I just got this infographic on SEPA from Misys and thought it worth sharing (doubleclick for larger version).
Nice!
I ‘ve been talking about contactless for years now - I remember talking about the Octopus card system about ten years ago after it launched in Hong Kong in 1997 – and still find it surprising how invisible it is.
Sure it got some coverage at the Olympics but some, like Forrester, reckon that NFC mobile payments will not reach critical mass until 2020. Others, like me, say that this technology is already past its sell-by date, although I am open to persuasion.
In order to persuade me, Barclaycard sent me their latest research promoting the fact that everyone in Britain knows what contactless is all about.
Someone made the comment that I would not receive any business from the five banks named yesterday with the biggest mistakes, so I thought I would rectify that by picking on five good things that banks are doing.
It’s harder to find, because it is less reported, but there are a number of banks that do really good on-the-ground work. Here are five examples:
#5: Bank of America’s Technology Leadership
I often use the example of Bank of America when discussing innovation. The reason is that they took leadership in internet banking a decade ago by committing to the technology early. This is a case study that I’ve written up in detail, and the core of the case study shows that through analytics BoA realised that share of customer wallet increased massively the more the customer was in control. That’s what internet and then mobile banking gave the customer and that’s why BoA committed early to roll out internet and mobile banking with security guarantees to assure customers that these technologies were safe and viable. It’s also why BoA is the #1 US internet and mobile bank.
Active online banking users
Active mobile banking users
#4: Barclays Innovations
It’s true that banks are lambasted for being slow to change and adopt new ideas, but Barclays has proven to be an exception in recent times. From extensive use of social media in their card operations to being the first UK bank to launch a P2P mobile payments service, Barclays has shifted the goalposts regularly in UK banking capabilities. I blogged about this in depth in April, and it shows that banks that innovate do win more business.
#3: Citigroup’s Visions of the Future
Citigroup are regularly rolling out new technology innovations and trialling new ideas. Their branch of the future concept opened in Japan last year was particularly noteworthy, as was their partnership with Google Wallet which could have been massive, if Google had opened the Wallet on the iPhone and not restricted it to one handset (the Nexus S 4G on Sprint). The Google-Citi exclusivity has now gone but, nevertheless, Citi make a point that they have been on the innovator’s curve on a regular basis for over 200 years …
… and what this video shows is that without banking and access to trade and project finance, the world would see no progress. That’s why Citi and other banks are needed to ensure that societies and economies move forward, not backward.
#2: First Direct’s Customer Focus
First Direct appear on this blog and others so often as the UK’s #1 consumer champion bank that it’s almost boring, but the reason is that they truly understand how to deal with remote banking. Regularly voted the #1 bank by their customers, the reason that First Direct get this is that they began life as a bank without branches and now see themselves as a digital bank with a human approach. That’s why they don’t script their call centre agents or do things by the book, and it’s why they win. If you want to know more about the bank, it would do no harm to revisit my 2010 interview with Paul Say, the bank’s head of marketing.
#1: Standard Chartered’s Charitable Work
There are many banks involved in community and charitable work, but one makes a point of it and it is visible in all my dealings with them: Standard Chartered. I first noticed their work when I bumped into the then CEO Mervyn Davies at an Awards ceremony in 2006. He was wearing those tacky wrist bands and I thought it would be something about “stop bullying”. Instead it was about "Seeing is Believing", a charity that is helping to bring eyesight back to emerging market citizens who suffer from cataracts or similar eyesight issues. Mervyn explained that it was a passionate cause for both him and the bank. In fact, if you look at this charity, which aims to raise $100 million by 2020, it is actually a partnership between the bank and the International Agency for Prevention of Blindness (IAPB). In other words, the charity would not exist without the bank’s support. And it goes to the heart of the bank. For example, Standard Chartered sponsor Liverpool Football Club. The bank even replaced its sponsor logo in the Liverpool versus Chelsea match last season, to promote the charity’s work.
And it’s not just this work that places them high up in my list of banks doing good things. For example, I bumped into another senior StanChart banker in Asia six months after meeting Mervyn Davies, Mike DeNoma. Mike was championing a charitable cause to stop child pornography online. It is clear from both encounters that the bank actively encourages charitable work as part of its culture and that’s why they get my number one award for doing good things.
So there you go.
Five banks doing good things.
Note, that four out of five of these are the same five banks as yesterday (First Direct are part of HSBC), so it shows that they can just as easily do good work as messing things up.
Oh, and why did I miss out RBS?
Well, I was going to include RBS but:
Either way, they’ve got no budget for consulting with Chris.
