Matt Wilcox Pro

A curious application just crossed the desk of the United States Patent & Trademark Office. Two weeks ago, MasterCard applied for a patent on its new “… method for anonymization of a blockchain transaction.” 

“MasterCard’s idea sounds an awful lot like a mixer or tumbler,” reported TNW the day after MasterCard filed its application, “a system often used by cybercriminals to launder dirty cryptocurrency.” 

That may not be an exaggeration. While there are plenty of reasons behind the appeal of blockchain’s anonymity to the law-abiding—from security concerns, to an intrinsic preference for privacy, to a desire to keep Big Brother’s nose out of their business—there’s no question that anonymity protects people who are up to no good. 

And it appears that MasterCard indeed proposes to eliminate what little penetrability exists in blockchain transactions. On the day following the application, Coindesk’s Nikhilesh De explained that  … 

… most blockchain ledgers are not actually anonymous. The [MasterCard] application explicitly notes that transactions can be traced due to “the nature of the blockchain as an immutable ledger.” 

As a result, it’s possible to identify all of the transactions that are associated with a specific blockchain wallet using public data. 

To wit, De goes on to cite the following from MasterCard’s application: 

“… such data may, as it is accumulated and analyzed, eventually reveal the user behind a wallet or at least provide information about them … However, the existing communications and attribution structure of blockchain technology such as bitcoin require identification of where the transactions are emanating and terminating, in order to maintain the ledger … Thus, there is a need for a technical solution to increase the anonymization of a wallet and the user associated therewith in a blockchain.” 

MasterCard’s technology, continued the above-referenced TNW article,  

… works by providing a primary address for a transaction, this address then stores the transaction data including the amount and final destination address. 

Meanwhile, a new transaction and digital signature is created, with a new private key. This new transaction is responsible for ensuring the funds reach the desired person. 

As a result, when you receive funds the sender address will be associated with the MasterCard system, and not the identity of the sender. 

None other than the International Monetary Fund has expressed a keen interest in piercing blockchain anonymity. Earlier this year, IMF Managing Director Christine Lagarde blogged: 

The same reason crypto-assets … are so appealing is also what makes them dangerous. These digital offerings are typically built in a decentralized way and without the need for a central bank. This gives crypto-asset transactions an element of anonymity, much like cash transactions. 

The result is a potentially major new vehicle for money laundering and the financing of terrorism. 

“One recent example,” Lagarde continues, “reveals the scope of the problem”: 

In July 2017, an international operation led by the United States shut down AlphaBay, the largest online criminal marketplace on the internet. For more than two years, illegal drugs, hacking tools, firearms, and toxic chemicals were sold all over the world through AlphaBay … Before the site was taken offline, more than $1 billion had been exchanged through crypto-assets. 

Of course, money laundering and terrorist financing is only one dimension of the threat. Financial stability is another. The rapid growth of crypto-assets, the extreme volatility in their traded prices, and their ill-defined connections to the traditional financial world could easily create new vulnerabilities.   

Yet CNBC recently suggested that government poses no imminent threat to blockchain anonymity, citing assistant to the president and White House cybersecurity coordinator Rob Joyce’s remarks at the Munich Security Conference in Germany: 

Joyce emphasized the need to better understand the cryptocurrency’s risks and benefits before embarking on any sort of regulatory regime. 

“I think we’re still absolutely studying and understanding what the good ideas and bad ideas in that space are,” he said when asked about the potential for government regulation. “So, I don’t think it’s close.” 

Privacy and money laundering are not the concern of the U.S. Patent & Trademark Office. Its job is to determine whether a submission represents a “… new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” If so, it may grant the inventor “a property right.” 

Things could get interesting if MasterCard receives its requested patent and the IMF or the United States government doesn’t like it. 

Too personal?

This week I’m doing a 180 from last week, when I discussed the importance of infusing a personal feel into digital banking and how to do it. Important as the (seemingly oxymoronic) personal digital touch is, this week I want to examine …

The pros of impersonal digital banking. 

