This Week’s Reads: IBM, Disruption, Mobile Payments

Below are interesting stories the Banking.com staff has been reading over the past week.

What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

This Week’s Reads: ROI of Social Media, Google in Banking, Customer Experience

Below are interesting stories the Banking.com staff has been reading over the past week.

What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

What We’re Reading: Corporate Mobile Banking, Security, Mobile Gift Cards

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

 

  • Websites that adapt on the fly

ABA Banking Journal

The days of online banking being limited to desktop computers are over. Modern consumers are increasingly interacting with their banks using mobile devices such as tablets and smartphones. Understanding the popularity and value of on-the-go banking services, a handful of financial companies are beginning to introduce websites with “responsive design” to optimize their digital resources across the online and mobile channels.

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  • Microsoft Joins FIDO Alliance Security Standards Group

American Banker

The FIDO Alliance, a consortium of vendors promoting authentication standards that includes Google, PayPal, Lenovo, BlackBerry and Nok Nok Labs, announced a major new member today: Microsoft. The Mountain View, Calif.-based FIDO Alliance (FIDO is short for Fast IDentity Online) is creating a protocol that will let applications, browsers and servers speak the same language for authentication. This could become a universally accepted alternative to passwords, which are considered by most to be too easy to game and too hard to remember.

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  • Corporate Mobile Banking? Not So Fast

Bank Systems & Technology

Capital One research suggests security concerns are delaying many business customers’ adoption of mobile for corporate banking, while there is growing interest in commercial cards and self-service capabilities. Fewer than half — 48% — of the finance professionals surveyed by Capital One at the recent Association for Financial Professionals (AFP) Annual Conference said their companies have plans to implement new treasury management tools and/or services this year. Those plans include implementation of corporate mobile banking for a relatively small portion — 12% — of the 68% of responding firms that do not already offer the service, according to Capital One.

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  • Weak Security In Most Mobile Banking Apps

Dark Reading

Security experts this month tested 275 Apple iOS- and Android-based mobile banking apps from 50 major financial institutions, 50 large regional banks, and 50 large U.S. credit unions. Overall, they found that eight out of 10 apps were improperly configured and not built using best practices software development. Among the big-name banks whose mobile apps were tested by security firm Praetorian include Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Capital One Financial, and Suntrust Banks.

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  • Putting the Pieces in Place: LifeLock and Lemon Wallet

Javelin Strategy & Research Blog

At first glance, LifeLock’s $42.6 million acquisition of Lemon may not seem to fit quite right.  To some it may appear that LifeLock is buying access to Lemon Wallet’s user base, but an app with 3.6 million downloads does not justify that kind of investment on its own.  As for LifeLock getting into the mobile payments game, the last thing the market needs is another also-ran.   Fortunately, all is not as it seems because LifeLock may have actually found a way to avoid the rampant customer turnover which has been plaguing the identity protection industry.

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  • Bank Opportunity #307: Online/Mobile Gift Cards

Net Banker

Regardless of the form factor, a favorite holiday gift is money. Some people like to give crisp 20s, the hand-written check still has a certain charm (as long as the recipient has mobile deposit capture), but the biggest growth area has been the plastic gift card. Banks should have owned this trend, at least in the United States. Those 100,000 branches would have been good distribution points, a place that you trust far more than the express checkout lane at Safeway. Financial institution still have an opportunity to be major players in digital gift car distribution, especially mobile.

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  • Banks shouldn’t use text messages for two-factor authentication

PC World

A widely used security feature intended to protect access to online bank accounts is becoming increasingly ineffective, as cybercriminals develop advanced malicious software for Android devices, according to a report released Wednesday. Many banks offer their customers two-factor authentication, which involves sending an SMS message with a code that’s entered into a Web-based form.

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What We’re Reading: Unbanked, Twitter, BYOD

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

 

  • Gruenberg: Cell Phones May Hold Key to Access for Unbanked

American Banker

The Federal Deposit Insurance Corp. plans to issue a report next year exploring whether cell phones could help draw consumers not served by a bank into the mainstream financial system, the agency’s chief said Thursday. “We want to take a hard look at this issue from the perspective of economic inclusion to try to assess what the potential is here in a careful way of using this technology to expand access,” FDIC Chairman Martin Gruenberg said at a conference hosted by the Consumer Federation of America.

