Tuesday, March 31, 2009

Trust the complete banker?


First, there’s the Global Trustometer from Edelman. I’ve been a follower of this for years. You can see summary results at Edelman’s website.

For quite a few years, even during the good times, Edelman found that bank and finance brands are trust challenged. Equally, they find very different attitudes between Asian, European and American brand views.

For example, I remember a few years ago that European consumers voted the World Wildlife Fund, Greenpeace and Oxfam as their most trusted brand names whilst Americans had Johnson & Johnson, Microsoft and Ford as their top names.

I’m sure the US view may have changed a bit after Vista and the auto bailout, but Europeans are still tree-huggers and fluffy-bunny lovers.

Anyways, the 2009 Edelman survey, its tenth, is based upon a thirty minute telephone survey with 4,475 people in 20 countries between November 5th and December 14th 2008.

These interviews comprised 1,075 people aged 25 to 34, and 3,400 people aged between 35 and 64.

Globally, 62% of people trust companies less now than they did a year ago, with this drop the most marked in the USA, falling from 58% of American consumers trusting business to do what is right in 2008 to only 38% in 2009.

Funnily enough, trust in government to do what is right stayed pretty much on track globally.

Although the Swedish, Americans, Mexicans and Indians trusted their governments less, these were offset by the Brits, Germans, Dutch, Polish, Brazilians and Canadians who all trust their governments more.

Companies headquartered in Sweden, Germany and Canada are trusted more than any other, whilst Chinese and Russian firms are trusted the least.

Now to the crunch (not the credit crunch!).

Trust in banking.

Unsurprisingly, it’s down.

It’s down more than any other industry.

It’s down 11% globally, from 56% to 45%, only just above Media and Insurance.

Ah well, at least banks are more trusted than sponsored links and payout avoiders (not my view but the masses maybe?).

In America, trust in banks dropped a massive 33% from 69% to 36% of consumers believe that banks can be trusted to do what is right. In the UK, France and Germany, bank trust dipped from 41% to 27%, again the biggest drop ever.

What may be surprising is that trust in the banking sector in emerging economies was up from 72% to 84% in China and from 52% to 59% in Brazil.

Trust in articles in business papers, along with analyst's stock reports, have been blown off their most trusted mantle, whilst blogs appear on the trust scale for the first time this year.

Now, that’s good news isn’t it?

Similarly, the only person to gain more trust this year is an academic or expert on an industry.

Also good news for some.

There’s a load more in the Edelman survey so I commend you to download and read it.

Meanwhile, for the UK folks, there’s also the Trustometer from Marketing Week.

Now in its ninth year, Marketing Week with Reader’s Digest produces a view on whose brands are most trusted in the UK.

Reader's Digest (RD) claim to represent Middle England with 650,000 readers spread over a wide variety of the population:

Men Women Chief Income Main Shopper Working
GB Population 49% 51% 58% 66% 55%
Reader’s Digest 47% 53% 62% 71% 51%

ABC1 <35 35-54 55+ Presence of
School Age Children
GB Population 51% 34% 35% 32% 24%
Reader’s Digest 60% 17% 37% 46% 23%

So the results are interesting.

According to the survey, the most trusted brands in Britain for financial services are:

Bank/BuildingSociety Lloyds TSB
Credit Card Barclaycard
Insurance Company Direct Line
Mortgage Lender Nationwide Building Society

Noteworthy above is that Halifax had won the mortgage lender category since the survey launched nine years ago, but not this year as they are eclipsed by the Nationwide Building Society.

That's interesting as Lloyds TSB, the most trusted bank/building society, just took over Halifax.

Ah well, I guess Lloyds still did well, as it won the most trusted bank and, in a year that we've seen over here, that's some going. Mind you, Lloyds has apparently dominated this space since the survey began, which makes me question the RD readership figures.

For example, Lloyds most loyal customer base are seniors who also happen to be the typical readers of RD. The median age of an American RD reader is 52 and I reckon that's who voted in this survey. Not Americans, but readers with an average of around 52 years old.

Anyway, it still makes interesting reading as you may think that only a few people could name a trust bank brand after the events of last year, and yet 89% of respondents named one.

Marketing Week comments: “perhaps this demonstrates the distinction between how people perceive the dismal economic outlook overall, against their ongoing personal experience of banks as day-to-day service providers of financial services, with whom many have had long-term relationships.”


Meanwhile, the fact that Barclaycard wins in the credit card sector may reflect its independence.

The magazine notes that the Barclaycard won the top spot for the second year running, sitting comfortably ahead of Capital One, which is in fourth position, and Visa and MasterCard, who are second and third, even though you can’t have a Barclaycard without one of those brands on it!

