Pub. 5 2016 Issue 3

The CommunityBanker 12 oday’s community banks face unique challenges: keep- ing up with rapidly evolving technology and regulato- ry environment, preparing for the corresponding data security concerns and marketing traditional services to a decidedly nontraditional next generation, just to name a few. On top of that, community banks must also shoulder the associated increase in their “cost of doing business.” So it’s little wonder that banking organizations seek to ease that particular struggle by voicing their concerns to Washington. However, any long-term solution to a complex problem requires a careful look at the big picture — and so it is with the Durbin Amendment, or Regulation II. We believe the best environment for financial institutions (and the communities they serve) is one that allows them choice and flexibility to compete in a fair market. Unfortunate- ly, that scenario may be more fantasy than reality today. Let’s look at an example from today’s payments environ- ment: EMV. The introduction of EMV and tokenization brings increased security to the payments system, but they were delivered using proprietary standards and rules that limit choice and flexibility. Without customization to EMV and tokenization, the proprietary nature of the solution limits the options for issuers and eliminates competition. Competition is ultimately the engine that drives innovation into the payments ecosystem, creating new solutions that may ultimately benefit card issuers. As the industry moved toward the implementation of EMV and tokenization, it engaged without being fully aware of the unintended consequences and restrictions they put on both issuers and merchants. As a result, customization (the common AID) was required to enable the kind of competition that exists in the U.S. market today. This customization would not have occurred if two unaffiliated networks were not required for community financial banks. Because the technologies being used are not based on open standards from organizations like ANSI and ISO, the ability for an issuer to negotiate and manage expenses The Power of Choice By Terry Dooley, Executive Vice President and Chief Information Officer, SHAZAM T F E A T U R E