There are certain products that, no matter how common or needful, people can be reluctant to be seen purchasing. For them, online shopping is a godsend. Abashed about what the Walgreen’s clerk may surmise? Just order that lice shampoo online, from the privacy of your home. It’ll come in a plain wrapper so not even the UPS driver will know. 

Shyness about purchasing certain items in plain view is not new. In 1950, a new line of rat poison was launched by a fellow whose last name was—what else?—Ratner. He branded it d-Con, ran aggressive radio ads targeting areas known to have rats, and sat back waiting for sales to roll in. To his surprise and disappointment, none did. Then Ratner added this line to his commercials: “So that no one will know you have a rodent problem, d-Con is always mailed in a plane wrapper.” Then, sales take off.*

People haven’t changed. There are many products that today’s consumer prefers not to be espied plopping down on the check stand. This is true even for products that everyone needs and uses. Pmnts.com recently put it this way:

No, we aren’t talking about drugs or stolen goods or other illegal products or purchases that anyone with enough determination can procure online. We’re talking about more mundane items that range from certain types of personal hygiene products, over-the-counter medicine and weird things like cat brushes—even toilet paper that some people once had to horse trade asking another person to buy for them in a physical store—that they can now by online, embarrassment-free.

Chances are each of us knows—or has even been—the person experiencing angst when buying products of a personal nature. In fact, purchase shyness is so prevalent that a number of news and entertainment sites have lists of items that people are grateful at last to be able to purchase discreetly, thanks to the privacy—and impersonal aspect—of the Internet. 

Buzzfeed, for instance, lists “21 Slightly Embarrassing Products You’ll Be Glad You Can Buy Online.” Some of the items surprised me. Call me a social lummox, but it wouldn’t bother me to walk up to a checkout counter and pay for products the likes of toilet bowl cleaner, a selfie stick, shoe deodorizer, or bathroom scales. 

Well, maybe the selfie stick.

I can, however, better understand some of the items, such as hemorrhoid ointment, a copy of Fifty Shades of Grey, an STD test, morning after meds, ringworm balm, or, for that matter, handcuffs.

One product showing up on a few lists was new to me: a glow-in-the-dark cat brush that fits over your tongue. I totally get why someone might be shy about being seen buying one of those. What I fail to totally get is wanting to buy one. Much less use it.

Embarrassment that hinders face-to-face sales creates an online marketing opportunity. In “How to Make Money Selling Embarrassing Products on eBay,” The Balance Small Business advises that people “appreciate the anonymity of the Internet”; that online shopping lets them “transact business privately without questions, remarks, or strange looks from employees or shoppers in stores”; and, most important for its readers, that online shoppers “… will pay a premium for embarrassing products”:

Some consumers are not price sensitive. They are more concerned with finding the product they want, fast shipping, and privacy. It is not unusual for consumers to pay three times retail for a particular product online because of the privacy factor. This concept may seem backward—isn’t eBay for buying items at a cheaper price? Not always. Some buyers seek very specific products and purchase on eBay strictly for the privacy factor.

Granted, most banks don’t sell rat poison, anti-fungal ointment, or pregnancy tests. But banks nonetheless deal with sensitive and personal matters, such as balances, overdrafts, loans, budgets, insurance, earnings, and investments. 

Dealing face-to-face with a live banker means disclosing personal financial matters to a human. Given turnover, oft times the banker may be a perfect stranger. By contrast, digital apps are gloriously non-human, never gossip, make no judgments or assumptions about balances, provide no opportunity for others to see or overhear what a client would rather they didn’t, and never inadvertently say a little too loudly “you’re overdrawn,” “you’re late on your loan payment and there’s nothing we can do about the penalty,” or “holy smokes that’s a lot of money.”

So there’s the marketing challenge: To ensure that digital banking has a personal feel, while promoting the advantages of detached, impersonal banking for the times customers want it.

