TBT: Looking back on some predictions

Nine years ago to the day, I wrote the post below, in which I offered some predictions about the future of mobile banking. I’d say the predictions held up pretty well.


The Future of Mobile Banking (2010) 

With every technological advance, there’s never a shortage of cheerleaders predicting around-the-corner marvels. Their timeframe of choice is often a decade: “Once we sequence the shitake mushroom genome, we will eradicate cancer, domesticate the cockroach, eliminate halitosis — not to mention make better filet mignon toppings — within the decade.

Still, with the seeming mobile banking explosion upon us, I can’t resist a prediction or two of my own.

Of course, because time can prove you wrong, predictions are risky. If you ever chuckled at the once futuristic but, by today’s standards, clunky-looking instrumentation on Captain Kirk’s supposed 23rd-century starship, or found Tomorrowland in a Disney theme park laughably quaint, you know what I mean.

But then, predicting can also be safe, since in due time most people won’t remember that you predicted anything at all, much less what it was. (Unless you’re a politician, in which case your opponents will trot out your every failed utterance: “You said you’d vote against any bill legalizing vandalism, yet no such bill was ever introduced, which means you, in fact, never voted against one, thereby breaking your promise. What do you say to that?”)

With due respect to those caveats, here are my two cents on the future of mobile banking, along with some problems the industry will face. I shall ground these predictions only on technology that exists, and leave the blue-sky stuff to the cheerleaders.

Mobile banking will supplant online banking. Right now in the U.S., about 60 percent of banking clients avail themselves of online banking. But mobile banking, with 20 percent, is catching up fast. There is less overlap than you might think. Most people who use mobile banking do not use online banking.

There are reasons for that. Convenience is one. Unlike online banking, mobile banking is truly portable. Technology is another. Just as today’s PCs do what once required a room-sized computer, smartphones now do what once required an under-the-desk CPU. Another is that phones have become both a utility and a fashion item, such that brandishing a smartphone that is “so last year” can embarrass an executive as readily as an adolescent. As the fashion-conscious keep up with style, they also keep up with advancing technology. Affordability is yet another reason. People — in fact, entire cultures — who cannot afford PCs can afford basic smartphones. In fact, much of the mobile banking technology we enjoy in the U.S. was first created and perfected to meet demand in other nations. So mobile banking will continue to spread, and not just in the U.S.

So it’s not unreasonable to speculate that mobile banking will outstrip other forms of remote access. If that happens, bankers who treat mobile banking as an adjunct to online banking will miss the boat with clients who want their branch location to be a smartphone or similar device like the iPad.

Mobile banking will become more interactive. You know those trigger-based programs some of you put in place and the rest of you keep saying you’ll put in place as soon as “someday” arrives? The mobile realm allows for trigger programs on steroids. For instance, triangulation and GPS systems let you detect a client’s location so you can provide directions to the nearest branch or ATM. You can offer enhanced security, such as asking clients to verify their identity should they attempt a transaction away from their usual stomping grounds.

Since mobile technology travels with the user, your communications needn’t wait till the client returns home and fires up the PC. Most people open and read SMS text messages, and emails delivered to their phones, within minutes of receiving them. That’s far more instant than so-called “instant messaging” on a PC. And, it’s far more personal. The opportunity that mobile banking provides for that enhanced, instant personal touch shouldn’t be overlooked.

Smartphones will become a preferred payment mechanism. I won’t harbinger the demise of the plastic card just yet, but I won’t rule it out, either. Mobile couponing is already here, and consumer demand is mounting for merchant terminals that read bar codes from tiny screens. It’s only a question of time before people prefer — demand — the ability to use a smartphone in place of a credit or debit card.

