Industry

Evolving Issues in

On-Line Banking

Richard C. Owens

Centre for Innovation Law and Policy

University of Toronto Faculty of Law

78 Queen’s Park

Toronto, ON M5S 2C5

E-mail: richard.owens@utoronto.ca

october 29, 2002

I. INTRODUCTION 1

A. Banking and Poetics: a New Approach 1

B. Definitions 2

C. Market Changes and the Role of Banks 2

II. How Much per Transaction? 5

A. The Promise of Electronic Commerce 5

B. Banking Transaction Costs 6

III. Intellectual Property 8

IV. New Business, Old Regulations 9

V. Banks Cannot do it Alone—The Risks and Complexities of Strategic Alliances and Outsourcing 13

VI. Aggregation 14

VII. Commoditization 18

VIII. Models for Internal Competition for Technology Expenditures 19

IX. The Customer Base 19

X. Systems Vulnerabilities 21

XI. Consumer Protection 21

XII. Privacy and Data 22

XIII. Corporate Governance 24

XIV. My E-Bank: Business Model Selection 25

XV. Jurisdiction and E-Banking 26

XVI. Competition Law 27

XVII. Electronic Payments and Electronic Money 28

XVIII. Credit Cards 28

XIX. Credit Risk 29

XX. Funding 29

XXI. Taxation 29

XXII. Innovation and Risk 30

XXIII. Cowboys in our Midst 30

XXIV. Generally 31

Introduction

1 Banking and Poetics: a New Approach[1]

One of my areas of study before law was English literature. I have since been open to opportunities to marry the two. My expectations of such opportunities have been low, and they have never been exceeded, except when, as a research assistant, I helped create a law school course called Crime in Literature. Electronic banking is a rare and happy exception. The very uneasiness of the juxtaposition of the two words invites elaboration by way of the structural criticism to which the meaning of poetry yields, to elaborate by imaginative association on the inevitable tensions between a world of ancient lineage and institutional heft, on...