Online Banking Security? a user repellant more like it.
I’ve been creating
multiple websites for my new concept projects the last few months. One of the
things they keep on telling me is the Metcalf Law and Reeds Law.
Anyways, net users
are much less forgiving now a days, and will take their business elsewhere if
the website do not provide the super efficient functionality that internet has
spoiled us with.
For instance, Bank
of America is using a sitekey to prevent identity theft, but it did not give
notice for those of us who had NO idea that they were changing security
systems. On top of that, Sun Micro is having trouble with the sitekey, and no
passcode and ID will log on for the next 6 hours.
But, they failed to China ,
inform us of this, and I ended up spending the last 5 hours trying to log on to
my bank acct. The f*cked up thing, is that I actually did log on once, without
the sitekey, and then it told me I couldn’t anymore. So I called their 1800
number from
and they told me I would be paying long distance fee. (automatic prompt), and
on top of that after waiting for 10 minutes ( the connection broke the first
time when I waited for 3 minutes), the nice lady got on the phone and told me
they were having tech difficulties.
The thing is,
earlier last night, I even wrote them an email about this problem, and the AI
form letter answering bot sent back a letter telling me that there were no
problems. For some reason, I was blocked with sitekey security on Firefox, BUT
not with Internet Explorer until 1pm tonight. Can you imagine my confusion? I
thought a virus or spyware had majorily hacked into my online bank acct, and
either my credit rating just went into the toilet, or they added a couple of
zeros to my acct. either way, I couldn’t tell, because I couldn’t get access!
Now, couldn’t the China and spent
website tell me that it was having tech difficulties when it was having tech difficulties?
I wasted last 5 hours + long distance mobile call from
frustration? I could have spent that time sleeping or at least using the
internet for its real purpose, PORN! Instead, constant rejection from my own
online banking service.
Now, in this day
and age with instant gratification, would I ever ever ever want to come back to
this site again, if not for the fact that I freaking banked with them?
You guys feel me?
This goes back to
my thoughts on the principles of designing a website. If it’s not easy to use,
don’t launching the f**king thing because, it will pick up negative word of
mouth instead of referrals. And that’s really F*cked up, especially with the
amount of detail planning that goes into a community user/ function based site.
Below are the basic
applications and principles of Reed’s Law. An integral of Metcalf’s Law
equation turning into Reed’s Law.
The
Four C’s: Steps to Reed’s Law
Having read our
research note Business
Platforms: Profiting From Networks and thought about the overview of the
different classes of social networks and how they differ in the way the value
of the network increases with the number of members in the network, one person
was wondering how Amazon would go about moving its business up in the network
classes.
To very briefly
recap the discussion in the research paper, we identify three distinct classes
of networks and the way their value grows with the number of actors in the
network. Three laws are named: Sarnoff’s Law holds true for broadcast network
(e.g. television) and says that the value of the network is proportional to the
number of actors (so, to stick with the example, advertising costs on
television networks are roughly proportional to the expected number of
viewers). In contrast, Metcalfe’s Law is good for networks that allow paired
connections (e.g. the telephone network) and predicts that the value grows with
the square of the number of actors and Reed’s Law says that when the network
allow communities to form (e.g. most real-life social networks) then the value
grows exponentially with the number of actors.
| Law: | Sarnoff | Metcalfe | GFN (Reed) |
| Optional Transactions |
Tune In Broadcast |
Connect Peers |
Join/Create Groups |
| Examples | OnSale, Remote Access |
Yahoo! Classifieds, EMail |
eBay, Chat Rooms |
| Value of N member net |
N | N2 | 2N |
| Combined Value of N, M member nets |
N + M | N2 + M2 + 2NM |
2N x 2 |
.
For many platforms we can
identify four stages in the development of the network effects.
