The American banks are making progress towards making check clearing electronic, and somehow we're supposed to applaud this effort in making an obsolete process more efficient, with our dollars, for consumers are paying for it. First with bank fees, and then with taxes for legislators to legislate all this nonsense. This is a typical example of what not to do in IT, making an obsolete process marginally more efficient instead of re-engineering the process.
At a recent Ziff-Davis conference on Real Time Web business, this particular piece of progress was being touted as a proud accomplishment. I modestly made some comment about the Dutch postal bank where I worked ca. 1975 and where two day clearing was a reality then, so that I have wondered to this day about the ridiculous inefficiencies of the American banking system. The real point of my question obviously was not to repeat that particular solution, which is now also obsolete, but that there would be in fact other ways to solve the problem, which are more effective: a paradigm shift, or at least a re-engineering of the business process. The meteoric take-off of cellphone based money transfer in the Philippines, Vietnam and other developing countries may have more to teach us than is generally realized.
Likewise, what Kofi Annan needs to do is not support the illusion of computer literacy with $100 computers, which only creates more posters with pictures of kids happily staring at computer screens instead of learning something useful. It is tantamount to repeating the dumb mistakes of the West (the "personal computer revolution") at a lower price and relabeling it progress. In the process Nicholas Negroponte unwittingly becomes a lackey in the palace Bill Gates' silly delusion that a computer for every person somehow would bring world peace. Or, to put it differently, the focus on cheaper computers, or computer literacy per se, is similar to the focus of many managements who confuse their computers with their IT-systems, focusing on the 15% of their budget they can see, and ignoring the 85% they can't see (people and licenses), but which make it work. The real mission is educating enough people in IT to develop a local industry in every country, and to teach them to really think, i.e. study the mistakes of the developed world first, and stop repeating the mistakes of the early adopters, and instead create real solutions that mean something based on the realities on the ground. The developing world potentially has the edge in IT for the future for one reason only: they do not have to fight the enormous sunk cost of the first generation infrastructures which the developed world has to write off, no different from AT&T writing off enormous amounts of obsolete switching gear in the course of the breakup of the Bell system.
To underscore the above observation, suffice it to say that anyone who has worked in IT, knows that most of our "computer literate" users barely know how to turn on the switch, and can only just about complete a few simple tasks without screaming for help or having to reboot their dysfunctional Windows PCs. And the better part of people in IT are focused on the maintenance of the T and not the I, let alone are allowed to apply any real intelligence to their solutions. Thus computer literacy is largely an illusion, and mostly an exercise in futility. People will however learn very fast to utilize any technology that truly helps them. the rip-roaring success of cellphone based payment gateways in the developing world is indeed a case in point.
The direction for the solution is to make electronic banking, safe, secure, convenient and reliable, up and to including mobile solutions, voip solutions, etc., but the banks by and large have resisted it under the perception that security is a cost, not a business opportunity. So security solutions are not looked at as business opportunities. The resulting situation means that the slow adoption rates of electronic banking are at least in part a self-inflicted wound, while lots of dollars are being spent on creating an electronic version of the hopelessly fraud prone (more so with copiers and laser printers) system of checkwriting.
As solutions involving strong authentication and advanced security become a reality countries who have not gone this route have an opportunity to skip generations of useless technology. In short the "developing world," may indeed have several opportunities to skip some expensive stages of financial infrastructure development, and do things far more efficiently than the developed world, and have the last laugh in some of these areas, potentially ending up with advanced infrastructure at a fraction of the cost. Unfortunately, as per usual most so-called development aid is focused on exporting obsolete technology, and charging future generations of indigent tax payers in the developing world for them, in order to provide a steady stream of the indentured servants, also known as illegal immigrants. For that is the upshot of the current geopolitical system.
As far as Check21 is concerned, doing it was probably a necessity after all,
but major progress it isn't. Like all IT projects which fail to reengineer the basic business process, it probably just means making the same old mistakes except faster. So that checkfraud besides being easier on account of digital printing, will now also be faster courstesy of real time processing. The rationale that electronic banking did not take off as fast as expected is mostly a self-inflicted wound, caused by not making that alternative more compelling, as it easily could be. So now we'll first have check21, and then we still have to make e-banking viable anyway. So much for the "developed" world.
Copyright © 2005 Rogier F. van Vlissingen. All rights reserved.
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