Unload The "Digital Wallet" Before Someone Gets Hurt

And that's not all...

The term "e-wallet" or "digital wallet" has always caused a physical reaction. But what started as a small twitch over my left eye in November 1999 now involves diving under a table. The term has become so loaded with giant concepts like 'identity', 'privacy', 'authentication', 'security', 'payment' and 'funds' that it's simply too dangerous to wave around in meetings.

We need to focus on more of the detail if business presentations are to have any meaning and projects are to deliver anything.

The term 'digital wallet' is impossible to define, anyway. The Oxford English Dictionary has no home for it, and it's wise to ignore suppliers' self-serving, product-specific definitions. Th'internet merely yields a confusing mish-mash: [my emphasis] "a system that securely stores users' payment information and passwords..." (investopedia) and "encryption software that works like a physical wallet during electronic commerce transactions." (webopedia). Unhelpfully, the Free dictionary explains "the wallet data may reside in the user's machine or on the servers of the wallet service. When stored in the client machine, the wallet may use a digital certificate that identifies the authorized card holder." 

Such definitions are confusing because they keep jumping the rails from party to party, feature to feature and function to function, each of which has different implications for transaction flows, data flows and funds flows (to the extent payment is even involved). 

Perhaps the only consistent aspect in the use of the term 'digital wallet' is the sense that it refers to a specific individual, or at least it should be capable of doing so. Otherwise, the term means so many different things that it's useless. FinVentures defined it to mean, "A consumer owned and controlled account that can store any electronic form of what is normally held in a physical wallet, including: payment, ID, coupons, loyalty, access cards, business cards, receipts, keys, passwords, shopping lists, …etc." Indeed, a 'digital wallet' could be a feature within an application or service, or an entire application or service, a database, a set of permissions and so on. It could reside on virtually any digital device, including a smart card or just a microchip. It could enable a specific person to initiate or conclude any kind of transaction, or merely be used in the course of intiating or concluding such a transaction.

So when you next hear the term 'digital wallet', seek cover behind a large, heavy object and try to defuse the situation by asking: 

• which parties are involved;

• which party is agreeing to do what, how do they agree, what actions are taken as a result and by whom;

• where the related data is stored and where it flows; and

• where any related funds are and where they flow.

It could save a lot of time and money.

Image from Tenets in DM.

Stop The Moral Panic Over Corporation Tax

MPs and the media have a responsibility to put the corporation tax issue into proper perspective.

The outrage is not how 'little' corporations pay. It's how much tax the rest of us pay, and how much the public sector wastes while failing to improve services. The media, MPs and campaigners should be focusing on how to make domestic spending programmes narrower and better targeted, rather than second-guessing international tax treaties over which the UK has little control.

Similarly, we can't lose sight of the need to incentivise foreign private sector corporations to operate in the UK. They employ people, generate income for local UK suppliers and compete with UK-based businesses to keep them from charging us whatever they like for goods and services.

But this is not 'the big story' either. 

The real story on the growth and employment front is that the government must do more to foster an environment in which entrepreneurs can thrive and expand their businesses. According to the Institute of Economic Affairs, just 6% of new firms create over half of all new jobs in the UK. Compliance costs, product market regulation and employment protection have remained a constant drag on the ability to grow businesses, despite efforts to eliminate red tape.

Attacking a few foreign corporations over their tax affairs won't help the government spend tax revenues more effectively or enable UK entrepreneurs to thrive. Especially when, ironically, those same foreign companies happen to provide British start-ups with plenty of meeting space, low cost server capacity, online marketplaces, software and customers...

Old Lady Suffers From Undue Deference And Group Think

In March I related a story about the unduly deferential meeting protocol at the Old Lady of Threadneedle Street, and hoped it was more welcoming of critical thought than the rule suggested. However, three recent reports have confirmed the worst.

Not only were the terms of reference for those reports criticised for being too narrow and avoiding contentious issues. But, according to the FT, Bill Winters also found a "tendency [among less senior staff] to filter recommendations in such a way as to maximise the likelihood that senior staff will find the recommendation palatable." And David Stockton "criticised the bank for its opacity and a culture that discourages independent thought."

Naturally, I detect a certain lack of enthusiasm in the Governors' response:

“We welcome these three Reviews. The Reviewers have given us an independent perspective on some of the key challenges the Bank has faced in responding to the financial crisis and have given us a great many ideas to consider that could improve the Bank’s performance. We are starting programmes of work to evaluate the recommendations and to plan changes.  We will report regularly to Court." 

