Ruminating on Mutuals

If you have ever opened a savings account, taken out a mortgage, or looked into health insurance in the UK, you have likely come across names like Nationwide or The Exeter. While they look like standard banks or insurance providers, they operate on a completely different business model: they are mutuals.

Most large businesses are owned by external shareholders. Their primary goal is to generate profit and pay out dividends to the shareholders. A mutual flips this model on its head. A mutual is an organization owned entirely by its customers (who are called members).

Because a mutual has no external shareholders to satisfy:

• Surplus profits are kept inside the business. 
• Money is funneled back to members through better interest rates, lower fees, expanded coverage, or direct cash payouts. 
• Members hold voting rights on how the organization is run.

"Mutual" is the umbrella term. In the UK, there are 2 prominent types of mutuals - i.e. building societies and friendly societies. 

A building society is a member-owned mutual financial institution that provides everyday banking, savings accounts, and mortgage lending. Its main purpose (in the past) was to help local communities pool their savings so members can borrow money to buy or build homes. Profits are usually reinvested to benefit members rather than paid to outside shareholders. The largest building society in the world is Nationwide, with other well-known examples including Yorkshire Building Society and Coventry Building Society.

A friendly society is a member-owned mutual insurer that provides cover for health, income protection, and long-term care. Long before the NHS or modern state welfare, workers would pay small weekly amounts into a shared fund so that if a member became sick, injured, or died, the society would pay their lost income or funeral costs. Today, examples include The Exeter, which specialises in health and income insurance, as well as other mutual providers such as Royal London and Liverpool Victoria.

What exactly is Domain Driven Design (DDD)?

We have been using many of the principles and patterns of DDD over the past many years. During domain modeling we have often used the concepts of boundary contexts, entity objects, value objects, aggregates and repository pattern, etc.

But based on my humble experience, I think DDD is much more than the usage of these patterns. DDD is a "thought-process" - the way you think about the problem domain, the way you interact with the domain experts & business stakeholders and the way you articulate the technology realization of the business need. This in a nutshell is the greatest boon of following DDD. The business and IT speak the same 'ubiquitous' language and this in turn bridges the "Business-IT gap" :)

That's the reason, the famous DDD book by Eric Evas states that DDD tackles Complexity in the Heart of Software. Mapping your software model as close to the real-life domain as possible helps us in managing the complexity of our design solutions.

The Microsoft Spain team has some pretty good documentation on this philosophy of DDD, which is available for download here. Also a neat ASP.NET example of a n-tiered DDD application is available for download.

Closed Loop vs Open Loop Models in Card Processing

Found this good article on the internet that describes the differences between closed loop and open loop models.
Excerpts from the article:

"Open-loop payments networks, such as Visa and MasterCard, are multi-party and operate through a system that connects two financial institutions—one that issues the card to the cardholder, known as the issuing financial institution or issuer, and one that has the banking relationship with the merchant, known as the acquiring financial institution or acquirer—and manages information and the flow of value between them.
In a typical closed-loop payments network, the payment services are provided directly to merchants and cardholders by the owner of the network without involving third-party financial institution intermediaries. Closed-loop networks can range in size from networks such as American Express and Discover, which issue cards directly to consumers and serve merchants directly."


The site also has another interesting link on how companies such as American Express make money and the competitive advantage they gain because of the closed loop model.