Mobile banking won’t be as cheap as we’d hoped. Sure, mobile banking can reduce what we spend on building and staffing branches. But with no one-size-fits-all smartphone model or platform, bankers have no choice but to develop and maintain technologies that work on all of them. Keeping up on and supporting the likes of iPhone, Android, Windows Phone 7, Blackberry and others gets costly. If smartphone marketers converged on a common platform, that expense would go down, but the industry doesn’t appear headed that way.

Banks need to keep things simple even as they ramp up technology. Increasing demand and popularity aside, not everyone, not even in the rising generation, wants mobile banking. There will always be transactions requiring a visit to a bank office, clients who prefer live transactions and, unimaginable as it may seem, people who use their phones only for talking.

And, I predict that Boomers will soon pose a new challenge. As banks cater to rising generations, we must remember that Boomers still make up a large chunk of the market, and will for a few decades more. But beginning at about age 50, people’s facility with new technology and their patience trying to master it tend to diminish. There is no reason to think that Boomers will be an exception. Increasingly, Boomers will want technology that works, but that they can instantly comprehend without having to ask a teenager for help. So banks will need to offer a full complement of mobile banking options that are as easy to use as they are sophisticated. No small challenge.

Challenges and all, I welcome the age of mobile banking. I love the opportunity to deliver relevant financial services fast, with greater accuracy, and with a higher level of interaction. It’s an exciting time to work in banking.

My final prediction: Mobile banking will continue flourishing in ways none of us have yet imagined.

Meanwhile, as mobile banking technology advances, don’t be surprised if you come to work someday to find your smartphone wearing a green visor and arm garters.

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Sales tax in a digital age

calculator-1019936_960_720I shall open with something of a circular observation: If it weren’t for digital technology, there could be no Internet commerce. 

Lest you think I’m being too obvious, I’m not talking about payments via wearables, portables, laptops, or desktops, vital though they are. I’m talking about a morass that would be all but impenetrable without a computer assist. 

Namely, sales tax.

As with excise taxes, the burden of collecting and remitting sales tax has traditionally fallen on merchants. That’s a simple matter if you sell only to locals from only one, physical, retail location. But now that technology allows the smallest merchant to sell in and collect payment from any location in the world, managing sales tax becomes a bit more daunting. 

It’s not a mere matter of remembering that Alaska, Delaware, Montana, New Hampshire, and Oregon have no state sales tax while keeping track of sales tax rates in the other 45. Thirty-eight states allow individual localities to pile on additional sales taxes of their own. Even Alaska and Montana allow localities to impose sales tax despite imposing none at the state level. The result is a nation that is a mishmash of myriad, distinct, geographically-linked sales tax zones.

Just to preclude any easy solutions, what is and is not subject to sales tax also varies by locality and even within them. Some tax food, some do not. Some tax services, some do not. Some tax items bound for extra-state delivery, some do not. Some have reduced rates for certain kinds of items and increased rates for other kinds. Moreover, counties may impose a sales tax, and so may cities or towns within them. 

Here’s Avalara’s summary of sales tax for my home state of Utah:

The Utah (UT) state sales tax rate is 4.7%. Depending on local jurisdictions, the total tax rate can be as high as 8.7%. Local-level tax rates may include a local option (up to 1% allowed by law), mass transit, rural hospital, arts and zoo, highway, county option (up to .25%), county option transportation, town option (generally unused at present by most townships) and resort taxes. All total, there are 17 types of possible tax jurisdictions that may be levied in Utah.

That’s just one, not particularly populous state—“with 17 types of possible tax jurisdictions.” 

According to TaxFoundation.org:

The five states with the highest average combined state and local sales tax rates are Tennessee (9.47 percent), Louisiana (9.45 percent), Arkansas (9.43 percent), Washington (9.17 percent), and Alabama (9.14 percent).

That leaves interstate sellers with a lot more to worry about than 45 geographic locations. There are other rules, too, having to do with volume and verticals. So it is that Intuit advises, “if you sell your products online, you may—or may not—have … sales-tax-collection duties.” Oh, and you never know when a state or locality will revise its rates.

