LAS VEGAS —The panel title was dry – “The Future of DDA Revenueand Relationships in a Payments Network World” – but the closinggeneral session on Wednesday at BAI Payments Connect 2012 featured plenty of fireworks.

Such as: “Today the tail is wagging the dog,” said Bob Giltner,chief DDA strategist at Velocity Solutions. He elaborated: “We seeso many others stealing revenues and relationships from us. Astaggering shift is occurring, away from financial institutions.PayPal is an elegant illustration of this.”

“We have the head start, but these unregulated businesses –PayPal, Google Wallet – are doing a better job asking the consumerwhat he or she wants and they are winning the business,” said JeffKline, CEO of the Members Development Company, a credit union-owned product andservice developer.

“They” – added Giltner, by which he meant PayPal, Google, etc. –“are leveraging the network effect and we aren't.” That is, centralto the PayPal business model is not collection of incidental feesper se but the collection of increasing numbers of users whoeventually will produce profits. That approach is key to thenetwork effect, said Giltner.

Giltner added a zinger however: “Who knew when we built onlinebanking that we would become portals where others access the datawe built up at great expense, for free?” His point is that accessto real-time financial info of individuals is key to how manynon-banks operate – they win the consumer approval to access thedata – but the financial institutions are paying the way for thisinformation exchange.

The one bright spot for traditional financial institutions wasthe comment from David Mills, a senior Federal Reserve Bankexecutive, that the day may come when Congress chooses not toregulate companies but instead to regulate activities. Were that tohappen, at least some of what nonbanks do would likely fall underregulatory oversight.

When might that day come? Mills offered no prediction – andpanel attendees were left with a picture of ever more revenuesbeing siphoned away by nonbanks who, as Kline stressed, “workharder to understand their customers and their needs.”