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PRODUCTS: ‘Cloud’ Banking Services?
I have long bemoaned in this blog the lack of data portability in banking. It is my belief that, in the end, everyone , and not just the consumer, loses because consumers are not able to freely move from bank to bank.
Buried in a rant on SeekingAlpha is a fairly good idea that deserves airing. The concept is “cloud” banking services: just as cloud computing has allowed users to piece together the services they want in the way they want them via the internet, so too should their be cloud banking applications that do the same. As I understand the idea, the elements of banking are interchangeable — 
deposits, checking, credit — and those services can be made available in a non-endemic, non-brand-specific way.
Here’s the suggestion by Dana Gardner, a technology consultant:
You want financial industry reform? Screw the Congress, SEC and Fed. Barney Frank and Chris Dodd don’t seem to have the stomach and/or power to make much difference. Same with Obama. What we need is real competition — Internet style. The financial industry needs to follow the mainstream media (and others like car makers and hopefully cell phone networks) on a strict diet of lower costs, less egregious profits, less pitiful service — and to be swiftly outmatched on their piss-poor online capabilities. Like a lot of big, old industries, the banking function is essentially a function nowadays of software, standard protocols, high-performance (yet standard) IT systems … and soon impeccable cloud computing credentials. But the key is good software making things work for the users and community, not just the providers.
If I can order movies, rent a car, and run a small business online, I should be able to do a few basic financial transactions online. I’d like to do more micro-payments and automated financial and business processes. Credit cards are not the best way to do this. Yet I seem to be stuck with a loan shark when I simply need to be able to order and fulfill a modest online transaction.
So let’s have those that are good at what really counts — software and cloud computing experts — offering the banking services that we as consumers and businesses really want.
Now Gardner neglects to mention the biggest impediment to his plan: regulatory capital requirements. We use banks because they are safe depositories for our capital. How is a software provider a safe depository?
OK, so it’s not a perfect theory. But the idea that banking services are just simplistic applications — “send my money here,” “give me money to buy a motorcycle there” — is true, and thinking about how to simply give consumers what they want, and not pigeonholing them by data portability restrictions, is the future of banking.
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