All the Right Money Moves
Ben Milne: Breaking the Bank [Source: https://www.youtube.com/watch?v=AmOxaHno_Sk]
If you want something done right, do it yourself.
Let's all be honest here: Each of us has muttered this to ourselves at least once this week. Or maybe it was as recently as today. Either way, we sometimes have to rely on our own push and perseverance even though we work in large organizations where teamwork stands as one of our guiding principles.
If you ever get a chance to meet Ben Milne, a young entrepreneur from America's Midwest, he'll unabashedly tell you that his entrepreneurship has succeeded because he never waits for other people to pick up the slack. His philosophy is that if there isn't a business solution to a particular problem, solve the problem on your own. And then move on with confidence to the next set of seemingly impossible challenges.
One of the things that irked Milne early on in his career involved credit card fees. He had created a red-hot business selling his own line of audio speakers. But he was racking up more than $55,000 each year in credit card fees. He reckoned that was a pretty high cost of moving money around.
So Milne got to thinking: What if he could singlehandedly create his own financial network? He would bypass traditional networks that have for decades administered non-cash transfers. By making his own system, he wouldn't have to pay the kind of fees for moving money around that he believed were debilitating to many small businesses.
His innovation, which he calls Dwolla, is a case of creative disruption. That's because Milne invented a digital way to move money around in real time. He works directly with banks; his service charges 25 cents for each transaction over $10, but nothing for transactions below that amount. By comparison, the Automated Clearing House network used by credit and debit cards, typically takes 24 hours to settle. Not to mention the fact that credit cards and online payment services can charge as much as 3 percent plus 30 cents for each transaction.
One of his "secrets" - which is not so secret ever since he was interviewed by a prominent magazine - is that he strikes deals directly with banks. That might sound like a logistical nightmare; the world is filled with plenty of banks. But the customers who are utilizing his new network don't notice because he's doing that legwork for them. If you want something done right ... well, you get the idea.
Milne's story is both instructive and inspirational for anyone thinking of building a better financial services company. Although the network is based on proprietary technology that takes a high degree of engineering prowess, the overarching idea is pretty simple. So is his strategy. Whenever someone bases his business on taking care of his consumers, he's off to a solid and promising start.
This past month marked the fifth anniversary of the global economic crisis. In the years since, most of the world has continued to look with a bit of suspicion upon enormous banks that took big bets and then required even bigger bailouts. At least that's how a chunk of the general public perceived events. It's encouraging that those banks have largely committed themselves to rebuilding the trust of their consumers by creating better banking tools and improving customer service.
One of my favorite pieces of payment technology is known simply as the "square" to many entrepreneurs and budding retailers. This plug-in has become very popular because of its ability to swipe credit cards on any mobile device. So not only are retailers reducing the time it takes to make money transfers; it takes the costly credit card registration process out of the picture. Merchants have until recently had to "pay to play" with credit cards. The square presents new and limitless possibilities.
What's also evident, five years after the crisis, is that inventive entrepreneurs have stepped forward and begun to innovate their own banking solutions from the ground up. There's nothing wrong with a healthy dose of competition in the financial services industry. It keeps everyone on their toes.
When individuals and organizations alike can move money around more cheaply and efficiently, it means that the value of their money rises. That's one guiding principle with which we can all live.