Which keeps you up at night: Alternative currencies or alternative payment technology?


Nobody gets me Bitcoins!

Image by zcopley via Flickr

There was an interesting article and discussion today on American Banker‘s BankThink. American Banker’s Jeremy Quittner wrote an article about Bitcoin being highlighted in a legal case on an episode of the Good Wife this week. Brief Clip

If you want to learn more about Bitcoin, here’s another great Quittner article from a few week’s back For Banks, Digital Currency Poses Threat — and Opportunity

Read the Good Wide Bitcoin article here: ‘Cool, But a Hassle’: Bitcoin Tests Merchants’ Patience

I added comments on American Banker, and wondered what you thought of Bitcoin? What are you most focused on in fintech? Alternative currencies like Bitcoin/Facebook Credits/iTunes or mobile money movement through more traditional channels with less-traditional technologies (think Dwolla, Square, Paypal, etc). Am I missing something on alt-currencies? Let me know via Twitter: @leimer

Here were my comments on the American Banker post:

Are alternative payments like Bitcoin a curiosity or just a progression toward the ongoing transactional shift away from traditional banking (or traditional currencies for that matter)? Though the volume of alt-payments/mobile payments is growing rapidly (astronomically some might say), the vast majority of consumers and merchants still do not see the use of the established volume leader, Paypal (amazing growth under the recently departed Scott Thompson), as a form of regular payment activity.

The innovations of currency alternatives like Bitcoin (and mobile payments) are a great destination, a great promise of better technology and control around money movement and control for consumers and businesses, but it is often an overhyped ‘promise’ of what is to come…Yes, volumes are on the rise. Yes, some amazing technology is being developed and implemented. Yes, the user experiences around contactless payment (NFC, alternative POS), and alt-currencies (Facebook credits, even iTunes) are currently being established (certainly Google and Apple will have some say about this).

But how much do banks need to pay attention to alternative currencies? Yes, we should be prepared to integrate and embrace technology change around money movement of any kind. But, if you’re in banking or fintech, you’re probably more closely watching alt/mobile payment volumes rise and crafting/enhancing your payment/money movement technology at your own financial institutions in response. I wouldn’t worry as much about the Bitcoin model/alt currencies just yet. They’ll most likely take the back seat to money movement through traditional players (and in the alt-currency space, I would be more concerned about Facebook Credits than Bitcoin).

Money movement alternatives like Paypal, ZashPay, Cashedge/Fiserv’s PopMoney, Dwolla, Square (+ others) do have a built in ‘hassle’ within the user experience because of the need to link to additional traditional banking accounts somewhere. The person/merchant receiving funds also have to be on the same network or sign up/trust these providers. It seems like the only way to eliminate this is with an established alt-currency (how is the Euro working out, let alone the anti-banking alternative digital Bitcoins?), or an established open-API method of money movement (better solution). To address the overall UX, we need to integrate both technologies into the devices we carry everyday (our phones), whether it be through form factor (NFC/alt-device) or network apps (Paypal POS, Proxense, etc.). The UX still would take a back seat for alt-currencies like Bitcoin until you bridge the additional gap in the trust factor (Paypal itself, even with great UX, still isn’t as trusted for money transfers as a traditional financial institution).

We will have some time to watch these standards develop. As we watch the volume of alt-payments rise, the overall volume will be a limited space in the overall consumer/b2b payment pie. The true revolution in banking that everyone sees coming like a lumbering freight train is still there. It’s less about alt-currencies and more about overall experience through technology. But Movenbank and Simple aren’t going to change the world of banking overnight, nor has (or will) Bitcoin or Paypal for that matter. But changes are here, they’re real, and there are more are on the way (Paypal, Square, and Dwolla are will see monster jumps this year to be sure).

The fact that the Good Wife even tackled the subject is interesting. The audience for the episode probably increased awareness of Bitcoin in Peoria more than anything Bitcoin’s banking industry coverage ever did.

3 thoughts on “Which keeps you up at night: Alternative currencies or alternative payment technology?

  1. I got this web site from my friend who informed me about this web page and now this time I am visiting this website and reading very informative articles here.

  2. Jct: Though Bitcoin credits is an inferior engineering model compared to the UNILETS Timebank credits, seeing even the weaker models making waves is good news. More inevitable they’ll discover the Time Standard of Money and the Big Lie of Economics. An Ithaca 1-Hour bill can never inflate, it will always get you 60 minutes of help! Bitcoin’s a hoax to make the real value-based community currencies look bad. Why else start up an inferior model?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s