I’m going to write about Dwolla again because I really wouldn’t be too mad if Ben Milne and company decided to offer me a job. That, and I have the wonderful opportunity of interning at a community bank so I feel somewhat comfortable with the subject matter.
One of my tasks at this bank has involved researching new ATM technology and I can assure you those things are ridiculously expensive for the limited technology they provide. New technologies such as check reading are being touted as game changers and yet the idea of thin client ATMs just began alpha testing by only one manufacturer.
It’s 2012 and I imagine most banks run their PC infrastructure as thin clients connecting to a central server. I won’t cover the lack to cloud computing traction in banking, but the idea of hosted thin clients is already prevalent in banking. Why then don’t ATM manufacturers make thin client ATMs? My guess is they really enjoy replacing entire machines, or at least making the service calls for software updates every time there’s a new feature instead of allowing banks to download and distribute the update centrally.
Recent ADA regulations are making many banks install new software or in many cases buy new ATMs. The software on them is proprietary and require network facilitation from mainly Star, Pulse or NYCE to process transactions. These processors are ripe from Dwolla’s FiSync technology. Dwolla can better facilitate future thin client ATMs with FiSync and provide greater software flexibility to banks. 1 point Dwolla.
Yes this would save money and reduce network complexity but all of this is really mute for slow to react banks without their customers demand. The real seller for FiSync may be out of network ATMs. Say I’m out of my community bank’s footprint (who uses FiSync) but I need to withdraw money so I look up other banks using FiSync. I can go to that banks ATM and explicitly know that my transaction will cost a whopping $0.25. No need to employ my tried and true strategy of withdrawing the maximum to reduce the relative ATM fee. 2 points Dwolla.
Finally, transactions, in or out of network, are immediate on FiSync. No more viewing account balances on Sunday only to be shocked 3 days later by ATM withdraws on Saturday night. Or better yet, no opportunity to overdraft because your account balance is always up to date (in a FiSync powered world). 3 points Dwolla.
So ATM makers software and business models suck, where does Dwolla come in? Thankfully Linus Torvalds gave us the wonderful OS of Linux. It’s possible to open source necessary drivers for ATM hardware so that you have a nice plug and play, FiSync connected operating system. Dwolla could start by providing bare bones software for simple cash dispensers to banks and ATM manufacturers and allowing them to modify it as they see fit. Sort of like a less ambitious Android project. In fact writing that sentence makes me think Android may be completely functional for this project. It would be fiscally reckless of banks to pass up on this opportunity.
This golden opportunity makes it foolish not to do away with ACH completely for FiSync. Furthermore, small merchants banking with community banks using FiSync will see immediate benefits of accepting Dwolla payments in store. Voila, a tipping point is reached, payments dominated and banking silos come down.