Exformation

If you haven't already seen the viral web video presentation called "Shift_Happens", you might not agree with the statement, "We live in Exponential^Times" but consider this fact:

It is estimated that 1.5 exabytes (1.5 x 10^18) of unique new information will be generated worldwide this year.

...And that's just the INformation!

The world is full of data that is often never processed, stored or captured.  Tor Nørretranders began using the term in 1997.  In the domain of data, the universe of all possible data includes that which is captured, stored or processed as INformation.  Everything else would be the EXformation.

I propose a verb version of the word as in, the exformation of industries, meaning transforming more of the universe of data for a given industry into information.  I believe this is a crucial capability necessary to manifest real-time transparent reputations in the new world economy.

There are many companies in the business of processing payment information.  Sure, my company actually moved over US $2.5 Trillion in 2008, at roughly $ 77k per second by processing over 20 Billion transactions.  That’s impressive, but consider this…

90% of the people who physically change residences move with OUT reporting a change of address are past due or delinquent on their accounts.

Eric Schmidt, CEO of Google, looks to Google's future as "targeted personalization" and he posits, "Why not deliver products to the end customer directly?"

Self-service and more personalized services seemingly require more "knowledge" of the customer.

We have been tremendous beneficiaries of both Moore’s and Metcalfe's Laws, but are our personal lives really that much better?

Ok, I give, let's collaborate...

I've been advocating for some time now about the need for folks to be able to collaboratively contribute and sharpen the intellectual sword as it were with blogs, even if only as a draft development means of production.  Well, here we are.  And not being aware of anything else similar, this is it.  This is where we can rant and rave and otherwise pontificate and I can ease some of my manic tendencies, OCD, ADHD and futuristic technology latency frustrations through the miracle therapy of blogging.  Welcome to the blogosquare.  Not yet quite a sphere in that it is very rough around the edges and not exactly as perfectly "mashable" as those round things out there in the wild...  Here I will blog on mt thesis, new products, services, technologies, competition, education, current business or government initiatives and anything else that makes sense to be here...
Frankly, (har) I could use y'alls help.  I don't need to be the author of all of these ideas, I don't need to create or write everything and I don't need to take all of the credit, but I do want to start to flesh out these ideas and start to push the envelope a bit more in earnest...
Here's where my head is at today, Monday, March 16th, 2009:

1. A Next Generation Vision of the future of payments
2. The Exformation of Industries: Select Business Examples (Healthcare, Banking, Loyalty, Entertainment & Travel)
3. Global Payments - Perfecting a Universal Processing Solution
4. Unified & Self-Directed Communications, Universal Alerts & Notifications
5. Seamless User Experiences – Introduction to U/X
6. Searchable & Self-Managed Enterprise Channel & Integration
7. Componentized Business Services & Common Data Model
8. Open Standards & Global Thought Leadership
9. Process Optimization & Workflow Automation
10. Contactless Tipping Points... We really are ready for contactless in the States
11. Connectivity Autonomics & Proactive Monitoring
12. Customer Centricity & Prosumer/Producer Profiles & Real-time Reputation Transparency
13. New Commercial Services including Automagic Expenses
14. 9-D Security & The Quintuple Convergence of Global Identities
15. Mobile Acquiring - Retail MPOS ain't what they used to be...
16. Mobile Context & Pervasive Awareness
17. Payments as a Service - Introducing "PaymentTone"
18. Addressable Funds (Smart, Routable, Private, Ffinancial Instruments)
19. Flexible Account Aggregation (Dynamic, Decoupled, Advanced Hybrid Wallets)
20. The Foundation for the Future of Commerce and International Business in the Cloud

Anything else anyone want to work on?

