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Virtual Banking: A Guide to Innovation and Partnering

ISBN: 978-1-118-74247-1
240 pages
July 2014
Virtual Banking: A Guide to Innovation and Partnering (1118742478) cover image
Technology is permanently transforming the banking industry, and digital payments are the key

Electronic Payments, Mobile Commerce, and Virtual Banking: A Guide to Innovation, Partnering, and Regulation takes a hands-on approach to competing in the modern banking environment. Former PayPal Head of Financial Innovation Dan Schatt explores the reasons behind the massive consumer migration away from traditional banks, and provides clear, actionable guidance on beating new banking models at their own game. Digital payment is the hottest topic in banking today, and is set to define the future of the industry.

Consumers are rapidly abandoning traditional banks in favor of institutions that are lower-cost and more consumer-centric. Between the pace of financial regulatory reform and the cloud computing revolution, the old banking model is on the fast track to extinction. Electronic Payments, Mobile Commerce, and Virtual Banking provides the information banks need to compete in this new environment, and details the integral implementation actions that will allow them to thrive. The book discusses real-world innovations from banks, non-banks, and up and comers, and the heavy competition from the new outsource bank model. Topics include:

  • The changing POS landscape and the need for digital wallet partnerships
  • Shifting gears to greenfield market opportunities versus non-profitable markets
  • Digital channel best practices for superior customer experience
  • When to outsource, and what capabilities to truly own

Case studies including PayPal, Google, Square, Facebook, Twitter, and more illustrate acceleration of innovation through banking partnerships, as well as the mechanics behind banking's biggest, scariest threats. The trick to surviving the paradigm shift is to embody innovation while providing a superior customer proposition. Electronic Payments, Mobile Commerce, and Virtual Banking: A Guide to Innovation, Partnering, and Regulation provides the inside track on managing the shift and dominating the new marketplace.

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Introduction:  Innovating Through Scarcity

The Influence of Cloud on Innovation

The Influence of Smartphones

Big Data = Big Driver of Innovation

Taking a Cue from Retailing

The Enemy of My Enemy Is My Friend

Reconciling Innovation and Regulation

In Search of New Payments Revenue Streams

New Skillsets for a New Era

A Roadmap for This Book


Chapter 1:  Consumer Empowerment Knocking At the Door
How Mobile is Reshaping Consumer Expectations in Financial and Retail

How Mobile is Changing Consumer Behavior

Mobile is Blurring the Lines between Digital and Physical

The Uber-ization of Mobile

‘Top of Wallet’ to “Top of Mobile”

The QR Code

What Banks Can Learn From Starbucks

Leveling the Playing Field With LevelUp

From Mobile Banking to Tablet Banking

Mobile Models for the Emerging Markets

What’s Next?  More of the Same


Chapter 2:  Social and Financial Services
Maintaining Relationships and Relevance through Social strategies

Digital, Data, and the Future of Banking

Social Media Experiences in Banking


Personal Financial Relationship Mapping

Capitalizing on Social Banking

Moven: Delivering Banking through Social Context

Social Banking in Europe and Asia

Social Login, Sharing, and Top of Wallet

Peer to Peer Lending: Blending Social and Banking

Beyond the Hype:  Partnering For The Future with Peer-to-Peer Lenders

Lending Club:  A Win-Win for Banks and Their Customers

An Investor’s Perspective on Social Banking and the Emergence of Bitcoin

Message To Banks:   Be a Smaller Part of a Bigger Pie


Chapter 3:  Connected Financial Commerce
Location-based Services, Mobile Commerce, and Digital Wallets

The “Local” Digital Wallet

The New Retail Experience

Retail 2.0 and Its Effect on Payments

Entrepreneurs, Developers, and Financial Services

I d Context Banking: The Next Step

Low Energy Bluetooth, Hardware, and the Future of Commerce

iBeacon and EasyPay: The Future of In-store Payments?

PayPal’s iBeacon: Proximity and Context

Google Glass for Finances

In Search of the Digital Wallet

The Who’s Who of Digital Wallets

What’s Next?


Chapter 4: Innovating with Big Data and Open Platforms
Competing in a World of Unlimited Data and Storage

The Rise of Platform Services

Application and Programming Interfaces (APIs) for Online and Mobile Commerce

Coping Strategies for Banks

PayPal’s Bold Bet: Unleashing Innovation Through an Open Platform

App Stores For Banks: Will It Work?

What’s Next?


Chapter 5:  The Smart Pipe
Models that Will Survive the Next Generation

The Prepaid Model

Prepaid Nation: Redefining What A Bank Can Be2

The ‘Underbanked’ and Opportunities for Innovation

MoneyGram: An Example of Innovation Through Partnering

Innovative Ways To Expand Access-  PayNearMe

How Innovative Banks Are Partnering For Innovation

The CEO, CIO Relationship Driving the Innovation of ING DIRECT Canada6

A Whole New Era7

A Venture Capitalist’s Look at The Future of Banking

Technology As An Enabler And Partner…

What the Next 50 Years Might Hold?

The Future Bank Bundle: Platform-Relationship-Utility


Chapter 6:  Math Based Currencies
How Bitcoin May Prove Transformational to The Financial Services Industry (
George Peabody)

Entering The Age of Context

Intro to Math-based Currencies

Why "Math-based Currencies"?

History of Digital Currencies

Math-based Currency Characteristics

Bitcoin:  The First MBC

Is it Bitcoin, Bitcoin, or Just BTC

How Bitcoin Works

Counterfeiting No More

Completing the Bitcoin Ecosystem

Bitcoin Use Cases in Payments

Improving the Bitcoin Protocol

Ripple: The Second MBC

International Remittance Rails

Interbank Settlement

Building Trust with MBCs

Automating Transaction Policies

Moving Ahead with MBCs


About the Companion Website

About the Author


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DAN SCHATT is the former Head of Financial Innovations for PayPal, responsible for defining and executing on PayPal's initiatives with the financial services industry. Schatt has also been an advisor to CGAP, part of the World Bank, and an industry analyst with Celent. Prior, he worked in the Financial Institutions Group at Citigroup. He currently serves as Chief Commercial Officer for Stockpile.

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