Over the last year or two I’ve learnt a lot about banks and especially the ways in which they don’t serve their customers. When are we going to build a technology that solves this pain?
Managing an online e-commerce platform means you simply cannot avoid the bureaucracy that is the global banking system. You have to fill out endless forms, pay extortionate fees and generally play their silly game or get cut off. After two years of trading we took the step of opening a foreign currency account for iWantMyName. Six weeks down the track we are finally in a position to accept our first U.S. dollar transfer from our payment gateway. That’s not all. It turns out that I have to actually go into a branch each week to physically transfer money. There is no online banking facility (at least not for small businesses or individuals). It shouldn’t be that hard!
Economists and business commentators have been urging us to participate in the “weightless economy” and go global. Banks on the other hand have no interest in uploading risk by dealing with more small companies. Banks and financial institutions have a vested interest in the status quo and are reluctant to allow a frictionless flow of capital across international borders. Of course if you are a large enterprise, the banks will bend over backwards for you. I’m sure the financial controller at Fonterra doesn’t have to pop down to his local branch to sign a form to transfer a few million Euros in proceeds from the latest global milk auction.
Amazon, PayPal and even TradeMe gave us a taste of what a universal payment system might look like; but these services remain heavily dependent upon the existing banking system because your credit card or bank account is involved at some point. But it’s a starting point at least. Notably, there are increasingly vocal calls for a completely new value system involving the Internet that enables easier payments and that excludes banks altogether. For example, with some services you can perform virtual tasks to earn bartering credits. But that won’t pay my rent or buy me dinner – at least not yet.
Money is a deeply ingrained social institution around which economic commerce has conveniently been constructed. It has no inherent value in itself yet leads to huge inequity in society. Creating a safe, universal online payment system that not only circumvents the banks, but also engenders trust is possibly the greatest challenge facing developers and entrepreneurs today. Let’s do it!