Credential Vaulting, Trust and Integrity are key for frictionless Commerce

Just a quick primer, Credential Vaulting in its simplest terms is storing your private authentication information, you know -- the something you know, something you have, something you share bit, right?  Well, storing that with someone you trust is credential vaulting.  And I really don’t know if I trust the guy from Mint.com so much, but I do trust Wachovia, Fidelity, PayPal, etcetera, after all, I already have relationships with them, and I kinda HAVE to trust them because they kinda had to trust me to give me the money and accounts that they did.  Whether or not they should, well, that’s a different story, and that’s part of the digital persona and portable prosumer profile I’ll blog about later…

Anyway, for each of my financial relationships I have an account user name and password that I use to sign in to them on-line.  I’ve been doing this as I’m sure you have for quite some time now.  Like since my early adoption of electronic BillPay back in the 90s when I first attempted to realize a “cash-less” Frank.  As good as it was, Sears’ Prodigy and BillPay USA weren’t all that.  But they did MOSTLY worked, and once you figured out the latencies of mail-enabled physical check payments it seemed to work okay... Even in ’91!

Ok, so, what’s his name at Mint.com realized that a big problem with most 2nd or 3rd party offerings for financial services is the whole trust and integrity thing and stealing from the playbook of FaceBook he realized he didn’t actually NEED your Personally Identifiable or Controlled PCI or HIPAA information to do what he needed.  And since he didn’t want to wait for the banks to come up with simple solutions that were elegant and infinitely more attractive and usable than what was out in the marketplace by proprietary software producers like Microsoft and Intuit with their Money and Quicken products, he took matters into his own hands and created the future he wanted.

Payments and the very nature of money is a profound Human Achievement

The need to “pay” for things or exchange value in a mutually beneficial way pre-dates written history. The anthropological importance of this abstract thinking is as significant and as ancient as the development of weapons, agriculture, tools and writing.  It isn’t hard to imagine payments helping the Phoenicians develop Zero, or the Chinese develop the abacus and play an important role in the use of symbolic notations instrumental in the development of numerology, mathematics, logic, commerce and modern communication.

money3.0 and the economy of small – Micropayments

The next big thing in big business may be incredibly, inconceivably small…

Why Smaller Amounts is the next Big Thing in the world of Payments.

In case you haven’t read chief editor of Wired’s Chris Andersen’s “The Long Tail”, do so.  Check out the Business Book Review, ask me for the podcasts, CDs or just take my word for it.

Either way, much of this is predicated on ideas in that book, Wikinomics, Freakonomics, Naked Conversations, The 10 Faces of Innovation, Innovate or Die!, The World is Flat, The Wisdom of Crowds, The Global Paradox, The Death of Money, China, Inc, Capitalist China, Asian Megatrends, The Extreme Future, The Search, Business at the Speed of Thought, Bad Money, Love is the Killer App and web2.0 concepts.

The gist of it for you that are already familiar with the tenets of Long Tail economics, is that 98% of markets are underserved by traditional mainstream products and services.  The Pareto Principle that ruled so much of the Industrial Revolution is being supplanted by a new set of “rules”.  The much revered 80/20 “rule” is in fact, not an economic law after all, but a scarcity-based guideline from a bygone era.  In an age of abundance, especially of the digital sort, there seems to be almost infinite demand for even the most obscure supply.

Perhaps most interestingly, the sum of these increasing niches is substantially larger than the sum of the hits. This creates tremendous opportunities for those poised to enable that economy -- The economy of small.

PayPal – An incredible Consumer-oriented Brand trying to grow up and out

PayPal is potentially one of the first modern “out of the Blue” experiences many bankers have had to face in recent years. For establishing a viable cash replacement with reasonable privacy and account abstraction through the use of an email address, PayPal successfully innovated around the global FIs while they were all busy “testing” and “piloting” cyber-money, digital cash and how they could maintain “top of wallet” status, mind and wallet-share with loyalty, CRM solutions and gimmicky attempts to put lipstick on a pig. After all, behind the scenes, it’s all the same old thing. Multi-day delays to access money, restrictions out the wazoo and the so-called “benevolent entanglement” of the once altruistic turned publicly traded Global Payments Networks and Brands.

