Reminders

The Four Letter Word That Could Change the Business of Online Banking

By June 25, 2012
OfflineMichael Versace

In November 2007, when I was Managing Director for the Financial Services Technology Consortium (FSTC) , I drafted a proposal at the request of my boss Dan Schutzer, the then President of FSTC, who had been researching an idea for how to make part of the public internet the exclusive domain of the financial industry.

The proposal was to establish a specialized top level domain name or TLD, an alternative to .com, to be used by members of the financial industry for a host of bank-to-consumer, bank-to-bank, and actually any bank-to-accepted entity transactions.  .(dot) BANK, as we began to call it, and other g (general) TLDs for specific sectors of the industry, would be proposed, with support of federation of industry organizations and under the leadership of the FSTC, to the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization that oversees TLDs under contract with the United States Department of Commerce.  If and when approved, the new TLDs would serve to fence off a virtual portion of the public internet and serve to insulate the .bank members from common cyber-security threats of malware attacks, phishing, and denial of service attacks through the use of infrastructure protection techniques and technology already common in military and other virtual private networks today.

I was happy to see, that on 31 May this year, almost 5 years later, the proposal for a .bank domain name had finally made it to ICANN.   The FSTC (now part of the Financial Services Roundtable) and the American Bankers Association announced last month that they have indeed applied to ICANN to operate two gTLDs, .bank and .insurance, on behalf of the financial industry.  The proposal is endorsed by a host of other lobbying and industry associations around the world, including the European Banking Federation, the Australian Banking Association, the Independent Community Bankers Association, the International Banking Federation, and others.   The goal of this proposal is to provide enhanced security and fraud protection for all registered to use the .bank or .insurance domain name.   All banking entities registered to use the new TLDs must be chartered by their home country regulator.  Other financial entities not chartered by a financial regulatory body will be strictly vetted in ensure the integrity of the new financial network.

.BANK is a large scale effort requiring sizable investments and business planning, so it's not clear yet whether the timing of the proposal represents an offensive or defensive strategy by the lead players, as the influx of new domain names and the willingness of ICANN to approve them makes the internet more complex, and more competitive in general.   Our early proposals recognized both strategies - wanting to reserve these domain names for a union of regulated entities, while at the same time provide security and of course, new service opportunities.    Given the emphasis on finding new business models and non-interest revenue opportunities, my guess is that the banks are on the offense at the moment and building business plans and products to take advantage of this 3rd-platform technology and the revenues that it has the potential to generate.

What needs to be done to bring .BANK to consumers and businesses?  Some of the topics I'm sure are still under discussion include:

  • Who will actually operate the new domains (e.g., Verisign, who operates .com today)?
  • How will the TLD organization be structured - for profit, not-for profit?
  • What will the service levels look like?
  • What will it cost to register www.yourbank.bank, and how will registration fees be used?
  • How do these cost trickle down to consumers in the form of products and service?
  • What new services will this enable?
  • What will the rules of this new financial infrastructure look like and how might they impact, for example, account agreements and payments system policies?
  • Will .BANK extend to mobile and social?

This is a bold, global move by the industry - proposing a new platform for new business models and services, and carving out a piece of the public internet infrastructure for the private use and operation by bankers.   Being an early contributor to this idea, I'd like to congratulate the current leads at the Financial Services Roundtable for taking this step forward and wish them success in the months and years ahead.bank.jpg

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