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  • New Twitter Rules Stymie Credit Unions From Promoting Themselves

Credit Union Journal

New rules from Twitter have thrown a wrench in the social media works for some credit unions that want to use promoted posts to break through the clutter and highlight their offerings on the popular social networking site. Peach State FCU entered the social media realm in October with Facebook and Twitter profiles, using promoted posts on each site. (A promoted post pays the site to expose the tweet or post to a larger number of users.) But a recent change to Twitter’s rules sometime in November has shut out some credit unions from using this common business marketing practice. “We had some luck with Twitter in October doing promoted tweets and promoting the account as a whole,” said Meredith Olmstead, founder and social media marketing consultant at Social Stairway, who is serving as a social media consultant for Peach State.

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  • Mobile Wallet Collaboration Crucial for CU Success

Credit Union Times

A mobile wallet will only be successful if members adopt and consistently use the app to conduct daily transactions. Ultimately, merchants will play a critical role in the success or demise of each mobile wallet solution. Forging mutually beneficial relationships with merchants, navigating the various merchant requirements including point-of-sale technology preferences and negotiating pricing agreements can be a daunting, if not impossible,  feat for an individual credit union to accomplish, regardless of its size or resources.

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  • NAFCU – Strategic Growth Conference

The Financial Brand

According to data from FindABetterBank, consumers who are specifically interested in mobile banking services are very likely to believe they’ll bank 100% virtually in the future. While fewer banking “traditionalists” (those using checks, for instance) see an all-digital future, it’s still a healthy percentage — nearly two-thirds.

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  • Security and BYOD policy management key barriers to corporate mobile banking

Finextra

Corporate treasurers cite security challenges and bring-your-own-device business policies as the key obstacles to wider uptake of mobile banking platforms for treasury activities. Of 135 finance and treasury professionals collared by Capital One at the annual Association for Finance Professionals (AFP) gathering, barely one-in-three used a corporate mobile banking platform. Security challenges with sensitive corporate data was cited as the primary barrier to widespread adoption (66%), followed by obstacles for companies figuring out their BYOD policies (24%).

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  • Banks Face Losing To Google And Amazon, While Shortchanging Corporate Clients

Forbes.com

Two strong critiques of banking in the Financial Times today. Francisco Gonzalez, CEO of BBVA bank, writes that banks can expect competition from Amazon, Google and Facebook. BBVA is based in Spain but owns BBVA Compass in the U.S. Goonzalez writes that technology has transformed many businesses — next in line is banking. That may come as something of a shock to bankers who think they are on the cutting edge, but Gonzalez points to competitors in providing financial services including PayPal, Square iZettle, SumUp and Dwolla.

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  • Email Design: Discover Card’s “Statement Available” Message

Net Banker

Most statement alerts are simple one liners asking the user to do all the work: login, find the right tab, click on the correct button, and so on. Discover, on the other hand, positions key summary information right within the body of the email: statement end date, statement balance, credit available, minimum payment due, and due date. The company includes a button to view the statement at the top, but somewhat buries the payment link near the bottom. Analysis: This is one of the better (maybe best) statement-available message I get from the major brands. But it could still be improved

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What We’re Reading: Google Glass, Payments and Branches

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

 

  • Google’s Glass Guidelines Provide Clues to Future Bank Apps

American Banker

Banks will be prohibited from advertising on Google Glass, the wearable computing product the tech giant has just started releasing to privileged developers and early adopters. In guidelines and best practices Google released this week, the search engine company told developers it will reject apps for the device — so-called “Glassware” — that it considers an irritation to users. “Google is very clear about apps limiting distraction, not [bothering] people all the time, so this isn’t something that banks can use as a platform to coax their customers 100 times a day,” says Sarah Rotman Epps, an analyst with Forrester Research. “But it is potentially a platform for them to deliver utility when it could be most useful.”

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  • Phablet, Superphone Shipments Expected to Reach 825 Million Units in 2018

American Banker

They may look ridiculous, but phablets and superphones — mini tablets and extra-large phones — have a bright future, according to research released today by Transparency Market Research. According to a new market report, “Phablets and Superphones Market — Global Industry Analysis, Size, Share, Growth and Forecast, 2012 — 2018,” the global phablets and superphones market is expected to reach $116.4 billion by 2018, growing at a compound annual growth rate of 44.1% from 2012 to 2018. The number of units of the devices is expected to grow at a CAGR of 25.8% from 2012 to 2018, and reach 825 million by 2018.

