Payments Views


My Experience at BarCampBankSF


A few weeks ago I mentioned BarCampBankSF – an unstructured, participant-organized, conference on banking and payments – and promised to share my observations. The event was this past Saturday and I thought it was great.


The Format

Approximately 60 of us gathered at UC Berkeley. The day started with informal networking and after everyone introduced themselves we each had an opportunity to suggest session topics. The resulting grid of post-it notes on the wall served as the official schedule/agenda:


The sessions themselves were loosely moderated and participants were articulate, well-informed, and enthusiastic (as one would expect from payment and banking aficionados that came on a Saturday). Participants represented a wide range of experience in payments (just starting out to industry leaders), age (undergrad to semi-retired), and company size (start-up to large financial institutions). No one individual dominated any session and although not everyone agreed with one another, the dialogue was always respectful. We were in one big room and rearranged the furniture to accommodate three simultaneous session groups. Volunteers picked up pizza from Zachary's and coffee from Peet's. It was casual and worked very well. The only suggestion I have for improvement is name tags.


To get a better sense of the atmosphere, check out photos on Flickr

I moderated a couple session and floated back'n'forth between others (it was hard to choose).  Here are my (admittedly sketchy) notes on the sessions I attended:

Business Payments

Bottom-up solutions, from smaller companies rather than large financial institutions are more likely to succeed. Big banks are not motivated to challenge the status quo as they are profiting from today's environment. Bill pay vendors (Check Free, Metavante, Online Resources) are likely to address the problem with consumer to business online bill payments dropping to paper  by collaborating on a means to pass a unique transaction ID with an ACH payment. The ID would be used to access customer information from a shared web repository.

And finally, we had an entertaining and informative tangent into the "financial crypto-underworld" and learned about alternate currencies and off shore efforts to avoid know your customer rules, e.g. e-Gold.

User Driven Development

By involving users in the development of financial products bankers can ensure that their product development efforts are more successful. Representatives of banks, credit unions, and marketing/product development firms shared their experience (pros and cons) of getting customers involved in product development. All agreed that web-enabled sessions (via WebEx or similar tools) are useful, but not nearly as effective as gathering face to face. Input gathered online can easily be summarized/shared online with other customers that were not able to attend. Suggestions include putting mock ups of 4-5 products out there and asking customers to rank them.

One must always be cautious – what customers say they want and what they actually use is not always the same.

Blogs are often used to share information with customers and encourage feedback (via comments) although bankers expressed frustration that it was hard to get customers to participate. Participants shared their success in tracking how readers find blog posts (search terms, links from other blogs or websites), how long they remain, which pages/links the explore while visiting the blog, and where they go afterwards. This data can be even more telling than comments generated by viewers.

We had a good discussion about generational differences in interfacing with banks/credit unions via text message, mobile browsers, etc. Younger people are more interested in having their financial data come to them (via RSS or a personal financial management widget) rather than visiting their bank or credit union's website.Blog and Facebook widgets like ChipIn enable you to set a savings goal and allow others (friends and family) to contribute. The widget tracks your progress against the goal. Something like this would be a great feature for credit unions and banks to offer student and youth customers. We also talked about SecondLife and the experience banks have had in its virtual world.

The group also discussed using RSS feeds to cross link via Flickr, podcasts, YouTube, and iTunes.

Strategy Execution: why some efforts fail and others succeed

We shared both success stories and dismal failures. In hindsight, some of the disasters may have been averted if only…

  1. Everyone had agreed on the right metrics up front and they were measured
  2. Incremental results, rather than one big bang is often easier to develop and allows teams to incorporate feedback
  3. It is critical that sponsor and senior management expectations are managed effectively to avoid surprises
  4. If things are really going bad, it's okay to cancel/kill/stop the project
  5. Communication is key
  6. Every project / product / initiative must be grounded in a solid business model
  7. Senior leadership must not only be aware of the effort, but need to provide active support to ensure success
  8. Organizations with formal project management methodology fared better than others (assuming the methodology includes a fast-track option for smaller projects)
  9. Technology developers must work closely with business owners/customers in order to ensure appropriate solutions, rapid response, and agile problem solving.

[This is a topic near and dear to me, see related posts here.]

P2P Venture

… or how to raise funds without a Venture Capitalist.