In short, when it comes to interstate sales tax, there’s a lot to keep track of.

The problem existed in the old mail-order catalog glory days, albeit on a smaller scale. It grew as more and more catalog merchants entered the arena, but states had little luck getting out-of-state merchants to do their collecting for them. North Dakota pushed the issue all the way to the United States Supreme Court, which in 1992 ruled in Quill Corp. v. North Dakota that states could collect sales tax only from businesses with a physical presence within their borders. It was an arguable incentive for mail-order businesses not to open outlet stores and not to build satellite warehouses.

But the Internet—and I bet you’ve heard this before—changed everything. Unless you’ve been napping since 2005 when the term Black Friday was coined, you’re probably aware that online sales have mushroomed. Already not-trivial losses in sales tax related to interstate sales mushroomed with them. 

In 2017, it was South Dakota that pushed an interstate sales tax case up the ladder. It fared better than its neighbor to the north. A little over a year ago, the United States Supreme Court handed down its South Dakota v. Wayfair decision. The Balance Small Business summarizes the ruling this way:

A state’s ability to tax transactions is based on the concept of tax nexus, meaning that the seller has a presence in the state. Your company can have a nexus if it is doing business in the state, including:

  • Having a physical office or a place where you conduct business (in your home, for example),
  • Selling or shipping products to a buyer in the state,
  • Having a distribution center, like a warehouse or storage area,
  • Having employees who work in the state, including independent contractors, salespeople, representatives, or agents

Note the second bullet, “Selling or shipping products to a buyer in the state.” The ruling kept the requirement of a physical presence for collecting sales tax, but it broadened the definition of “presence.” Sold something in another state? That’s a presence.

Sale tax has been around for almost 90 years. It was in 1930 that Mississippi and Kentucky became the first states to impose a broad-based sales tax. Although the United States levies product-specific excise taxes—on, for instance, tobacco, alcohol, gasoline, and tires—broad-based sales taxes remain a state thing. For now. 

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TBT: In a hollow in the snowy ground


Here’s a poignant, year-end reminder I shared in 2017.


* * *



In a hollow in the snowy ground

This time of year it’s traditional, and I am inclined, to offer a holiday thought. I admit to a bit of apprehension. Of late, what one says or fails to say has the potential to offend. I hope the spirit of what I wish to get across transcends.

I live in the Salt Lake Valley, where we have a number of lovely off-leash dog parks. One in particular sits at the feet of the majestic Wasatch Range, part of the Rocky Mountains. It is picturesque and, due to its elevation, colder than the rest of the valley at this time of year.

Which makes what I’m about to share all the more heartbreaking.

Last week when a friend—let’s call him Bob—was there, his dog sniffed out something I wish I could tell you was unusual. Some 20 feet from the main trail, hidden from view in a hollow in the snowy ground, a homeless person lay shivering, not quite conscious, clutching a ragged comforter.

Bob felt helpless. It was afternoon, the warmest part of the day, and only 40 degrees Fahrenheit. The man would most likely freeze to death that night. Yet what to do? The actions taken in the Parable of the Good Samaritan are easier said than done. Perhaps the man was dangerous. Even if he wasn’t, Bob had no pack animal to carry him out, and his care would have been beyond Bob’s and just about anyone else’s means.

Later that night as he pondered, Bob realized that though he wasn’t able to help that individual, he could at least help others like him. With some googling he found a shelter with the buying power to purchase eight times the food he could buy on his own for the same amount. The shelter is now part of his monthly budget.

My wife, three kids, and I—and, yes, our dog—have a nice home. It’s no mansion, but it’s a far cry from a hollow in the ground. We’re never cold. We never go hungry. Right now I am indoors, on a comfortable chair, writing on a Macbook Pro that retails for an amount that a food bank or shelter could turn into about $15,000 worth of goods and services for the homeless.