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  • Critical Bank Management Skills for the 21st Century

Bank Systems & Technology

In the past, your teams needed to be able to demonstrate a detailed grasp of policy, rigor in analyzing reports, and dedication to data quality — but to tackle today’s challenges, a different form of expertise is required. The rapidly shifting economic and regulatory conditions of the 21st century, mean that market changes often outpace management skills. In the past, your teams needed to be able to demonstrate a detailed grasp of policy, rigor in analyzing reports, and dedication to data quality – but to tackle today’s challenges, a different form of expertise is required.

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  • How Apple and Amazon Will Shape Mobile Payments

Bank Systems & Technology

Apple and Amazon will continue to drive customer expectations and create big shifts in the retail world even if they don’t release a mobile payments solution. Many traditional payments players like banks have been worried for a while about the possibility of Apple entering the mobile payments space at the point of sale. Many speculated that the last iPhone release would include an NFC chip, which did not happen to the relief of those who would have to compete with Apple. Although Apple already has a bridgehead into the payments business thanks to iTunes, experts seem to think Apple will refrain from entering the mobile payments business.

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  • Small Banks Excel at Industry Specialization

Barlow Research Analyst’s Journal

Many business banking customers value financial institutions and banking relationships that cater to their specific industry’s needs. Unfortunately, not all business customers believe their bank is industry-focused. However, customers that believe their primary bank caters to their specific industry needs appear to be more confident about the financial condition of their company, as well as their industry and believe their banker is more knowledgeable about their business. Barlow Research’s Second Quarter 2013 Economic Pulse provides valuable information about business banking customers’ need for industry-focused financial institutions.

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  • The five layers of Online banking security

CIOL

It is becoming increasingly critical that financial institutions ensure their consumer and corporate banking customers are able to access their accounts with the highest reasonable security, using a process that is very straightforward and approachable. There have been significant changes in the threat landscape for online banking. In order to protect customers using Internet-based products and services, such as applications, the Federal Financial Institutions Examination Council (FIEC) and other regulators have instituted significantly more stringent requirements for financial institutions. Ensuring a compliant security program requires the execution of a good, multi-faceted authentication solution.

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  • Retailers likely to be winners in m-payments, with banks making it work, suggests leading banker

Internet Retailer

Mobile payments is currently a three way battle for consumers being fought out between retailers, banks and mobile network operators – each keen to ‘own the customer’ – but it will be retailers and banks that win, leading m-payment experts concluded at the International Payment Summit (IPS) in London last week. Mobile operators are likely to end up just as dumb pipes. Retailers, banks and operators are all looking towards mobile wallets as the key to mobile payments and this is likely how the technology will start to gain traction in mainstream retail and it is through this that mobile payments will start to be used. But who will brand the wallets and how do you make sure not every retailer, bank and brand that a consumer uses has its own wallet?

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  • What Bank Branch Closures Mean for Consumers

U.S. News

The traditional notion of banking, in which customers visit their local branch to deposit money, check their balance or take out a loan, may no longer be the reality. In the past year, American banks shuttered more than 2,000 branch locations—and news of additional closings appears on a regular basis. Banks cite rising operation costs and shifts in consumer-banking behaviors as primary causes for reducing the number of branches. For banks, these decisions are a matter of improving their bottom line, but for customers, these closings may force them to develop new habits. In one way or another, most people are likely to notice a change in how they interact with their bank.

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Social Media Statistics: By-the-Numbers, March 2013

Below are some interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section or Tweet @bankingdotcom.

  • 100,000,000: The number of active monthly users for photo-sharing service Instagram as of February 2013. (Source: Instagram)
  • 8,900,000: The number of Tweets sent on Sunday, February 24th about the 85th Academy Awards. (Source: Twitter)
  • 64: The percentage of US advertisers that plan to increase their social media ad spend in 2013. (Source: Digiday)
  • 200,000,000: Dollars in new funding for social scrapbooking site Pinterest. (Source: AllThingsD)
  • 180,000,000: The number of U.S. Internet users that watched online content videos in January 2013. (Source: comScore)
  • 36.2: Billion online content videos watched by U.S. Internet users in January 2013. (Source: comScore)
  • 191,400,000: The number of unique US visitors for Google in December 2012, making it the most visited site in the US during the month. (Source: comScore)
  • 200,000: Dollars per day to purchase a Promoted Trend on Twitter according to recent reports. (Source: AllThingsD)

Worried about having your Twitter account hacked? Here are five reminders for brands from Social Media Today.