This discussion focused on a repeatable process for vetting ideas and accelerating fundraising for entrepreneurs. Just as P2P lending allows individuals to loan money to one another, the goal of the P2PVenture project is to help create a platform enabling ordinary people to invest a small part of their money (prudential investments are the rule) in startups and small businesses.

[from GoogleGroup home page] Following the Pyramid metaphor, we are seeking to create: 

   1. a place for exchanges – where interested people can freely exchange on the subject of p2p investments
   2. a think-tank – that creates noteworthy white-papers
   3. an incubator – where a full-blown business model can be elaborated and where hopefully money can be collected to finance a team that will start implementing it.

Learn more about P2P Venture here. If you think this is interesting, see also these related efforts:

Time Banks and Time-Based Currency

The P2P Venture session also featured a discussion of community-based TimeBanks that are dependent upon an alternative time-based currency. This social change movement provides a mechanism whereby for each hour that a person delivers doing service for someone in their community they earn an hour of service from someone else in the community. The process is dependent upon all participants agreeing that their hour of work is equal to another person's hour of work, regardless of expertise and/or training. 

Business Models

Futurist Melanie Swan led a discussion of emerging business models including

  • Free – just as it sounds. No revenue from users directly. But monetize links, traffic, etc.
  • Freemeium – mostly free, but charge a subset of the subscribers a premium fee for additional services, more storage, etc. For example: Flickr, Craigslist.
  • 3rd Party Funded – Advertisers underwrite free services. For example: Google, traditional TV and Radio.
  • None – launch the product or service and figure out the business model later (!)

There was a very good discussion of the meta data that accompanies many free services that makes them "sticky" and how businesses choose to either allow users to export their meta data or not. Implications for financial services include a service from CheckFree that allows consumers to move their bill pay data to Jason Knight, CEO of Wasabe indicated that his service allows users to take their data with them if the service is no longer useful and has an API to encourage interaction with the financial data uploaded to Wasabe. It was interesting to note that most participants agreed that it is critical that users/consumers know that they can extract their data if they leave your service, but many are unlikely to do so (they just feel better knowing they can if the time comes).

One other interesting tidbit from Wasabe: The way they handle inappropriate posts in their community forums is to hide the offensive posts so that only the person who posted them can see them. The poster thinks that no one responded when in fact, the rest of the community cannot see the inappropriate posts. It's like ignoring a child's bad behavior – if they don't get the attention they desire they will stop.

[Note: if future payment schemes and market economics interest you, see Melanie Swan's website for a number of presentations and links to further information.]

Alternate Currency

Examples of alternative currency include Second Life Linden Dollars (see remarkable economic stats here) and time based currency (discussed above).

Alternative currencies face the classic chicken/egg dilemma. You need enough network participants, willing to accept the currency as payment and you need enough consumers willing to adopt the currency for their purchases. And you can't have one without the other. Everyone in the group agreed that trust is the key ingredient in developing a viable alternative currency.

There was considerable discussion in this group about Facebook's effort to develop a payment mechanism, although depending on how it is implemented it may not be a true alternate currency.

Mobile phone minutes and airline miles (reward points) can be considered alternate forms of currency.

One BarCampBank participant – Ted Sorom, UC Berkeley Haas School of Business Class of 2008 – is focused on developing  a payment method for kids and teens to use on the web. It is likely to be prepaid and dollar based and be used for micro-payments.

There was also a good discussion of community based lending and reaching the unbanked. The challenge is how to loan funds to groups/individuals far away without knowing your counter-party. One example we explored is that of Grameen Bank and how rural communities judge loan recipients that do not pay up, thus ensuring a high rate of loan repayment. Another example involved merchants providing credit to customers in small villages and sharing with one another information about individuals that fail to pay. The challenge is how to recreate these community level enforcement mechanisms in a non-physical community.

Fellow participants: please add your observations, notes, thoughts in the comments.

Links to notes/observations by other participants:

Over All Assessment

Highly recommended.

I met some great people, was exposed to some alternate ideas about banking and finance, identified a few leads, and gathered a fist-full of business cards. As one would expect from a Web 2.0 gathering, my inbox was swamped with follow up notes and invitations to connect via LinkedIn.

Attend a future BarCampBank event

I encourage you to check out these upcoming BarCampBank events: