What Causes Profitability?

August 12, 2014
/   Spotlight

Digital Insight proves that digital bankers actually drive increase engagement and profitability with their financial institution.

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Cause and Effect: If you build it, will they come?

/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Platform Shift in the Making

February 13, 2013
/   Insights

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...

Infographic: How to Spot a Fake Check

March 8, 2013
/   Insights

The team over at TROY pulled together an infographic on how to spot a fraudulent check. With more consumers using remote deposit capture to upload and deposit checks through their smartphones, it’s important to...

When the Form Factor is the X Factor

March 4, 2013
/   Insights

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...

Every once in a while, a technology-related capability that has the potential to be a game-changer seems to get overtaken by the hype. Sure, people are using it, but far more people are hearing and talking about it, to the point where the feature becomes old even before it has a chance to thrive. And while it’s always hard to predict the future of any emerging capability, this gap between reality and hype makes it even harder.

Which brings us to Bitcoin, the digital currency that functions exclusively within a peer-to-peer network. Launched only in 2009, it still has a relatively small user base and yet has stoked furious debate in very different circles. And at the heart of it all is a central question that will generate discussion regardless of what happens to Bitcoin itself: In this increasingly digital era, when there are technology aspects to every kind of commercial transaction, what will money itself look like in the future? In 2014, expect to hear many different answers.

Piggy Bank Entering BankWith Bitcoin in particular, some strands of the story make for compelling reading. At one end of the spectrum, the high-profile online black market known as Silk Road was shut down by the FBI amid charges of drug trafficking and murder, and seized Bitcoins featured prominently in the news coverage. However, savvy consumers can also use the currency to buy burgers, bouquets and Beatles albums at stores around the world.

Of course, the practice is still far from mainstream. There are currently only about 12 million Bitcoins in circulation, yet the level of penetration is as varied as it is remarkable. Just a few weeks ago, the University of Nicosia (UNic) became the first academic institution to accept this kind of payment for tuition. The Winklevoss twins, famed for their role in the creation of Facebook, are major investors in Bitcoin, and continue to promote the currency. A young couple recently completed a worldwide journey financed exclusively with Bitcoin. And in another sign of the perhaps surprising welcome the practice has received in the United States, the New York State Department of Financial Services is considering licensing Bitcoin traders, while usage is already booming in China.

So how much does the financial services industry figure have to do with all of this? By most accounts, not much—and that’s a problem, one that will likely keep growing.

On one side, some of the businesses involved in the Bitcoin trade, or using it as the core of their operations, still need good old-fashioned bank accounts, perhaps even bank loans. This is proving to be a major hurdle. For their part, lenders are understandably concerned about the legality of the entire process. Financial institutions must always operate under more stringent compliance mandates than their counterparts in most other industries, and given the relative newness of this practice, the lack of regulations—not to mention the outright opposition in many legislative bodies—makes it a virtual Wild West. The accompanying volatility doesn’t help either: The price of a single Bitcoin has gone from $20 in early 2013 to $1,100, and is currently somewhere over $600. Those are some pretty big swings by any measure.

This has unsurprisingly caused a sharp disconnect between two key constituencies, banks and venture capital firms. Some high-profile VCs such as Accel Partners, General Catalyst Partners, and Union Square Ventures have taken the plunge into Bitcoin-related initiatives, while Bank of America apparently froze the account that funded the operations of virtual-currency exchange Kraken.

The technology underpinning all this is equally critical. The Bitcoin Foundation, which “standardizes, protects and promotes the use of Bitcoin cryptographic money for the benefit of users worldwide,” acknowledges the need for quality software at every level, particularly top-tier cryptography, to ensure the viability and promise of this protocol. And in an open-source environment, that can be a challenge.

On this blog, we frequently focus on the connection between financial services and technology. Sometimes it’s about specific advances in mobile apps, at others it’s about the operating philosophies that drive the two industries. Bitcoin makes for a perfect test case in all of those scenarios—do we try to lead the way, with advocacy, best practices and support centers, or do we wait to see which way the market is headed?

One thing is clear: How institutions and individuals in our profession deal with this new form of disruption will say a lot about our industry as we move into the future.



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Brad Strothkamp


James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.