Book help: The First Bank of Google
I’m writing the section of the book now on what Googlethink could bring to banking. Among the topics I have in mind:
* Peer-to-peer and microloans (Prosper, Kiva, Zopa, Lending Club, VirginMoney, dhanaX, et al).
* Microinsurance.
* No-brick no-mortar banks (Egg et al, which didn’t take off and what did got bought up)
* Freeing our credit-card and purchase data to learn from it.
* Covestor and other wise investor and wisdom of the crowd stock picking plays
* The death of the analyst and rise of the blog
* New currencies — phone minutes in Africa, fake dollars on Facebook.
* Mint and other online finance help sites.
What am I missing? What do you think banking could and should be if it asked what Google, craig, Zuck, Jeff (Bezos, not Jarvis), Jimbo, et al would do?
As always, thanks.
July 4th, 2008 at 8:20 pm
prediction markets for the float on bills & interest bearing accounts
July 4th, 2008 at 8:44 pm
*Tracking social capital / good deeds. Similar to the “causes” app on Facebook but more generalized.
*offering low cost financial services access to the “normal” Americans who need it most
*information and advice for basic financial transactions like buying a house, car, or saving for retirement. But much better than the 1-way data dumps of old…personalized and with iterative feedback created by leveraging the power of the crowd.
*etc. I could go on forever here. Important and exciting innovations to come here.
July 4th, 2008 at 9:36 pm
Google might be in a good position to issue multi-bank debit cards.
See (bear with me), right now there are several bank transfer networks with different features and limitations. The one ATMs use is called Electronic Funds Transfer (EFT) and the one used by banks and the Fed for check clearing is called Automated Clearinghouse (ACH). ACH has in the last few years been totally overhauled but the Fed didn’t do a very good job of it - it’s poorly architected from an access point of view and so its totally opaque to account holders. (As, arguably, it should be.)
A lot of banks will charge an overdraft for a transaction conducted on EFT, even though ECH conveys balance data to the issuing machine BEFORE a transaction is approved. (ACH has never supported such a feature.) So a bank is ripping off its customers when it does that, because it explicitly approved the transaction in an account it KNEW had insufficient funds. It’s a source of considerable anger among bank customers.
As a bank, Google could open up access to multiple banks through a single interface and single card. There were startups back around 2000 and 2001 that wanted to do this (i.e. Yodlee), but none of them were able to lock it up. Google probably could.
July 4th, 2008 at 9:52 pm
Look to ING Direct for some examples of how communications would be more transparent and in plain talk, not legalese; how benefits and pitfalls of various products and practices stack up — again, in plain english, simple matrices.
1st G would give open access to all rate and fees info, fully transparent. Would explain, for instance, how the bank actually makes more money on FREE checking than it does on traditional checking, and who pays.
1st G would link to outside, objective advisory info, viewing that as a valuable service rather than a risk.
No doubt, 1st G would also innovate new products that would be lower cost because they would be built from algo-scratch rather than chiseled and polished legacy bricks.
Most important, though, you’d have much less risk of the chain of rationalization that allowed the whole subprime travesty to unfold because of that little nagging “no evil” screen that would set off the bs whistles at the first attempt to pass the risk upstream.
Or so I’d hope. And wish.
July 5th, 2008 at 1:20 am
Sending money from your Google money account to other Google accounts and it is instantly available on any of your checking accounts you choose.
July 5th, 2008 at 6:54 am
New currencies. That would probably be the best thing to happen to the 3rd world. Something out of the reach of governments that cause inflation and hyperinflation.
Usually those governments criminalize all foreign currencies, but I never thought of cell phone minutes as currency. If there was a way to transfer them reliably, that would be great. Wealth could be stored safely abroad, yet easily accessed when needed. This could undermine many a kleptocracy.
Funny, you normally only get talk of alternative currencies from “gold standard” obsessives. Nice to see the idea can sprout up elsewhere.
July 5th, 2008 at 7:38 am
My 5 (euro)cents
http://www.rohi.ee/ellakvere/?p=1674
July 5th, 2008 at 1:04 pm
A lot of what you mention is already being done by PayPal on a large scale. Take the time to figure out what PayPal is actually doing, where it is headed, the size of its business and the regulatory obstacles that constrain global financial operations.
When Google started to get into payments, PayPal responded with an aggressive expansion into global markets.
July 5th, 2008 at 4:32 pm
If Google wants, Google sure has the ressources to enter any field they like.
Peer to peer lending would be suitable in the way that Google could play out its advantages in analysing huge amounts of data.
