CIMB’s OctoPay FB app is a welcome addition to the payment ecosystem
Banks should do more to unleash the latent potential of e-business in Malaysia
CIMB Bank has joined the ranks of Commonwealth Bank Australia, First National of South Africa, ICICI of India and ASB bank in New Zealand by launching OctoPay, a Facebook banking app.
Instead of emphasizing the security concerns (raised by Citibank Facebook fans in July 2012 when surveyed whether they’ll use a banking app through Facebook), I’d like to focus on the potential of banking through social networks.
Unlike Social networking, getting the ‘network effect’ in banking is found by heightening payments versus the bread-and-butter of savings and financing. Oddly, banks have only skimmed the surface of online payments; and allowed the likes of Paypal and WePay to occupy a niche in the financial transaction value chain.
I am somehow reminded of how IBM ignored the TCPIP switch and allowed Cisco to become what it is today.
In economics, the ‘network effect’ is achieved when the value of the product increases with the growth of user participation. A classic example is the telephone; it is practically useless unless somebody else has the phone and the value increases exponentially with new users. Similarly, online payments are useless unless more merchants and consumers are mated.
Frankly, the biggest gripe banking users have with online payments come from both ends of the transaction spectrum: The merchants complaining about the hassle of setting up a merchant account, and the everyday user complaining about how limited the list of merchants available is.
Businesses thrive in a vibrant market, and that is essentially the purpose of online payment – to create a vibrant and ‘efficient’ market where everyone gets to see what everyone is selling and easily walk over and pay for it.
Currently, each bank creates a mini-market of its own, and payment transactions organically grow like a township in Rawang [a comparatively less cosmopolitan part of Kuala Lumpur – ED].
We are totally missing the point of how impactful entrepreneurship and innovation can drive a country’s competitive advantage vis-à-vis its economy. Better yet, online payments allow a typical Malaysian to sell wares globally.
I say to banks, unleash the latent potential of e-business in Malaysia. Heck, swoop in and corner the ‘social payment’ circuit before somebody does it for you. With Basel IV ruminating, Islamic banking and more scrutiny on fandangled derivatives, the days of vacuous money generation is coming to an end.
So here’s my wish list for banks in Malaysia when it comes to social networks:
1) I’d love to have a BlogSpot or WordPress widget that allows bloggers to collect money from both friends and strangers (I trust a bank better than Paypal). With friends it should be super easy, three clicks max, since you already have their banking details.
2) A micro-loan module that allows friends to borrow money from me. It’s my cash after all, and my friends. (Loan sharks are giving everyone, including banks, a bad name).
3) A Facebook page that comes with a banking app to accept payments. I see a ton of small businesses already purveying their wares with a flaccid note that says; here’s my banking account number.
4) Getting rid of physical credit card when paying online. The banks already have my details, I have authorized you to take money through a credit facility; so why should I still key in my credit card details with more passwords? A notebook today comes with finger print scanner and video camera; and you get to SMS to double-confirm that it’s really me …
5) All charity organizations get to use the banking services for free.
One more thing: Kudos, CIMB; et tu Maybank?
Bernard Sia is head of strategy at Mesiniaga Alliances Sdn Bhd. His opinions here do not necessarily reflect the views of Mesiniaga.
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