Maybe they won because of their great ad for contactless cards, which has also been a viral hit.

The other interesting point is that Norwich Union has been knocked off top spot for the first time since 2004 by Direct Line in the insurance category.

Tuesday, March 24, 2009

FSA Liquidity Regs

The FSA’s new rules on liquidity management threaten to overload banks with reporting that the regulator won’t be able to understand while missing the source of the current financial crisis, said panelists at the Financial Services Club Capital Markets forum.

Because the session was conducted under Chatham House rules, this commentary doesn’t identify individual speakers. There was broad agreement that the FSA’s new rules, which are to take effect in October, largely miss the cause of the current problems.
Panelists agreed that banks are holding onto liquidity to survive.
“What kills a bank? If it loses liquidity it dies. The essence of why banks aren’t lending to banks isn’t any longer about counterparty trust. It is banks thinking they need a liquidity buffer that is bigger than in the past – if there is a run they want to make sure they can pay everything they owe on the dot.” The American program to offer insurance is a useful approach to improving liquidity.
National regulators threaten to undermine international banks because they focus just on performance within the nation’s borders.
“How can the FSA or any national regulator adequately regulate multinational institutions when all they do is look at the local part of that institution? If Asia is in trouble the FSA may ignore it but the bank with operations in Asia won’t.” Regulators will simply want to ensure a bank is self-sufficient in its home country, but that won’t work in a global work.
“If you trap liquidity in your own system, how does the UK function as an international center?” Parliament appears to want finance to shrink to the national borders, said another speaker. The FT reported Thursday that the FSA’s proposals are under fire from the financial services industry.
“The FSA's proposals would force banks to hold greater reserves of government bonds than in the past. It would also force UK subsidiaries of foreign banks to be self-sufficient in terms of funding, unless their parent companies met certain criteria.”
The FSA stressed that its proposals were subject to consultation and that it was supportive of efforts to come up with a global solution to the problem, said the FT.

At the FS Club, participants suggested delaying implementation of the rule for six to nine months.
The problems of national regulation aren’t limited to the UK.
Also on Thursday, the FT reported that American Congressmen want the Treasury to insist that banks which have received US funding invest in the US. Reacting to $8 billion of financing that Citi is arranged for public authorities in Dubai and a $7 billion investment by Bank of America in the China Construction Bank, they have raised questions about why US bailout money should be used outside the US.
Several FS Club participants said the FSA liquidity rules, which are to take effect in October, were adding cost to banking without adding much value. Banks will have a difficult time finding some of the data and it is unlikely the FSA will have staff in sufficient numbers, or with sufficient knowledge, to make use of it.
However, some vendors said that the information is more readily available than many banks think. One or two said that banks would actually derive business benefit from following the FSA liquidity regulations because this is information they need.

Thursday, March 19, 2009

How to choice a good payment processing services to your business


What do you need to enhance your retail establishment business and internet Website.
I think you must do something to fastest your payments for your business, one way to do it using a credit card. The problem is how you get a suitable credit card from your business.

To choose a suitable credit card you can find it more on http://www.fivestarpayments.com you also can find the solutions if you have any problem with your credit card to resolved that, so you don’t have any problem with your credit card its mean your payment process will always in a good conditions I think it will help you to trusting your business is good.

http://www.fivestarpayments.com provide you to choose your payment processing services, its very helpfully to your business, do your business simple easy, trusted but have a good profit with a suitable payment possessing services.

Wednesday, March 18, 2009

are human hands needed?


The final day in Hong Kong focused upon innovations and several speakers provided a rich overview of innovation across the region, mainly n Japan and China.

I’ll blog about some of these for the rest of the week, as I was particularly impressed with a few areas of leading-edge technology being deployed in a consumer and business friendly manner.

For example Kazuhiko Saiki who leads marketing and operations for eBank in Japan, discussed the latest developments in eBank in-depth. Now I’ve blogged about eBank before and use them regularly as an example of how to do things differently because they have over 3 million customers with a total bank staff of under 200 people. That’s 15,000 customers per employee. Amazing.

I also notice that the number of accounts almost doubled from the end of 2006, as the bank moved access to both mobile and internet channels rather than just internet services.

How eBank manages the on-boarding process and structure is fascinating, as I haven’t seen this in other countries yet, and it’s also a major part of their success as it means no human hand is involved with the account opening process.

This is fascinating stuff and, as a result of such innovations, eBank have become the most popular inter-based Japanese bank with almost 1 in 2 online accounts, a 48% market share.