Meanwhile, there are many other banks doing amazing things out there, including many of the names that have had reputational hits over the past year.
In particular, if you want to see a few more amazing things banks are doing that are not so big, then go check out Fidor’s Social Work and Triodos’s Sustainable Stance.
I just received a Gallup report for the World Bank about gender differences in bank account usage.
The headline is that gender barriers exist worldwide to banking.
Hmmm … women are less included in finance than men.
Hmmm … my initial reaction was so what?
No, I’m no misogynist, but it doesn’t surprise me that women are less included in that, in the majority of nations, men are more likely to be the worker still.
Hence, as the work horse, the man is more likely to have the bank account, although the woman is more likely to control how it is used.
And this does turn out to be the case, as the reason for women not having bank accounts is mainlyu because another member of the household has one.
Among all adults without an account, the most common reason cited for not having one was not having enough money to use an account. Among unbanked men, the next most commonly cited reason was that banks or accounts are too expensive. However, among unbanked women, the second most common reason (cited by 26%) is that another family member already has an account. For men, this reason ranks fourth (after too expensive and too far away).
In South Asia, where the overall gender gap in account penetration is largest, the gender gap in this response is 10 percentage points. This suggests that indirect use of accounts is widespread among women in the region -- reflecting a lack of asset ownership that may have implications for economic independence and self-employment opportunities.
What did surprise me is that half of this planet is unbanked with, on average, 55% of men and 47% of women having a relationship with a formal financial institution.
The whole point being that we need more inclusion which, as I recently blogged, will happen as a result of mobile ubiquity.
That’s certainly the belief of Secretary of State Hillary Clinton who commissioned the research through the Department of State.
“As we have learned in this country, what gets measured gets done. Once you start measuring problems, people are more inclined to take action to fix them because nobody wants to end up at the bottom of a list of rankings.”
Aha. So, by knowing what progress has been made you can move things forward.
As Secretary Clinton goes on to say: “Data not only measures progress, it inspires it.”
So true and yet so undervalued is data by many that they just throw it away, especially banks (as I’ve blogged regularly).
As Secretary Clinton concludes: “Data only becomes valuable when it is organised and put to work.”
I think I get that message.
Maybe the banks should, not only to increase share of wallet in the developed world but also to recognise that with half of the world unbanked, there’s a great opportunity for growth.
These results come from a global study of financial inclusion, which measures how adults in 148 economies save, borrow, make payments, and manage risk. Gallup collected the data in 2011 for the World Bank Global Financial Inclusion (Global Findex) database, which is funded by the Bill & Melinda Gates Foundation. The database is the first source of hard data for examining how women make financial transactions, both inside and outside the formal financial sector.
The complete database and related report, along with the survey in 15 languages, are available at http://www.worldbank.org/globalfindex.
Access the complete country-level data set, report, and questionnaire at www.worldbank.org/globalfindex.
It’s Friday, it’s summertime and it’s the day the London 2012 Olympics begin.
Fantastic.
Tonight’s opening ceremony should be amazing and so, rather than talking about banking today, I thought I would talk about banking Olympians.
Lloyds Bank were one of the first to sponsor the London Olympics.
They have an official bank sponsor website ...
... and spent £80 million to secure their Olympian status.
This was back in 2007 of course, before the financial crisis.
Since then, there’s been a long and winding road to get from a secure, boring old retail bank to being one of the UK’s leading fruitcake banks.
This was of course prompted or caused by Gordon Brown and Alastair Darling forcing the hand of Eric Daniels and Viktor Blank, the then CEO and Chairman of Lloyds TSB, to takeover HBOS.
Since then, the bank has tumbled into an abyss of issues which led to the government taking an initial 43% stake in the bank, lowered to 39% today.
The bank found itself in a quagmire of a mess, particularly with the commercial lending portfolio of HBOS, leading to consistent losses for the past few years.
The worst of these was in 2008-2009, when the bank wrote off £24 billion in debt, although the year-on-year results are not particularly impressive.
The bank posted an operating loss of:
The 2008 – 2009 losses are attributable to the mistake of taking over HBOS, which cost the bank around £42 billion in costs, compared to the mere £8 billion acquisition price.
But more worryingly they have other challenges today as the leading UK bank embroiled in the PPI scandal.
This is the insurance that was sold without customers being aware they were buying it, and Lloyds originally estimated the cost would be about £3.2 billion in claims.
They’ve now upped that to £4.3 billion so far, with £1 billion of this just the cost of processing the claims, half of which are fictional.
Then they’ve got burnt by the European Competition Commission forcing the sale of 632 branches in Project Verde.