I only partly earned any of what I have. Sure, I’d like to think I have an iota of talent and once or twice put in some hard work. But it wasn’t my doing that I was born in an economy where I could pick up an education, gain skills, and join a thriving corporation. Neither was it my doing that the right combination of genes, upbringing, mentors, and random opportunities came along at the right times for me to capitalize on them. So there’s no way I can picture a man shivering in a hollow and think, He deserves it. Or, Why doesn’t he just get a job? I don’t know his story. All I know is his circumstance in the here and now.

Looking for a great idea for a resolution?

Where I live, it’s something of a year-end tradition to express gratitude for what we have. But it follows that some have less or even nothing. Maybe we can’t do as the Good Samaritan did—bandage wounds, transport unfortunates on a donkey, and leave them with an innkeeper—but there exist organizations that do essentially that. If you’re looking for a New Year’s Resolution, scaring up a dollar or two for them on a regular basis might be a great one.

Thanks for reading. My family and I hope you had a great Christmas Day and wish you a happy New Year.

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We just had a $7.4 billion Black Friday


This just in from Associated Press

This year’s Black Friday was the biggest ever for online sales, as fewer people hit the stores and shoppers rang up $7.4 billion in transactions from their phones, computers and tablets. That’s just behind the $7.9 billion haul of last year’s Cyber Monday, which holds the one-day record for online sales, according to Adobe Analytics … Much of the shopping is happening on people’s phones, which accounted for 39% of all online sales Friday and 61% of online traffic. Shoppers have been looking for “Frozen 2” toys in particular. Other top purchases included sports video games and Apple laptops. 

Will Black Friday out-cyber Cyber Monday? 

I had set out to write about the origin of the term Cyber Monday—but the truth is there’s no outdoing how Matt Swider and Mark Knapp put it in techradar.com:

As a term, “Cyber Monday” was coined by Ellen Davis and Scott Silverman of the US National Retail Federation and Shop.org, in a deliberate move to promote online shopping back in 2005 when the Internet was made of wood and powered by steam. 

Cyber Monday is, of course, a play on Black Friday, which needs no introduction. The latter follows on the heels of Thanksgiving, which in the United States falls officially on the fourth Thursday of November

For brick-and-mortar retailers, Black Friday marks the biggest shopping day of the year. It is a day of self-punishment during which crowds descend upon stores and malls while complaining about crowds descending upon stores and malls.

I probably don’t need to tell you how Black Friday got its name. You probably know that, as the official start of the holiday shopping season for millions of Americans, it is responsible for nudging many a retailer “into the black.” 

As origin stories go, that one for Black Friday makes so much sense, it’s a shame it isn’t true. According to Business Insider, the first use of Black Friday referred to a severe stock market crash:

The term “Black Friday” was first used on Sept. 24, 1869, when two investors, Jay Gould and Jim Fisk, drove up the price of gold and caused a crash that day. The stock market dropped 20% and foreign trade stopped. Farmers suffered a 50% dip in wheat and corn harvest value. In the 1950s, Philadelphia police used the “Black Friday” term to refer to the day between Thanksgiving and the Army-Navy game. Huge crowds of shoppers and tourists went to the city that Friday, and cops had to work long hours to cover the crowds and traffic.

For a while, retailers pushed to change “Black” to “Big.” It never took hold.

According to Adobe Analytics as reported by Wikipedia, in 2006, one year after Swider and Knapp coined the term Cyber Monday, gross sales on that day came to $610 million. Last year, Cyber Monday topped “a record $7.9 billion of online spending which is a 19.3% increase from a year ago.”

To me, the only wonder is that Cyber Monday isn’t even bigger. It is, after all, the ultimate crowd-avoidance opportunity. At the same time, think of the gasoline you won’t burn, traffic accidents you won’t risk, register lines you won’t endure, picked-clean retail shelves you won’t face, the ache that won’t be splitting your head, and sore feet you won’t have to soak when you finally return home, assuming you have time for foot-soaking when you return home.