- Content: In order to attract people to your platform
in the first instance, content is king. Content can be either information
or transactions. It is current, frequently updated, and relevant to the
visitors you wish to attract. Examples abound in the online world where
almost every web site has some form of content to attract visitors:
CNN.com (news), Yahoo.com (sites), Amazon.com (books) etc. Newspapers,
commercial radio and television are examples outside the web. In this
stage you are publishing and Sarnoff’s Law applies. - Connectivity:
The next stage is about connecting people. Companies move from content to
connectivity by adding user identification and features like "add
comments" functionality, reading circles, or classified ads. An
example is the financial section on Yahoo where everybody can add comments
about companies. Some businesses skip the content stage and start at this
level; examples include mobile networks and dating sites. You are now
connecting people, and Metcalfe’s Law begins to take effect. - Collaboration: Actors—whether customers,
suppliers, investors, or casual visitors—can now author content, thereby
achieving scalability and attracting new networks. A wonderful example is
the Dutch Smulweb that
brings together some 300,000 people who share information and experiences
related to food and drink. Programming interfaces, of which the Amazon Web
Services that we discussed in the research paper, is another interesting
example where the connectivity is to a large extent happening off-site but
in a way where the business retains profits. Some of the elements of the
Amazon.com web site including user reviews and reading lists are pointing toward
collaboration. At this stage, your network value still follows a power
law, but you are now able to grow and scale in a way that was impossible
with a central author. For the programming examples, this is Sarnoff
times Metcalfe where you are able to broadcast the ability to connect
networks, and we expect a value that grows with the cube (or higher) of
the number of actors. (There doesn’t seem to be a name for this law in the
literature.) - Communities:
At this stage, actors are not only able to author content but are able to
group together and form sub-communities. The classic example on the
internet is Usenet: the hierarchy of discussion forums that pre-dates the
World Wide Web considerably. (You can browse and search the discussions at
groups.google.com
and other sites.) Most real-world social networks are at this stage, and
follow Reed’s Law.
As suggested in the descriptions,
many business platforms develop through these four C’s in order, gradually
increasing the value of their networks.
Back to Amazon as the example and
to a beginning of an answer to the question. Communities are the key, and
providing the infrastructure to build communities.
At the moment, Amazon.com allows
communities to form at the individual book level. That is probably too narrow a
base. One of my favorite thriller writers at the moment is Lee Child who has a
nice community web site at LeeChild.com. There
is no reason why those discussions should not take place on Amazon.com and be
fully extended through the web services program. Similarly, Amazon has a
classification of products known as browse nodes (an example of the
classification as you may see it on Amazon.com is Books > Subjects >
Mystery & Thrillers > General), and again there is a good place to
introduce communities.
Extending all of these
collaboration and community features through the web services program is
important to ensure rapid growth and scalability (level 3+ in the list above).
But making the features available
through the web services program is also essential to ensure profits. That the
network has value is all well and good, but unless Amazon ultimately profits
from building and connecting the networks there is no reason to embark on this
effort. The API exposed through the web services program ties everything
together and back to the Amazon platform.
Looking forward we can imagine a
meta-site providing a "plug-in" platform for new Amazon features.
Perhaps you’d like to browse books and search for them at Google at the same
time? Or would you like to have weblog (blog) comments about the book added to
the reviews at Amazon.com? Maybe display a graph of how the book has been
selling over the last few months?
All of these features are
existing solutions but implemented on different web sites with different
interfaces. Wouldn’t if be nice if you could log on to a single site, check the
boxes for the features you want and then browse the way you want it? There are
some technical infrastructures challenges that we would need to solve, but this
is certainly possible. Such a site probably wouldn’t be an Amazon-owned site,
but that is OK: the value is, as we have argued, in the platform.
Technical: blubbering.
Read on at your own risk of boredom.
Both laws give a
powerful bonus to interconnection; mergers and partnerships of networked
companies should be able to extract a premium resulting from these laws. When
we combine two networks together so that users of one network can connect
seamlessly to users of the other, Metcalfe’s Law tells us already that
substantial new value is created: (M+N)² = M² +N²+2MN. This bonus term, 2MN,
is substantial-up to 100% of the value in the original unconnected networks.