This decision was forced upon the bank as they gained over thirty percent market share of UK current accounts when they acquired HBOS.
Trouble is that selling branches today is not easy, as there aren’t many buyers.
In the end, they sold the package to the Co-operative Bank in a deal that was daylight robbery.
Just look at the numbers:
Lloyds deal with the Co-operative
Price paid: £350 million + £400 million promised
Number of branches: 632
Virgin deal with Northern Rock
Price paid: £747 million + £538 million
Number of branches: 75
And some people thought the Northern Rock sale was a bad deal.
Lloyds was a real humdinger.
For example, they got way less than their original £2 billion estimate for the branch deal value and it cost them £1.8 billion to get rid of the branches. This was admitted yesterday when the bank stated that it had cost them around £1 billion to organise the branch sale and they had lost £800 million on the deal value.
Hmmm … doesn’t sound like good business logic to me.
Finally, there’s another small matter of LIBOR.
The bank also stated yesterday that they were involved in the scandal as defendants in several law suits that analysts estimate will cost them at least £1.5 billion or more.
All in all, between Verde, LIBOR and PPI, the bank still has a long road to run before they get out of the woods.
An Olympic marathon, you might say.
For those interested, here’s a summary of yesterday’s news stories about Lloyds:
Lloyds Banking Group has posted a half-year loss and has increased provision for payment protection insurance (PPI) claims by £700m.
It is the second time this year Lloyds, which is 39% taxpayer-owned, increased the provision for PPI claims taking the total cost to £4.3bn in 18 months from an original £3.2bn. The new provision drove the bank to a half-year loss of £439m, down from a loss of £3.3bn in the first half of last year when PPI also drove the bank into the red.
A regular critic of the claims management companies that put in claims for PPI mis-selling on behalf of customers the bank’s CEO, Antonio Horta-Osório, revealed that the bank had deployed 1,000 staff to tackle erroneous claims. He said 50% of claims put in by these firms are false, double the level three months ago. Redress payments made and expenses incurred for PPI by the end of June 2012 had reached £3bn.
Lloyds is shrinking.
Non-core assets declined from £140.7 billion at year-end to £117.5 billion and it expects to reduce non-core assets to £90bn by the end of next year, a year ahead of its target, and a negligible £70 billion by the end of 2014.
Lloyds is a defendant in several Libor-related lawsuits. Research from Liberum Capital has suggested it could have to pay out up to 1.5 billion pounds ($2.3 billion).
On a conference call with reporters, Finance Director George Culmer said there was no need for the bank to set aside funds for potential litigation arising from the Libor affair.
"We are still part of an ongoing investigation and until the regulator is satisfied that that investigation is complete there is no point at this stage in thinking about or putting down a number," Culmer said.
Horta-Osório admitted that the bank could lose up to £800m from the sale of 632 branches to the Co-op but that this would be negated by a reduction in capital needed. But creating the branch network, required by the EU as a result of the £20bn of taxpayer money used to prop up the bank during the banking crisis, had cost £1bn.
The impairment charge of £3.1bn for customers missing loan repayments was down 42%.
Some 45,000 jobs are expected to be lost as a result of the rescue takeover of HBOS in 2008 and a new cost-reduction programme implemented by Horta-Osório when he arrived. Some 4,555 full-time equivalent role reductions were announced in the first half of 2012 taking the total to 6,653 since the start of the new cost reduction programme.
If we look at the core operations of the bank, income is falling by 11% while costs only improved by 4%. Even the near-halving of the impairment charges couldn't help, as management profit slipped 5% from the first half of last year. Overall, the underlying revenue of the bank fell 17 per cent to £9.25bn, as the bank suffered subdued demand for new lending and shrunk its non-core asset pool.
The shares were flat at 29.3p yesterday, down from £5.70 before the crisis hit and under half the 63 pence the government paid, representing a paper loss of around £11bn on the taxpayer's stake in the bank.
As recently mentioned, I attended the Re|source 2012 conference at Oxford University last week.
The meeting took place in the historic School of Examinations building ...
... and was a meeting of the great and the good to discuss how to build a sustainable world.
The conference had many of the leaders from politics and banking in attendance.
For example, several of the Rothschild financial family were there, as they had co-organised the event with Sir David King, the Chief Scientific Adviser to Tony Blair and Gordon Brown and Head of the Government Office for Science from 2000 to 2007.
I only managed to make it to the second day of the event, but the speaker list is very impressive including David Attenborough, Chris Patten, Jonathan Dimbleby, Peter Mandleson, Will Hutton, Jon Landau, Terry Leahy, Amartya Sen, David Miliband and more.
