When Innovation Suffers

Posted by Eric Solis on November 17, 2010 under Public Policy, Technology & Innovation | Be the First to Comment

More times than not, “protection” equates to diminished access as rules and regulations almost without exception carry a cost of compliance and they usually focus on the wrong problem.  

 

The propensity of law makers is to focus on short run, non systemic risks, such as cost, volatility, disclosure, etc. when the real problem lies within how the core operating systems of our financial infrastructure are or are not being utilized properly.  When a company holds itself out to be something it is not (technologically) and then something goes awry, public trust in technology at large is damaged and innovation suffers the consequences.

 

One solution might be to create a governmental agency which certifies the soundness, reliability, scale and security of technology based systems.  Few, if any financial company’s today operate in a silo; they are interconnected and rely upon each other for vital process flow within the links of their transaction chain.  But as the old adage goes, “you are only as strong as the weakest link in the chain” and this bares a profound truth when it comes to technology.

 

It is indisputable that innovation and technology can break down long standing barriers to entry for the underserved mass consumer with regard to how one achieves access to financial services and products that heretofore have been out of reach.  But the problem is that the end users do not know who or what to trust and with good reason.  This is where the breakdown occurs and where the focus of law makers needs to be.

 

If there were a “certification” that vetted new technological applications on the basis of system architecture and failure points, then entrepreneurs could develop innovative solutions that could provide high quality, unprecedented and trusted access to the public. This would hold non traditional financial companies accountable to knowledgeable industry experts employed by the government in order to maintain their participation in certificate program. 

 

Successful examples of this methodology include:

 

  • Verisign-SSL certificates
  • Better Business Bureau-A-F ranking
  • Moody’s and S&P-AAA rating
  • FDA-Approved by the FDA
  • FINRA-Member FINRA SIPC
  • FDIC-Member FDIC.

 

Innovation flows through the disruptive unknown and Trust Certifications of this type would spawn a bewildering array of ACCESS to the heretofore underbanked.  IMHO

home top