2016-07-02

Financial services – a huge network effect?

According to Wikipedia, when "a network effect is present, the value of a product or service is dependent on the number of others using it". More precisely (for a positive effect): each new user increases, if only slightly, the value of the service for all existing users. Since I have been having a minor spot of trouble with a Bitcoin wallet provider, I have unfortunately realized that this network effects exists rather dramatically for financial services in the following obvious sense. If the remote and electronic financial service provider denies me access to my funds (which, admittedly, it does less frequently than my brick-and-mortar bank) then the immediate feeling is one of distinct discomfort that there will not be a substantial mob in my immediate vicinity to storm the (virtual) bank. Perhaps it matters little that the mob is distributed all over the planet but in this case one remains faced with the issue of (a) finding the other customers; and (b) finding something to storm.

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