[Imagination Club] CHALLENGE:TRANSFORMING THE BANKING INDUSTRY

[Jeffrey Baumgartner]

Thanks for another great challenge, Adeola!

I'd really like to have a single point of payment tool. To 
explain, right now my pockets are weighed down with coins, 
keys, a mobile telephone and a wallet containing cash, 
three ATM cards, three credit cards, name cards and odd 
bits of paper. 

Already, in Belgium, I can use my "Bank Contact" ATM card 
to make small micropayments immediately, I can also use it 
as a debit card in many shops. I simply insert it into the 
little machine at the cashier's counter, enter my pin code 
and the payment is made from my account to the merchant's 
account. 

With larger purchases, I often use my credit cards. 
Sometimes I have to use cash. 

I would love to have one card - or better still, my mobile 
phone - function as a tool for all payments. Perhaps by 
entering a particular code on my phone, I could indicate 
that I want to pay with debit or credit and, if I have 
multiple accounts, from which account. Then I wouldn't have 
so much to carry around in my pockets.

I believe micro-loans are very interesting in developing 
countries - and may well have a place in developed 
countries. Micro-loans are very small loans made to women 
in villages in developing countries (apparently, women are 
much more reliable with money than men - at least in 
villages in developing countries). The loans are very 
small, US$50 or US$100 is enough for a woman to buy a push 
cart and a cooker and set up a small business selling 
snacks on the roadside. US$100 would buy her a mobile phone 
which she could then charge others to use on a call by call 
basis. As I recall, Micro-lending has had a lot of success 
in India and Bangladesh. 

But I expect micro-loans, albeit on a slightly bigger 
scale, might work in developed countries as well. A few 
hundred dollars would be enough for a man to buy a tool kit 
and the down payment on a second hand truck, which would 
allow him to offer a handy-man service. The same would buy 
a bilingual woman a second hand computer and printer which 
she could use to set up a translation service. And so on.

I believe mostly charities have done micro-lending. But as 
it has proven successful, banks might well want to move in. 
It is expensive to administer such small loans. On the 
other hand, there is some good PR in that kind of thing and 
if the bank sponsors a success, she is likely to become a 
customer.

As software tools become more sophisticated, banks might 
offer software agents that can manage money - even 
relatively small amounts - more effectively. This might 
include moving money from current (checking) accounts to 
savings accounts to other financial products and back again 
based on the customer's spending habits. This would include 
paying bills at the most appropriate time (for instance, 
holding off paying an electricity bill for a couple of days 
until a salary payment comes in), etc. 

All the best,

Jeffrey Baumgartner


On 19 Oct 2005 at 20:51, Adeola Ayibiowu wrote:

> What do u think we can do to transform the banking
> industry?Where is banking going?
> 
> Your suggestion would be highly appreciated.
> 
> Thanks
> 
> deola ayibiowu
> 

--
Helping businesses innovate better
www.jpb.com | Tel: +32 2 251 7725 | GSM +32 478 549 428