Social Media World

Image courtesy of bplanet / FreeDigitalPhotos.net

When the Form Factor is the X Factor

Most of the discussion around technology and financial services focuses on software and related services—new apps and capabilities, upgraded tools for security, platform shifts in the infrastructure, etc. But there’s another angle that deserves greater attention and is starting to get it: hardware.

Consider Google Glass, the newest innovation from one of the world’s most innovative technology companies. By now, the early details have been widely documented: it’s a head-mounted computer that obeys voice commands to perform a wide range of functions, from searches to taking pictures and sending messages, all hands-free. This makes a critical difference, as Google founder Sergey Brin just demonstrated during his appearance at TED. Looking down at a smartphone has the unfortunate side effect of disrupting social interaction with other human beings; with Google Glass, you don’t have to do that.

But these rudimentary functions are just that; they represent the nascent form of an emerging technology. What will this form factor be able to do, and enable us to do, a year from now? More specifically, how will it affect financial services? What, if anything, does it have to do with banking?

We don’t necessarily have the answers yet, but they go to the heart of why this question of hardware is so important.

First, it’s clear that (once compatibility issues are resolved), many banking apps currently available, from account information to geo-location, can be overlaid onto this new platform. Looking a little bit ahead, it’s even possible to visualize (pun not intended) a scenario in which, say, investment professionals receive instant market alters and make adjustments to their portfolio without any change to their habits and public demeanor. But in this age of rapid advances, even that doesn’t seem much of a stretch.

The point of a brand new form factor is not only that it enables us to more easily do what we already do, but that it enables us to do new things, which in turn affects our behavior in a positive way. The reality of ‘wearable computing’ has never quite lived up to the potential. Could Google Glass be the one that finally breaks through?

Consider the changes wrought by smartphones and tablets. This market didn’t exist just a few years ago, and now we’re coming up on 800,000 apps for the iPhone alone. It’s impossible to overstate the importance of hardware in this mix. In fact, it’s now estimated that mobile banking will be fueled in part by smartphone cameras. Well over half of all iPhone users favor mobile deposits, while 42% of mobile bankers say they’d like to use photo bill pay.

Inevitably, there’s a downside to all this. The bad guys know there are ripe pickings in this market, which is why, for example, cybercriminals are launching sophisticated hacks such as through near field communications (NFCs) on mobile devices in public areas. The more devices we have, the more attacks there will be.

Google Glass is still in its infancy; the company has put the technology in the hands of some 8,000 testers (who had to apply for the privilege by writing as essay on how they might use it). It’s not expected to be generally available until early next year.

Betting on a nascent technology is always a risky proposition, especially when it involves a new form factor. Moving forward, it will be interesting to see how (or whether) it gains broad-scale adoption, and which particular applications find an early audience.

But if history is any guide, we know this much. The app developers who are first out of the gate with tools that don’t just tweak existing releases but play to the strengths of the form factor itself will be the most successful.

What We’re Reading: Cloud Computing, Lending and Device Strategies

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

 

  • Asked About Digital Wallets, Most Consumers Only Know of PayPal: Study

American Banker

The promise of digital wallets has fueled the conversations and hopes of financial technologists for years. But there are many obstacles to having those dreams realized, including the fact that few consumers know that digital wallets exist. Only 51% of U.S. consumers said they are aware of wallets other than PayPal, according to a comScore Inc. study published this week. comScore defines digital wallets as virtual copy of the contents of a consumer’s physical wallet to facilitate online or offline retail.

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  • Big Banks Boost Lending to Small Businesses: Survey

American Banker

Big banks are showing a growing appetite for loans to small businesses. Banks with at least $10 billion in assets approved 15.3% of loans between $25,000 and $3 million in January, up from 14.9% in December and from 11.7% a year earlier, according to an index published Thursday by Biz2Credit, which connects small and mid-size business borrowers with lenders.

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  • Cloud Computing Security Rules Put Responsibility on Users

American Banker

The PCI Security Standards Council has published guidelines for protecting sensitive data in the cloud. Although the advice was written to protect card information, the same principles could be applied to any data stored remotely. The report states that installing and maintaining a firewall to protect cardholder data would be a shared responsibility between client and provider under infrastructure-as-a-service and platform-as-a-service cloud configurations. But for software-as-a-service, in which the cloud provider hosts software delivered over the web, the firewall would be the sole responsibility of the provider, the PCI Council has decided.