This success attracted an acquirer to step in and, in January 2009, eBank become a fully owned subsidiary of ... an etailer!

Rakuten Group purchased eBank to become the one of most popular internet sites in Japan behind Google, Amazon, eBay and Yahoo!

Considering our concerns about Wal-Mart and others entering the retail banking space, it is interesting to consider that we now have several internet brands running the largest financial operations in the world. For example, Rakuten in Japan, eBay in America with PayPal and Alibaba in China with Alipay.

This is a space to watch.

Meanwhile, eBank aren’t alone with their success, and are now threatened by a new bank.

A mobile telephone only bank.

A bank with no branches or internet site as such, but everything focused upon self-service through the mobile.

A bank launched only a few months ago.

A bank launched by a major Japanese bank.

Tuesday, March 17, 2009

Use Mobile for payments


Mobile payments in China

Researchers estimate that there were only 83.5 million online payment users in China in 2006, due to the lack of access to payment cards. Admittedly, Tencent with the QQ coin has enabled more payments outside the banking system, but the lack of access to e-payments has been an inhibitor to the democratisation of commerce in China.

However, this is changing and changing fast with UMPay, a Joint Venture between Unionpay and China Mobile, targeting this space through mobile services.

According to UMPay, e- and m- payment users will exceed 500 million people next year and there are already 100 million m-payment users under the UMPay scheme. That’s more than the total number of online payment users only two years ago.

UMPay launched in 2003 and provides China Mobile users with a comprehensive mobile payment platform and mobile payment system provide mobile wallets, financial message services, top-ups and mobile ticketing.

Where they are going to gain the greatest growth is from rural farmers though. This is the strategy of UMPay today - to saturate the rural locations with UMPay access - and will take the 100 million users through the half a billion number in the very near future according to UMPay CEO Bin Zhang.

I was lucky enough to catch up with Mr. Zhang in Hong Kong and asked him to briefly explain their strategy. Here's a short version of our discussion** and apologies for the sound, but we were in the middle of a conference

Mobile finance is fast demonstrating its power in countries that are using such technologies to leapfrog established financial infrastructures.

In China's case, this is a sophisticated mobile financial service from billing and payments to utilities and transportation. In other words, a comprehensive use of mobile for banking and financial services.

We could learn a thing or two.

Wednesday, March 11, 2009

crisis is an economic


Warren Buffett said yesterday that the US economy had “fallen off a cliff”, describing the current crisis as “an economic Pearl Harbor” as concern spread about the US Administration’s fitful attempts to halt the collapse of the American banking sector.

The leading investor, an informal adviser to President Obama whose financial diagnoses are widely respected – even though he conceded that he failed to predict the severity of the crisis – said that the economy had come “close to the worst case” imagined, and that recovery would be slow.

Mr Buffett, a multibillionaire, said that the entire banking sector had been hours from collapse in September, and would have imploded without the $700 billion Wall Street emergency bailout.

Mr Buffett also spoke of the growing fears over Mr Obama’s muddled approach to the central issue in solving the economic crisis: what to do with the banks’ $2 trillion of toxic debt that is threatening the collapse of the financial sector. Mr Obama and his Treasury chief, Timothy Geithner, have said that they do not want to nationalise any banks but they are coming under increasing pressure after massive and repeated injections of cash into crippled financial giants such as Citigroup, Bank of America and AIG have failed to stem losses.

Mr Geithner, who is woefully understaffed at the Treasury Department, has yet to come up with a detailed plan to stabilise the financial sector. Mr Buffett told CNBC that there needed to be a “very, very clear message”, adding: “People are confused and scared. People can’t be worried about banks, and a lot of them are.”

Tuesday, March 10, 2009

Whats the big barrier?


this about disruptive models of banking and payments, such as complementary currencies, the new European Exchanges, Paypal, Zopa and SmartyPig.

The aim is to illustrate that there is the potential to do banking without banks.

This is not to say that, we believe people want to do banking in a different way, and even to do banking without banks. It's possible.

This is a theme explored by Banking as a Service and many of the other presentations, discussions and dialogues you will read on this blog.

Much of the dialogue is there to create a discussion, no more and no less. It is not to promote or demonstrate it has to be this way, just that it could be.

And each time the same questions are nearly always raised:

"Ah, but no-one trusts those new forms of finance which is why they stay with us."

So what does this mean: trust?

Does anyone trust the bank these days?

After the collapse of so many institutions, can banks really claim any trust at all?

Not necessarily.

The banks admit that trust is no longer guaranteed, and so we then move onto the next barrier to disruption:

"These new forms of finance do not work because they are not regulated."

