Imagine a world where bank accounts don’t matter. You select services that solve your problems when you have them. Walmart (and Amazon) are unbundling banking.
As always pardon the typos
It seems like only yesterday that 30 members of Congress wrote the acting chairman of the FDIC to stop Walmart Bank.
“Wal-Mart’s plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation’s payments system,”30 Members of US Congress, March 2006
Of course, we all know that Walmart pursued a different course to deliver services. Partnerships (MGI, Moneygram, Paypal, …) and banking in a box (literally an isle with prepaid cards). Most analysts discount or “write off” Walmart’s achievements in financial services. Given Walmart doesn’t break out financial performance of Money Center, analysts are left with the tea leaves of MGI and GDOT reports. There is little doubt that comparing Money Center financial metrics to tier 1 banks would leave most unimpressed. However, Walmart has created a portfolio of banking services that supports their overall retail strategy and creates overwhelming loyalty amongst their core customer base.
Continue reading “Walmart – Banking and FinTech”
A blog to my bank friends. Sorry for typos.. feedback appreciated!
Thought for the day
Open systems garner greater participation, but margins are held either by orchestrator or proprietary components that offer unique performance or capabilities. Payments and Banking are trust networks, trust requires not only enforceable and auditable assessment of counterparty operations, but a shared business case for investment.
Trust networks revolve around a shared and enforceable definition of roles, standards, counterparty identity, trust and risk. Trust network attributes and operating model drive scale and participant investment. In all cases, networks require participation of both consumer and merchant. A trust network of known participants operating within a defined set of operations and economics stands in stark contrast to the open, anonymous and distributed internet (see Transformation of Commercial Networks).
Today we will take a look at Open Banking and Open Payments. If you are looking for the summary, here it is:
Continue reading “Open Banking, Open Payments and Trust Networks”
- The “golden geese are safe”. Data clearly shows network effects taking hold for Visa and Mastercard, as card issuance, acceptance and frequency of use all drive GDV growth in the mid 20s (see blog). As one top US bank CEO said of V/MA “there is no scheme we can define together that will result in improved economics… why on earth would we want to spend our time assessing one”?
- Open is a terrible business model, but a fantastic technical one. Tip toe into any “open” effort as a form of intelligence gathering. Standardizing messages will enable merchants (and banks) to deliver new forms of payments within embedded processes and systems.
- There can be no shared investment without a well defined and enforceable operating model.