal framework/geography they do business in.

      So, when real-estate agents are asked about RE investments strategy, it’s: “Location, Location, Location”. When asked about early-stage investments, VCs talk about “People, People, People”. Perhaps, when banks are asked about their payment strategy, or their general banking strategy for that matter, bank should say: “Convenience, Convenience, Convenience”.

      BarCampBankDallas, Whuffie and open Banking Web APIs

      I wasn’t able to attend BankCampBankDallas, but Charlie over at Open Source CU wrote a nice report highlighting some of the concepts that were discussed during the camp:

      • Incorporating online reputation into financial reputation: “why can’t [FIs] hook into LinkedIn and view a person’s Recommendations and process that into their credit score”
      • Opening a FI’s APIs to the creativity of their customers and 3rd party developers: “could there ever be a day where an existing financial institution could let people hook into it and meaningfully tailor the infrastructure and product to their own needs?”

      I think exploring the links between online reputation and financial reputation is very interesting indeed. I think leveraging public social data is a great way for banks to reduce the risk of payment default on people with less than perfect credit. I’ve talked about this before, particularly in the context of peer-to-peer lending: in the problem with banking innovation…, I explained how a loan where some of the people lending money are family members offers a different and more attractive risk profile than someone’s lending money from people they don’t know (and don’t care) about (especially when you have a huge securitization food chain). I had never thought that such data could eventually actually be part of the FICO score, and that I think that will take A LOT of time. Here is my guess at how things will evolve: I think that Experian-like services computing someone’s overall reputation (see how to compute someone’s whuffie) will develop, and as they become established brands, may end up as an input to FICO scores. Anyway, I do think FIs are fundamentally social intermediaries and can’t afford to ignore the publicly available social data. I think there is a great opportunity, especially at credit intermediaries whose goal is the benefit of the community (credit unions), to re-socialize credit relationships.

      Regarding the opening of Banking Web APIs, I think also that this is a great way for FIs to smartsource innovation while ensuring the highest level of security standards. In the problem with banking innovation…, I suggested at the very end that one way to smartsource innovation could be to “do what Apple or Facebook do: expose some of this information via easy-to-use APIs in a way that is more secure than their startup competitors. Then, allocate a VC fund to fund startups using this API (which is equivalent to buy an option to invest more/buy out the most promising ventures later).”

      So, I’m glad to see that these highlighted concepts are inline with some of my own ideas and probably with many other people. I really hope I can make it to the next BarCampBank near San Francisco.