Sure, and the banks were regulated with light touch, principles-based, self-regulation and look what that did for us.

Does regulation work in banking?

Not necessarily.

That's why the G20 and all the supervisory bodies are scrambling around to find a new way to regulate the system.

A Global Deal.

But if banks aren't trusted and regulation hasn't worked, are there really any barriers to new entrants in banking?

"Yes", say the bankers. "To be a bank you have to be licenced by the Central Bank, and many of these new players do not have that guarantee."

"And what does that mean?"

"It means that if we fail, the government guarantee the return of our customer's money."

Mmmm ... if that's the only reason customers stay, it's not a great case for keeping the business models of the past is it?

The banks of tomorrow are arising already.

They are nothing like the banks of the past and they may not have the licence, trust or regulatory endorsements that the old banking system had ... but do they need it?


Thursday, March 5, 2009

power of low latency


Last Thursday was one of those days where you wake up knowing it’s going to be a good one and you go to bed realising that it was … for some that is, but not for everyone.

In my case, I was up with the birds to get into the City and chair a conference all about trading technologies, from smart order routing through low latency equities exchanges and beyond.

On the way into the conference I discovered that for my good friends Peter Randall might not be having his best day as the headlines held the news that he had left Chi-X. This shocked me as Peter was joining our Financial Services Club’s panel on low latency that very evening.

I rang Peter and obviously gave him my best wishes and that I totally understood that he would not be able to join us that evening and wished him well. Then, in the spirit of the City, I immediately grabbed Hirander Misra, COO for Chi-X, and asked if he would take Peter’s place that evening which he did.

Joining Hirander were Todd Golub, COO of NASDAQ OMX and Yann L’Hullier, CIO of Turquoise.**

Terry Quigley of Colt Telecom and Chris Pickles of BT both joined us as well. Terry and Chris are key advocates and deliverers of low latency networking.

The results were also fascinating and, to an extent, staggering so I'm going to provide here a collection of clips and slides from the evening. The video clips are variable in quality due to the various converters used, and Slideshare isn't accessible for everyone, but here's a complete multimedia view of the evening.

Wednesday, March 4, 2009

what's going on In Ireland, cash or just a cheques


What it shows is that Ireland is still extremely reliant on paper payments, particularly cash and cheques.

Ireland has historically had a policy of such usage, and the government has actively discouraged electronic payment until recently by taxing citizens for using debit and credit cards. This is illustrated by Slide 5, which shows that the volumes of paper payments processed have remained remarkably constant during the last four years.

Equally, I was amazed at Slide 9 that shows the use of cash per capita has been surging between 2006 and 2007. Is this the result of the credit crisis I wonder, or the fact that every newsagent, post office, public house and field in Ireland has recently seen off-premise ATMs deployed? If you don’t know btw, Ireland has more ATMs than any other country in Europe per capita, as illustrated by Slide 11.

Therefore, although card values are rising, cash is still dominant (Slide 12).

Cheques are also rampant and Slide 13, 14 and 18 put this in context. They are also fascinating slides in their own right.

For example, slides 13 and 14 show that whilst Ireland’s use of cheques is not as bad as France, the value of cheque is massive. This implies that cash is traded for general sundries and small trading, whilst cheques are for the big stuff.

Slide 18 particularly speaks volumes, as countries such as Britain and France have actively been targeting the reduction in the usage of cheques.

In the UK for example, we have many firms that decline cheques completely or will only accept them with a high processing fee or value.

France has seen cheques reduce from over half of all payments in 1990 to under a quarter today, and it’s reducing further.

Ireland’s cheque usage remains constant – another sign of a government that has encouraged paper payments by discouraging electron ones, and a culture where paper is more trusted than bytes.

The other charts and stats are also worth reviewing.

Tuesday, March 3, 2009

roll-out - SQL and XML


Wow. What a stir I caused when I put XML and SQL side by side! Thanks to all of your for your feedback.

Please correct me, but I believe there are two reasons for that interest: the first is simply that this is a novel and unusual idea. The second is that ISO 20022 being work in progress, the people involved in it are (quite rightly) protective about it.

The idea is not to run ISO 20022 down, nor to say that SQL is an alternative to XML. Saying that car A is good and putting it side by side with car B does not necessarily mean that car A is the same as car B, nor that car B is bad. In fact, the purpose is rather to contrast them, by which I mean, their initial similarities might then lead us to learn something interesting from their differences.

The crux is deployment or, to use Swift terminology, roll-out. And a model case I often think of, is precisely Swift, because they have been able to succesfully manage all these evolutions over the years -- my first arms were with USE/BKE, then I witnessed SwiftNet, and so on. The vast majority of these roll-out efforts have been fruitful and the ecosystem is still prospering (which was not granted either). No flattery intended here -- it is fact.