July 6th, 2008 at 12:54 am
Google would probably offer free payment processing for all non-profits. (Of course, they *already* do that via Google Checkout! — at least until the end of the 2008…)
The Googley thing to do would be to seek innovations that make the whole banking business more efficient and better able to serve people’s needs. Googlers would figure that whatever makes the banking business better would help Google even if it also helps Google’s “competitors”. (A rising tide helps all boats — including Google’s) So, Google would address issues of the banking business’ infrastructure. For instance, you might see development of an open-source banking platform and the development of open-source banking applications. The idea would be that providing such a platform and apps would reduce the cost-structure of the business while also reducing cost of adoption of the new applications. Reducing cost of implementing new applications would tend to cause them to be more widely offered and thus tend to generate more demand for Google’s own implementations of the applications. Open sourcing the platform would encourage others to also build open-source apps on the same platform and thus make it easier for Google to expand its own services with applications which come from other platform users’ innovation.
bob wyman
July 6th, 2008 at 12:49 pm
Re: “Freeing our credit-card and purchase data to learn from it” - look at Mint.com. You sign-up with your different credit card and bank accounts and it imports all your transaction data. It has tools for tracking trends in your spending in various categories like Shopping or Food or Gas and automatically categorizes purchase data.
July 6th, 2008 at 1:44 pm
But against others?
July 6th, 2008 at 2:39 pm
As the internet opens up the world of globalisation there is a lot to do as far as linking between international banks and exchanging money. I recently came to London from the US to do a one year master program and have found the money shuffeling that I have had to do a grand burden. I was amazed that at 30 years old with great credit in the US I can not get either a debit card or mobile phone plan (I can only do pay as you go). The stories are plentiful and long and I would blame the UK systems of bureaucracy for a lot of this but there are problems from the US as well. For example I can not change the address on my credit cards to an address out of the US which makes for using them on the internet quite difficult. I have to always include a separate billing address and shipping address which always raises flags especially an out of country address and half the time I try this my card gets shut down. Like I said the stories are long and I have a thousand of them.
In any case I think Google would be in a position to provide some middle ground for managing money for people who are not confined to one country. Even being able to make a simple international bank transfer could be greatly improved. Right now in order to transfer money I have to pay £20 to Barclays (UK) $15 to Bank of America plus 2% for currency conversion and wait three weeks. I have been trying to trick PayPal into helping me out but I am having difficulty getting it set up with my Barclay’s account…… another long story.
July 7th, 2008 at 6:59 am
Peer-to-peer foreign exchange for frequent travellers, redeemed via multi-currency cash cards. Cut out the 6% spread
July 7th, 2008 at 7:56 am
You might want to look at how the fake money used in the online gaming world to buy extra powers in the game has led to the use of real money to buy the fake money from those who have set up businesses “earning” it.
Apparently lots of Chinese young people play the games and earn points which are then sold to incompetent or impatient gamers in the west. A Google bank could integrate the two worlds of “finance”.
July 9th, 2008 at 7:33 am
What PayPal does, yes, but there’s more - Google could partner with banks directly to eliminate the delays in transferring money between accounts (ACH). The way the US banking system still works on cheques is criminal. Partnering with traditional businesses for bill payments - receive and pay all your bills online through your Google account. In Australia there’s a system called BPay that integrates with online banking to do this, but not in the US. Wesabe is in to “Freeing our credit-card and purchase data to learn from it.” Real-time fraud protection, similar to spam detection? Before you make a transaction, it’s marked “possible fraud” based on the ratings of people who’ve used that merchant before?
July 10th, 2008 at 4:09 pm
A few years old now, but if you haven’t seen it take 10 minutes to look at this film - a look 10 years into the future of financial services (inspired by the famous ‘Googlezon’ video.
http://www.amazonbay.net
Might give you a few ideas.
July 12th, 2008 at 3:26 pm
[...] using the power of commenters to build the arguments in his book. (In one post he’s even quite explicitly soliciting input.) And that’s really great, because it’s all for mutual benefit. It’s advertisers [...]
July 25th, 2008 at 11:56 am
Does anybody know if eBay/PayPal has plans to unite/integrate with shippers?
I think online transactions should be more about barter. Google could help with a global market a little more fluid than eBay, but similar. Get rid of money. Encourage production and trading. Spread the importance of computers and data. Yay, Google says. When the rice farmer can trade his rice for what he needs to nuture his family instead of being owned by a rice distributor, life is good.
Watch out middlemen! It’ll be your relationships that you can barter, who do you know? Banks’ll have to join with Google to be the keepers of the information.
Peace.
November 23rd, 2008 at 5:04 pm
[...] searching a little further I found this blog post from Jeff Jarvis where he is asking for examples of bank services that Google would be very good at. Examples are [...]