In fact, probably one of the most impressive line-up of speakers I’ve seen at a UK conference with, top of the list, Bill Clinton delivering the final keynote session.
Why so many of the world’s most elite and powerful?
Because the world has a finite amount of resources and at the current rate of population growth, urbanisation and general human consumption, all of it is going to run out soon:
If you’re interested in more on this, then read the briefing papers prepared by Re|Source Academic Programme Directors Professor Sir David King,Professor Sir Chris Llewellyn Smith, Professor Charles Godfray and Professor Jim Hall (there’s plenty more where that came from by the way).
Photograph from the Guardian (see end of blog entry)
If you don’t want to read the papers, but just want a feel for how the day went, then read on as I managed to attend a few panel discussions, and so here’s my notes about them.
First, a dialogue about short-term versus long-term thinking with:
It was a great debate as it got into the real depths of why the Long Now is important. In other words, investing in long-term gains and projects at the expense of short-term gains and profits.
That’s fanciful, but something many have campaigned around including myself.
Just checkout the Long Blog about the Long Now if you really want to get into understanding this area well.
Anyways, Lynn summed it up well when she compared the idea of changing investors thinking from the short to the long being a challenge as everyone has gone short these days.
She noted that the average shareholding in 1960 was eight years but, today, it’s just four months.
The about-face that created such short-term investing was when it became cheap to trade. Before 1960 a financial transaction tax along with broker commission fees made it too costly to day-trade. Now those barriers have gone, and everyone wants to short.
We can reverse this through appropriate measures, such as reduced taxation on long-term dividend holdings and higher taxes on short-term gains but, as she put it, that is like ”fishing with dynamite”.
When everyone else is fishing with dynamite, you have to join in or you don’t get any fish. The same is true in stocks. If everyone else is shorting, you have to join in or you don’t get any returns.
This is not necessarily the case as, at the end of the panel, a great question was seeded from the audience: “why is that everyone venerates Warren Buffet but so few emulate him?”
It appears to be because Buffet does his research, gets a stock as a value investor, and holds it for the long-term knowing its value will increase.
Too few have such patience, knowledge, time or research.
Shame.
In summary, Lynn stated that: “we need to increase the costs of short term trading to increase long term holdings, and radically rethink senior executive pay to encourage breathing space for long term thinking.”
Agreed, but cannot see it happening whilst everyone is fishing with dynamite.
The next panel also proved illuminating as it discussed the costs of subsidies and whether they were being directed in the right or wrong way.
This panel comprised:
The panel talked about a whole range of issues with the way that subsidisation of economies works today, and gave out a whole range of interesting facts:
It was all depressingly detailed stuff. For example, Dr Khatib is formerly the Chairman of the Jordan Electricity Regulatory Commission and stated categorically that 80% of the subsidies for fossil fuels in Jordan went to the richest 20% of the people.
The same appears to be true in Indonesia and most other markets, all in all facts that confirm this world is corrupt wherever and whatever way you look at it, so get on with working out how to direct investment to where it’s needed around such corruption.
After lunch we have a final session discussing tomorrow’s economies with:
This was probably the most compelling session as it was looking at what to do for tomorrow than for yesterday. It talked a lot about Africa, India, Pakistan, Brazil and China, and came up with another range of stats:
Much of this I've known since hearing Bob Geldof talking about Africa as an investment opportunity back in 2007.
This discussion was fascinating as it talked about the fact that lots of the world is still to be developed but, in doing so, there has to be a balance between development and dignity.
There was a lengthy discussion here about taking away people’s lands and the issue of land rights. I had been involved in this myself some years ago – providing technology to the Queen’s Counsel who led the case for Aboriginal Land Rights in Australia in the 1980s – and know just how sensitive and important this subject has, is and always will be.
The debate was particularly interesting as Charles Tang was arguing for development fo lands whilst Camilla Toulmin was underlining that it had to be done with dignity.
When Charles responded: “of course, we recognise that a minimal level of human dignity needs to be retained as you develop lands and resources”, I wondered what that meant as China is regularly questioned about its views on human rights.
I’ve blogged in detail about such things in the past, so will avoid repeating them again here, but there is obviously a fine line between progress and destruction.
Anyways, I will write up the final two keynote speeches – Sir David King’s and Bill Clinton’s – over the next few days.
Meantime, if you want some other great facts, here are the two standouts of the whole year:
A diesel-powered aircraft carrier does 12 inches to the gallon; and
The aggregate weight of all the humans on Earth is less than the aggregate weight of all the ants on Earth!
Meantime, if you want some other perspectives on the event itself, here are three other useful links:
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