Banking Services and User-Defined Policy 2

by Richard Veryard
Who is going to want the kind of user-defined policies I talked about in the podcast (link to soundfile, transcript extract)? Is it just the higher-end type of customer, as Ron suggests?

Hypothesis One: The better-off customers have the more complex requirements. Their financial arrangements are more subtle, their consumer electronics are more sophisticated, and there is much greater scope for interoperability.

Hypothesis Two: The technically literate consumers are most able to articulate the more complex requirements. They are more willing to experiment with the available options, and to learn to express their requirements in an appropriate policy language. In consumer electronics, they are the ones who know the difference between an Ethernet cable and a USB port, and how to tweak the firewall.

Hypothesis Three: The lead times are getting shorter. Even if it is currently the better off and technically literate consumers who are the early adopters of this complexity, service providers should anticipate the possible mass adoption of some aspects of this complexity within a fairly short timescale.

Hypothesis Four: Although the better-off and technically literate customers may be the ones who currently understand and express these complex requirements, that doesn’t mean that the rest of the customers don’t have these requirements. Everyone needs security; and the less money you have to start with, the more you suffer if someone steals a hundred dollars from your account.

Hypothesis Five. Where end-users are not able or willing to engage with the technical necessities (such as writing their own policy statements in some technical mark-up language), there will be intermediate services that will do this. For example, financial advisers may start to see their role as helping the client to orchestrate and manage a complex set of financial services from a range of service providers, instead of simply helping to select financial products. There are also opportunities for self-help groups and communities to emerge, where the complexity is managed collectively at group level, rather than at the individual level.

Hypothesis Six. Ultimately, the complexity is supported by a platform of composable services providing the right balance of flexibility and efficiency. The strategic question now becomes one of platform dominance. (The banks may be privately thinking about this question, but I haven’t seen much evidence of it yet.)

Hypothesis Seven: In the short-term, banks might be tempted to focus on the higher-end type of customer if they really were the most profitable. But there may not be enough of them to cover the costs of supporting them effectively. A more strategic reason for focusing on the higher-end type of customer might be because of innovation. But there may be just as much innovation (and greater social benefit, as well as reasonable long-term profitability) from supporting a “long tail” of lower-end customers, either directly or through appropriate communities and intermediaries.

One thought on “Banking Services and User-Defined Policy 2”

  1. The fallacy that the banks labour under is that what they provide is service. If you compare what they do with what a straightforward software tool would do, they provide an expensive set of constraints and timewasting measures, for no benefit. The fact that they are able to collect fees for this reflects their monopoly position, and their ability to create new money.

    The service equations can only be seen relative to the provision of what people actually need to manage their money. These equations can best be seen where the need for money mangement is most acute, i.e. with the marginally excluded/included (a surprisingly large and increasing sector) who need very tight control and cannot afford fees and penalties.

    If you study the way such people handle cash you will understand the nature of service needs. The system is social with individual/family/household/larger group dimensions.

Leave a Reply

Your email address will not be published. Required fields are marked *

For security, use of Google's reCAPTCHA service is required which is subject to the Google Privacy Policy and Terms of Use.

I agree to these terms.

This site uses Akismet to reduce spam. Learn how your comment data is processed.