But then, not every online holiday purchase must be made on precisely that day. The “rush” has already begun, for some as early as late August. And as CNET put it, “there are certainly a zillion Black Friday deals available right now.” 

And it’s not as if online shoppers will go into hibernation at sunset tonight. Digital Trends noted, “As with most buying holidays … many of the major sales are probably going to go live even earlier than that and bleed all the way through Cyber Week.” It continues:

You can be sure Cyber Monday will bring great deals on computers, TVs, smart home devices, games and gaming machines, and other tech products. For many, Black Friday is the time to shop for everything, but Cyber Monday is the day to focus on electronics … we expect to see loads of head-shaking deals on 4K HDR TVs, especially for 55-inch to 65-inch models, as well as 70-inch TVs. There will also be tempting deals on soundbars, Nintendo Switches, Amazon Echo, Google Nest, and other smart home devices. Laptops, tablets, and noise-canceling headphones will be highly sought-after and of course, smartwatches including Apple Watches and Samsung wearables. Apple deals for iPhones, iPads, AirPods, and other entertainment options are sure to be on everyone’s list. You can also bet there will be plenty of deals on Instant Pots, coffee makers, and robot vacuums.

To more fully appreciate the mammoth event that Cyber Monday has become, you need only google “Cyber Monday deals 2019.” In fact, permit me to spare you from having to key in all of that: just click here.

As payment options multiply, merge, and grow in capability, you can bet Cyber Monday will only continue to wax bigger and bigger. As one working behind the scenes in the digital payments industry, I hope shoppers will pause to thank us for making possible this respite from the stresses of in-store shopping. But the ironic reality is that the better we all do our jobs—that is, the more seamless and effortless we make digital payment processes—the less shoppers will even know we’re here.

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Early TBT: Grateful Act of Congress

The making of a legal holiday

The making of a legal holiday


This post originally ran on November 20, 2017

THE FOURTH THURSDAY of November is a legal holiday in the United States. Designated as a national day of thanks, it is named, appropriately enough, Thanksgiving.

Observing Thanksgiving in autumn has been around since the early 17th century. An act of Congress signed on October 6, 1941 established it as a legal holiday and designated the last Thursday of November as the day.

Which, believe it or not, caused a controversy. Larger merchants argued for establishing the fourth Thursday, fearful that in years in which November had five Thursdays, the last Thursday would leave too little time for Christmas shopping. (This was long before Christmas sales began popping up in September.) Meanwhile, smaller merchants liked the idea of reduced shopping time, hoping to attract shoppers unwilling to put up with too-crowded department stores. Adding to the tumult were not a few citizens who objected to letting commercial concerns move their holiday.

The matter was finally settled two months later, when on December 26, 1941 President Franklin D. Roosevelt signed H. J. Res 41. Henceforth the legal holiday would be on the fourth Thursday.

Thanksgiving is a popular time for authors who like debunking tales of “the first Thanksgiving.” True enough, most of the stories we learned in grade school are exaggerated, whitewashed, or outright fabricated. Dig around and you’ll find that the original meal bore no resemblance to today’s feast, and that, overall, the interaction between European immigrants and Native Americans is more to be regretted than celebrated.

History aside, I like the idea of setting aside one day—at least one—to ponder what has gone right for us. Whether we stumble into opportunities or make them, we must at some level concede that something out of our control put us in the right place at the right time, not to mention gave us the wherewithal and skills needed to seize it. Remembering as much can ground.

I do not embrace the cliché that everyone has something to be thankful for. There are many who mourn, and it is not for me to insult them with a pep talk. Nor do I embrace relative gratitude, the idea of feeling blessed because there exist people not as well off. It is not another’s ill fortune that makes mine good. Recognizing that there are less fortunate people serves best when it motivates empathy and compassion.

Now, please pass the gravy.

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