Thus there is an enormous incentive to find ways to interconnect networks,
since the members of each network can access a much larger set of potential
transaction partners. With the GFN law, interconnection is even more powerful,
creating many new potential groups that span the two networks: 2M+N
= 2M2N. The GFN interconnection bonus percentage
itself grows exponentially with the size of the smaller network.
What we see, then,
is that there are really at least three categories of value that networks can
provide: the linear value of services that are aimed at individual users, the
"square" value from facilitating transactions, and exponential value
from facilitating group affiliations. What’s important is that the dominant
value in a typical network tends to shift from one category to another as the
scale of the network increases. Whether the growth is by incremental
customer additions, or by transparent interconnection, scale growth tends to
support new categories of killer apps, and thus new competitive games. See
figure 3.
We can see this
scale-driven value shift in the history of the Internet. The earliest usage of
the Internet was dominated by its role as a terminal network, allowing many
terminals to selectively access a small number of costly timesharing hosts. As
the Internet grew, much more of the usage and value of the Internet became
focused on pair wise exchanges of email messages, files, etc. following
Metcalfe’s Law. And as the Internet started to take off in the early ‘ 90’s,
traffic started to be dominated by "newsgroups" (Internet discussion
groups), user created mailing lists, special interest websites, etc., following
the exponential GFN law. Though the previously dominant functions did not lose
value or decline as the scale of the Internet grew, the value and usage of
services that scaled by newly dominant scaling laws grew faster. Thus many
kinds of transactions and collaboration that had been conducted outside the
Internet became absorbed into the growth of the Internet’s functions, and these
become the new competitive playing field.
What’s important in
a network changes as the network scale shifts. In a network dominated by linear
connectivity value growth, "content is king." That is, in such
networks, there are a small number of sources (publishers or makers) of content
that every user selects from. The sources compete for users based on the value
of their content (published stories, published images, standardized consumer
goods). Where Metcalfe’s Law dominates, transactions become central. The stuff
that is traded in transactions (be it email or voice mail, money, securities,
contracted services, or whatnot) are king. And where the GFN law dominates, the
central role is filled by jointly constructed value (such as specialized
newsgroups, joint responses to RFPs, gossip, etc.).
In "real"
networks, it is important to note that although the total value of optional
transactions that involve pairs and groups grows faster than linearly, the
total price that can be paid cannot grow that fast. Typically, the consumers of
the value have money and attention resources that scale linearly with N.
So the law of supply and demand will kick in, lowering prices until the
available resources (dollars and attention) are saturated. What’s interesting
is that this saturation process affects all types of optional transactions-so
GFN value, peer transaction value, and broadcast content value all competes for
the same resources. Once N grows sufficiently large, GFN transactions
create more value per unit of network investment than peer transactions, and
peer transactions create more value per unit of network investment than do
broadcast transactions. So what tends to happen is that as networks grow, peer
transactions out-compete broadcast content in the arena of attention and return
on investment. And remarkably, once N gets sufficiently large, GFN
transactions will out-compete both of the other categories.
Now please excuse
me for quoting so much technical explanation, but if facilitation produces the
must number of transactions, BOA fucked up majorly with their sitekey, and lack
luster performance of informing members of their in-efficiencies, resulting in
a loyal user now actively looking for a better internet experience.
And that’s a
negatively decreasing value graph if I ever saw one. It will end up looking
like this! Straight fucking down.
And yes, this is
the most rambling, a disgruntle man at 5:17 in the morning without sleep has ever
laid on anyone. I apologize if you kept on reading through this blog. This was
not meant to bore you, but for me to vent.
Anyways, don’t
throw this back on me if while you friends who test my new site out find me
calling the pot black, at least you guys aren’t banking with me. The key
is testing, and more testing prior to launch. No rushing.
Funny thing, both
Anglophilic Joyce and Little Ann are online with me at the moment and it is
5:30 in the morning. I need to get some sleep.
Peace out.