At least they aren't alone. The IMF suffered from 'groupthink' for years, and auditors have been struggling to understand the meaning of 'scepticism'.

Come to think of it, Auntie seems to suffer from the same maladies, along with most of Britain's institutions.

In fact "maladies" is strangely apt to describe two ailing institutions called 'Auntie' and the 'Old Lady'. It also sheds new light on the reason for the apostrophe in m'lady…

Auntie's Fall From Grace: Death Of Another UK Institution

The resignation letter of the BBC's latest director-general reveals deep flaws in yet another of the UK's self-serving institutions.

One assumes the document was the product of some discussion, and that the "unacceptable journalistic standards of the Newsnight film that was broadcast on Friday 2 November" was carefully chosen as the narrowest possible reason for the top bureaucrat to go. Some care was taken not to mention the mishandling of the Jimmy Savile revelations, for example, or the seismic cultural implications of the BBC choosing to spike a story about his criminality in favour of a series of fawning tributes. But isn't it simply the case that a cosy insider is incapable of cleaning the place up? After all, Lord Patten said he only hired Entwistle to make the BBC "10 or 20% better" and it's now a vastly bigger job than that.

This tendency to cover up, to obfuscate, defend and deflect is the stuff of mere politics. It should not feature in the management of a public organisation in the public interest. 

Yet it's what we've come to expect from the British establishment. It permeated the Parliamentary expenses scandal and the conduct that led to the bank bailouts. It resurfaced in the failure of UK banks to honour Project Merlin, their Libor-fixing activities and attitude to international money laundering. It was present in the activities of GlaxoSmithKline that yielded a $3bn criminal settlement. It's there in the evidence to the Leveson Inquiry, the handling of the Hillsborough disaster by South Yorkshire Police and the systemic cover-up of child abuse.

And you can be sure we have not seen the last example. It seems that Britons are fascinated to learn just how rotten the country's institutions really are.

Rise Of The Facilitators: Big Society Capital

Last night, at a ResPublica event, I heard Nick O'Donohoe, CEO of Big Society Capital, outline a pragmatic vision for a social investment market in the UK. Critically, BSC's role is not to hand out £600m in cash to well-intentioned social entrepreneurs. Instead, it's focused on creating the capability for deprived communities to identify, manage and finance projects that will have a mainly social impact, but with the expectation of some financial return. 

Let's say you want to introduce 'makerspaces' for local people with expertise in operating machinery to invent stuff and make individual items to order. It seems reasonable to believe this could help regenerate some industrial towns. Consider the adventures of Chris Anderson, who recently announced his departure as editor of Wired to run a drone manufacturing business he built as a hobby, as described in his latest book. 

How would you make it happen? How would you establish the feasibility of such a project, identify the right equipment, locate an appropriate building, obtain any necessary planning permission and so on? 

This takes time and expertise, not to mention seed money. Numerous intermediaries must be available to help entrepreneurs co-ordinate and finance their project locally. It can't be done by Big Society Capital from its offices in Fleet Street. It can't be done by civil servants from Westminster, or even by the local council. This has to be a distributed effort all around the country, leveraging online resources where that makes sense. Such intermediaries - or facilitators - will include social banks, active social investors, professional and other support businesses, as well as platforms that enable funds to flow directly from people with cash to social entrepreneurs. The role of Big Society Capital is to invest in the development of a strong network of these social investment intermediaries.

But maybe we shouldn't be too definitive about what is 'social'. I think this approach will be truly successful when facilitators and entrepreneurs aren't necessarily conscious of the fact that the positive social impact of their activities is far greater than the scale of their financial results. To this end, we should factor into all our corporate and project objectives an obligation to take responsibility for somehow improving the community to which the corporation or project relates. In this way, all businesses would have an overlapping social purpose as well as a financial one. 

Similarly, financial services need to support this broader responsibility. Of course it's critical that investors know exactly whether they are donating money, receiving interest payments or getting a share in a company. But if I'm putting £20 directly into any project, my customer experience shouldn't be different depending on whether I'm offered a ticket to a concert, interest at 3% per annum or 2 shares in the project operating company - in fact the same project should be able to offer me all three, seamlessly. That's the sentiment behind efforts to proportionately regulate peer-to-peer finance. All types of enterprise should be able to offer all kinds of instruments over a proportionately regulated digital platform, within an ISA.

Now that would generate some serious big society capital.