_____________________

* Eicoff, Alvin Or Your Money Back. New York: Crown 1983

WITH THE CONTINUED move to digital banking, there looms a danger of losing the personal touch. That doesn’t bode well for an industry built on strong relationships. 

Contrary to what some may think, there’s no reason that automation cannot promote human connectedness. In an insightful article for The Financial Brand, LendKey’s chief marketing officer Lewis Goldman advises:

Based on the evidence from companies that have successfully navigated this challenge, including leading financial institutions, strong relationships between digital brands and their customers are often built on these three pillars:

1. Creating an emotional connection

2. Delivering a great user experience

3. Using data to improve products and services without encroaching on privacy

People who remember or have studied marketing in the pre-digital era may detect a familiar ring. Goldman’s advice is not so different from what marketers preached back in the day. They stressed the importance of using data not just to contact but to connect with customers. The Response Agency’s Steve Cuno wrote in his curiously titled book Of Marketing and Emasculated Goats:

Finding your target market has to do with locating customers and prospective customers … Reaching your target market has to do with connecting in a way that makes them more likely to receive your message.

For a financial institution, locating customers is a piece of cake. You have their email addresses, since it’s rather built into the account opening process.

Good: You can find them. Better: Here are tips for reaching them.

Be prompt.We all understand the importance of fast loading times. But how about when a client sends an inquiry? There’s no excuse for taking days to reply. Okay, maybe there is an excuse, like you’re understaffed, but it’s not an excuse that’s likely to make customers feel like they’re in a valued relationship.

Keep in touch. Emails and e-newsletters alike are mass blasted, but an email can feel more personal. There is no shortage of excuses to touch base. You have your clients’ birthdays on file; you can send a note of appreciation; you can send the occasional “Let me know if there’s anything I can do for you”; you can send news of interest; you can offer a favor, such as a freebie or discount; and you can use data to recommend relevant services. (Contrary to what Elizabeth Warren said, properly executed cross-selling can indeed be a service.) 

I’m not suggesting doing away with e-newsletters. Only that sometimes a more personal touch works wonders. But exercise care. Keep the email brief, and don’t get so specific that you creep people out privacy-wise. Also, there’s an art to personalized copy. To get a handle on that, I recommend studying up on successful direct mail sales letters from days of yore.

Pre-populate. It gets old, filling in the same data for every inquiry or application. You have the technology to spare your client the tedium.

Keep design accessible. People give up on too-difficult-to-navigate websites. Design should ensure that eyes easily espy the links they’re looking for. Moreover, good design doesn’t impinge on but enhances readability. 

Dispense with non-requirements. Many financial institutions’ forms and applications request information that isn’t needful. The more questions and boxes a client must answer and check, the more likely that client is to bail.

Write like a human. In the aforementioned article, Goldman points out a good example of Citigroup’s lightening the mood by presenting government-mandated questions under the subhead, “Questions we have to ask.” That’s refreshingly real. I might have taken it a step further with “Questions the government makes us ask.”

Say something useful. Consider this gem from the website of, well, never mind which financial institution:

Running a business is not for the faint of heart. You have hundreds of things to worry about. You need accounts that will run themselves and a partner who will be there every step of the way. Let us recommend the following …

The first three sentences say nothing. “Let us recommend the following” isn’t much better, since it’s implicit that the recommendations follow. They’d have been better off dispensing with the whole paragraph and cutting straight to the list of services.[i] Maybe if they’d thought harder, they’d have come up with an intro that actually said something. If boiling down a convoluted paragraph leaves copy that’s utterly unimpressive or needless, consider it an opportunity to work a little harder toward saying something of substance. Or doing without the paragraph. Customers won’t miss it.

Keep humans readily on hand. Ever dealt with an online business where getting to a real human was next to impossible? Or with a phone menu that offers no option to speak with a representative? Such have become so much the rule that customers are mightily impressed when you make it easy to text or call a real person, and when that real person responds promptly. (See above, “Be prompt.)

In summary: 

Just like a brand, a relationship isn’t what you claim. It’s what you do.