I personally love having fellow David’s around to fight the incumbent Goliath Associations. We LOVE PayPal. They are a fantastic client and partner of ours and we welcome the renewed spirit of innovation and consumer oriented thinking they bring to the market. They’ve practically single-handedly revived and unified the SMB and SOHO markets in what was a highly fragmented, specialized, risky and therefore expensive specialized set of markets.

But have you tried their mobile solutions? I have, along with a myriad others.  And let me tell you, not to pick on any one of them, they all leave much to be desired.

Despite all its successful innovations, disruptions and disintermediation, PayPal can rightfully be proud of their 67 Million accounts on file. But why are they stagnating and declining in certain markets?

Why did they exit China and Japan after dismal launches with great fanfare and hope?

Money 3.0 – The Exformation of Tender

In my short time here at my new company I’ve become even more bullish on what I’m calling Money3.0.  Why Money 3.0?  Well, Money’s been around a long time, and I think Money 2.0 was really pioneered in the 50’s with the brith of payment cards.  I think we have amassed significant intellectual property and world-wide acceptance and availability of technologies that we helped bring to market that lay the groundwork for what I’m calling Money3.0.

I use 3.0 specifically in relation to the 2.0 so often used in the media, in the techdailies, bizrags, blogosphere and the like.  Web2.0 is a lot of things to a lot of people and I don’t want to go into detail about the topic that is covered so completely in so many other places.  Suffice it to say that there are many undercurrents and social memes and technology driving those phenomena, and I want to make one distinction clear.

I think it is important and it is truly at the root of this coming transformation, or what I call the exformation of our industry. Don’t worry, I’ll explain exformation in detail in this blog.  Meanwhile, you can google it to start to get up to speed on it.

Web1.0, early CERN, WWW and HTML.

We all know web1.0 was the static web. The world wide web of one-way information, pictures, cheesy music and flaming spinning logos.  In other words, a lot of hype that helped an entire new generation get acquainted and familiar with concepts like market bubbles, paper millionaires and implosives corrections.  Who would have guessed what good training that would be?

Web1.0 is where many of the currently “cool” tech titans cut their teeth on making what would eventually become marketplaces or economies in their own right.  The emergence of ecommerce sites and disruptive innovators like Amazon, eBay and Rhapsody began to prove out that business could be made on the web while companies like IBM, Microsoft and Oracle watched for the business model to emerge. Companies that took it upon themselves to making this burgeoning ecosystem more user-friendly and useful like Google and Yahoo! Carved out nice niches for themselves by providing entirely new services that the traditional companies didn’t understand. Many a picture of a furry mammal (the upstarts) running around tapping dinosaur eggs (the tech incumbents) was rampant on the net.

Web2.0, O’Reilly’s Participatory Contribution Revolution

Web2.0 is the read-write web, or the participatory web.  O’Reilly (and no, not the Factor, but Tim, the Geek) is most lauded as the coiner of the term, though he was more like its biggest promoter.  Web2.0 is wikis, blogs, RSS, XML and podcasts.  Everybody wants to be in on 2.0, right? Put 2.0 on the end of something and there is an implied inflection point in whatever product, good, service or experience you’re providing. 2.0 inspires many a vision of grandeur about the democratization of the tools of content production and participatory nirvana the likes of which wikinomics or freakonomics or whatever your favorite economic buzzword du jour could sell you.  And these were not necessarily bad things.  2.0 innovations brought us sites like flickr, youtube, delicious, digg, upcoming, evite, and of course, social networking favorites, myspace, LinkedIn and facebook, oh my!

Many electronic payment upstarts that are now long gone tried to do for the web what the payment card industry had done for banking, but it was hard, especially as the banking and financial sites began to dip their toes in the web2.0 waters after PayPal’s meteoric rise and acceptance.

Money3.0 = web2.0 + money + mobile + context + wallets + reputations + trust