The reason why it has always worked out, despite the unavoidable grumblings here and there, is that Swift staff paid enough attention to what skills people had in the banks, what equipment was required, what training they needed and so on. They were always careful to provide a realistic roadmap to help any bank -- big or small, advanced or without in-house IT staff -- catch up and stay close. Everybody had to make it together, or nobody.

So, roll-out is not merely a technological proposition. It has to do with people, processes, systems and the environment. With constraints such as culture, capacity to accept change, cost, security policies, and how each tool fits into the balance of things.

That being said, let us get down-to-earth: suppose that today I want back office staff in my bank to be more effective in exchanging and processing interbank data. I want them to be able not only to make reports, but I want to empower them with something that will help them better exploit information from data feeds, fund administrators, back offices of other banks. They also must be able to provide data in the same way when requested.

And, since it is time of short budgets, they must be able to do it with whatever tool they already have on their desktops.

So I am going to train them.

Let us first check that they already know the part of FIN that relates to their job, because otherwise I would first send them to get trained by Swift. Since FIN is already deployed, that is a must.

Then what I am going to teach them? XML or SQL?
  • First XML: certainly, quite a few actors in the financial world are able to ship data in XML format. But what tool (that we already have) should I to teach my staff in order to exploit it? How to write an XSL stylesheet for their browser ? Programming javascript and the DOM model, in the browser? vbScript from the command line? And when that is done, how do we criss-cross that with other data get it into a usable report ? Let us face it: XML is complex for non programmers and, for now, should better be left to IT departments. I do hope that this will change,with user-friendly tools, but that is not possible yet.
  • With SQL, by contrast, I know with certainty that I can give two or three half-days of training and already get a significant increase in productivity. I know that if I teach them some Access, they will be able to import Excel and CSV files from their brokers, custodians or correspondents, mix all that and produce useful reports. Those who already create Excel macros will make good candidates.

Soon, the "rest of us" start to naturally exchange data using mdb files (preferably from a network disk), or through e-mail if necessary. And after a while, querying "serious" databases like SQL Server or Oracle,with Access,and exporting that to Excel becomes a normal thing.

The interesting part, is that SQL is not really the enemy of XML. Because then, back offices can work out ways to import XML data into their home-made relational databases and exploit it. That could even help them accept it.

Perhaps spreading the knowledge of SQL into back offices might even help pave the way for ISO 20022!

Monday, March 2, 2009

Germany's banks .................


Over the past few months, the liquidity crisis storms have hit Germany as hard as any market. The German government had to bail out HypoReal Estate (HRE) and pumped €500 billion into the banks, a figure that is about to double.

The question this raises in my mind is whether there are some more surprises yet to come out of the German bank system - another Black Swan** - and, having investigated a little, it seems there might be one or two.

Germany’s banking system is unlike most, as there are few large commercial banks. The largest banks, such as Deutsche, Dresdner, Commerzbank, are known primarily because they have large overseas operations. Domestically, the banking system is mainly comprised of regional and private banks, and then there are the standalone savings banks, known as Sparkasse banks. Sparkasse banks are the German equivalent of American savings and loans institutions, except that they are owned by local governments rather than private investors. Hence, they are immensely trusted by Germans, and manage almost $1 trillion in deposits.

With 2,500 banks in Germany and 45,000 branches, Germany also has one of the densest banking networks in the world.

There are other differences in the German banking system and markets in that there are relatively few foreign banks. Although the number of foreign banks increased sharply during recent years, due to the growing globalisation of business activities, they cater mainly for firms from their home country.

For example, under the recent European legislation the Markets in Financial Instruments Directive, MiFID, any bank can offer investment services in Germany under a home-host passport. This means that the bank is regulated by their home country, with only their code of conduct of their branch operations regulated in Germany. This code of conduct relates to the advice they give to their client and the suitability of the products they provide to them in a German market context.

Therefore, there are few dealings in Germany where Germans are exposed to foreign bank dealings, and probably why only 1 in 10 Germans invest in the stock markets compared to half of Americans.

All of this paints a conservative risk avoidance society and financial structure.


Not at all.

Unfortunately, for many Germans, their biggest banks have leveraged themselves to the point of collapse in this liquidity crisis, similar to the American, British and other banks.

This is disputed by German's bankers, but the “big banks” such as Deutsche Bank, Dresdner Bank, HypoVereinsbank, Commerzbank and Postbank, are all merging and consolidating as a result.


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