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  • Understanding the Tablet Banking Customer

BAI Banking Strategies

Tablet usage is growing exponentially, with important implications for retail banking. According to eMarketer, the number of U.S. tablet users was expected to reach nearly 70 million by the end of 2012, up from 34 million in 2011. Adoption is now strong enough to provide an accurate assessment of this user segment and develop a strategy for engaging these consumers in financial services.

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  • Five Things Every Business Leader Should Know About Social Capital and the Influence Economy

Business 2 Community

Though social capital is an intangible, it reflects on how well you’re known, liked and trusted. Social capital can be most simply understood as the good reputation and influence of your business or personal brand. Like the concept of goodwill in business valuation, social capital is an intangible whose value is determined by others. “A brand is no longer what we tell the consumer it is – it is what consumers tell each other it is.” ~ Scott Cook, Intuit

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  • Why You Need To Have A ‘Device Strategy’

Credit Union Journal

A recent study by First Data showed that 61% of Americans use a smartphone and that 56% of smartphone users use their smartphone to bank. Plus, almost one-third say they expect a mobile phone app from their FI. Most respondents go online to bank (86%) and pay bills (81%) frequently. Yet, while web-based transaction services are now the benchmark, ATMs still play an important role in consumer transactions. Although consumers view ATMs traditionally-as devices that enable them to retrieve cash, deposit checks, and monitor account balances-there are new capabilities that enhance individualized communications to promote both cross-selling and customer loyalty.

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  • Now banks have to worry about Apple and Google

St. Louis Business Journal

Financial institutions aren’t keeping up with the customers’ needs and desires in mobile banking, according to a recent survey.  Varollii, a Seattle technology company, found that increasingly tech savvy customers want more than what many banks are giving them and that they’re finding it from providers such as Apple and Google, which are offering competitive consumer-friendly services, such as personal financial management and alerts, The Street reports.
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  • Mobile Banking and Change is Coming

SYS-CON Media

In the book Bank 3.0 by Brett King he writes about the monumental changes taking place in the banking industry due first to the Internet and now mobile.  Here is an excerpt, “The average individual is spending 94 minutes or so a day using apps, checking emails and texting up to 100 times per day.  We’re logging on to mobile banking 20-30 times per month and Internet banking around 7-10 times per month, but visiting a branch (of a bank) only a few times a year.”

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  • Big Banks Bet on Mobility and Super-Powered ATMs

WSJ: CIO Journal

As big banks finish the job of consolidating IT systems and knocking down organizational silos, they are counting on investments in mobile applications for both retail and commercial customers, and more sophisticated ATMs, to increase customer satisfaction, lower transaction costs, and help improve margins and revenue growth. According to PNC Financial Services Group, the average cost of a transaction using an online or mobile device is 56 cents, and 59 cents at an ATM, compared with $3.97 when a customer transacts with a bank teller.

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Platform Shift in the Making

What does the banking industry as a whole have to do with Amazon, Microsoft and Apple? Just about nothing—and down the road, it may turn into a major problem (if it isn’t already).

Consider the many stories emerging from the realm of technology that have to do with financial services. Just last week, Amazon unveiled Amazon Coins, billed as “a new currency for Kindle Fire.” To launch the program, the company will dole out coins to customers (each coin is worth a cent), giving them essentially free access to apps and other services available on Kindle. The company can afford the generosity; late last year, it raised $3 billion through its first bond offering in a long time. Giving customers some free money is a great way to raise goodwill and popularize a new program that represents a new channel for transactions. For their part, app developers get another source of monetization.

See which industry is missing from this process?

Actually, the new “currency” is just the latest salvo in the ongoing battle between Amazon, Google, Apple and Microsoft to seed new apps on their respective platforms: Android, iOS and whatever mobile iteration of Windows happens to be in vogue. It’s not really about new software; it’s about creating mobile and other technologies that become increasingly embedded in the daily lives of consumers and business professionals everywhere. More apps, more users, more transactions, more money—that’s how it works. And at the core of this financially intense ecosystem will be. . .the technology platform companies.

In other words, it won’t be the banks.

The way these conglomerates (and it’s appropriate in this context to see Amazon as a technology provider) are driving app development is itself noteworthy. Each company is using a different model for the platform war, raising comparisons to everything from currency manipulation in China to ‘quantitative easing.’

For the record, it looks as if Apple still has a major advantage, thanks in part to being first to market with a smartphone and tablet. But few leads in the technology industry last very long. Kindle still has significant mindshare through its e-reader fan base, Google has racked up major partnerships for Android, and counting out Microsoft is often a mistake. (The company, which has at least as much in assets as Amazon, has been subsidizing developers to the tune of up to $600,000 per app for the Windows Phone, and the just-released Microsoft Surface Pro will likely have even more support, along with the massive user base for Windows PCs.)

We may also see more platforms emerge and find an audience. Facebook, which has already stirred interest with Facebook Credits, could yet become a financial services platform of its own, enabling consumers to pay bills and transfer funds when they go online to post a comment about a movie.

It’s not quite fair to suggest that banks are already irrelevant, but they may be in danger of getting to that point. The financial services industry has long been seen as the enabler for all other forms of commerce, which automatically brought with it a significant level of power. Is that power corroding?

If the role of enabler moves from banking institutions to technology platforms and the companies that own them, and the center of gravity shifts from Wall Street to Silicon Valley—a status some already crave—will that be a good thing?

We’ve commented earlier in this space how the two industries are dramatically different in their operating philosophies. New technologies considered “disruptive” win praise, while new releases from financial services providers that play the same role create instability and roil the markets. There are always new technology companies climbing into the upper echelons of the industry, while the top tier in banking seldom changes except through consolidation.

It’s not as if banks can’t handle technology—they have huge IT departments to run daily operations and regularly release custom apps designed to draw new business and ease customer engagement. But it may be time to go further.

Could banks do what Amazon did and release their own hardware? Should they partner with Apple, Google or Microsoft to gain more control at the platform level? Is it feasible to compete with those companies on their own turf and develop a banking-centric platform?

We don’t have the answers to any of this yet, but we may need some soon.

 

National (Banking) Security

Here’s a perfect snapshot of the world today: When Iranian President Mahmoud Ahmadinejad addresses the United Nations, banking IT executives should be paying close attention. While concerns over Iran’s nuclear ambitions pay out on the global stage, even becoming a major issue in the U.S. presidential election, it’s not only the Departments of State and Defense that are involved. There’s ongoing speculation over the details, but it’s become increasingly clear that in the past few months, several U.S. financial conglomerates—Bank of America, JP Morgan Chase and Citigroup, among others—have been under cyber-attack. There’s no official confirmation of the source, but it’s increasingly believed that the hackers were based in Iran.

The specific motives are still unclear, although it’s not hard to accept that economic sanctions that have been imposed are a major factor. For the record, the Iranian government has claimed in the recent past to be building a ‘cyber army,’ and has even called for loyal citizens to hack into Western institutions.

It’s not just banks getting caught in the crossfire. Just this week, Google warned Gmail customers that “state-sponsored attackers” may be trying to compromise their computers. Google didn’t name the state doing the sponsoring, and in this case Iran claims to be among the victims.

We still don’t know much about the recent attacks—just how broad they were, and the extent of the damage caused. For the most part they seem to have been Distributed Denial of Service (DDoS) attacks, which are typically made up of waves of phony traffic that effectively shut down otherwise functional servers and badly disrupt operations. There may not have been outright data theft, but many customers were unable to conduct online transactions, leaving banks with considerable remediation and repair costs.

Industry experts believe the attacks were heavily coordinated and targeted, pursuing weak spots that were likely uncovered through extensive research and surveillance. It’s being reported that thousands of servers were hijacked for the purpose.

The attacks seem to have subsided in the past week, but looking ahead, there’s continuing cause for worry.

First, by all accounts, these were not isolated incidents or the work of malicious kids out to prove their skills. Most DDoS attacks take considerable organization, skill and resources, and the new wave was no exception. These showed sophisticated tactics backed by patience and expertise. The diversity of their origins—the ‘botnets’ could be anywhere—makes the defense even more problematic.

It’s definitely uncomfortable to be considered alongside defense contractors as part of the ‘military-industrial complex’ and become the focus of geo-political tensions. However, the undeniable reality is that the information technology infrastructure underpinning the entire economy makes a choice target. Criminal gangs out for profit are no longer the only digital threats we need to keep in mind. Cyber terrorism is now a potent weapon in international conflicts, and few actions make a more potent political statement than bringing down the financial services industry.

There’s no reason for us to stop doing what we do—that would be handing the bad guys a true victory. However, it would serve us well to be vigilant. There are no guarantees here, but no one should be surprised if there are more attacks, whether through DDoS or new virus strains. Security must be a top priority: We need to help our security specialists build the best defenses possible, and ensure that even with waves of sophisticated assaults, operations are not disrupted.