The Financial Services Club's Blog

Bank customers: vulnerable victims or gullible gimps?

I must admit, having listened to Jeremy Roe regarding banks mis-selling swaps contracts along with Which? and the leader of bank employee union Unite talking about how general staff and customers feel about mis-selling, I’m a little bit cynical.

Have banks behaved badly or are customers a little bit stupid?

Why ALL banks will change core systems

There's a theme that keeps cropping up at most conferences I attend around the remodelling of banks.

It came up again today in a discussion about data leverage at the Asian Banker Summit, and it occurred to me again recently, when I chaired the future focused day at IPS 2013.

The theme is how do you turn a vertically integrated business that owns the customer process end-to-end and organises itself around products and channels, into a horizontally structured business that wants to provide functionality to the customer at their point of need and organises themselves around the customer’s data.

That’s a long sentence and, for those who get this, it will make perfect sense.

This is why I wouldn’t bother writing anything further, except that this is so fundamental to the dialogue we’re having that I feel the need to break it down step-by-step.

Why banks MUST wake up to the mobile social revolution

I was asked to join a panel discussion on social media during a recent conference.

A social media masterclass, as it was called.

Interesting.

Sure, I’ve been blogging and tweeting and facebooking for as long as I can remember, but does that make me a master of social media?

I don’t know, but here’s what I said so you decide.

Some fintech firms' marketing stinks

There’s an old saying that cropped up the other day in respect of Margaret Thatcher’s son, Mark. It was a joking reference by Margaret that her son was so clever he could sell “snow to eskimos or sand to Arabs” or, as one wag put it, arms to anyone.

Anyways, it’s a message worth remembering as most fintech companies could not sell sand to eskimos, snow to Arabs or guns to anyone, as they have no idea how to market or sell their wares.

The future is visual banking (still)

One of the discussions I was having recently was around a future vision for banking, and the idea of branchless banking reared its ugly head again.

As mentioned many times, I don’t believe in branchless banking in the future .. just less branches for banking.

Anyways, this discussion veered in another direction that also rang my old bells: remote visual banking.

Just as we Youtube everything, the idea that your banking would be serviced through a remote advisor who you could chat with onscreen came up as the ideal way to be serviced in the future.

This is a theme like branchless banking, cashless society and biometric authentication.  It keeps cropping up and then disappearing again.

The question is: can we really have a future where the bank deals with customers via remote visual media?

Yes.

Banks are just data vaults

There have been several themes I’ve explored on the blog lately that are the foundations of my latest presentations:

• Mobile is irrelevant, it’s the behaviours that are key
• Money is meaningless, it’s the data that is important
• Capitalism is dead, we are now ruled by social capitalism 
• Privacy has gone and security is our greatest risk

The themes of all of these blog entries are that banks need to think about how they reconstruct themselves for the 21^st century.

What this really comes down to is that banks are becoming pure managers of bits and bytes of data.

Fixing Our Banks: Part Two - the Bank View

As mentioned yesterday, I introduced a discussion about Fixing Our Banks this week, alongside a distinguished panel comprising:

• Charles Middleton, Managing Director of Triodos Bank;
• Seamus Gillen, Policy Director with the Institute of Chartered Secretaries and Administrators (ICSA);
• Dominic Hook, National Officer for Finance and Legal with the Unite union;
• James Daley, Head of Money Content with the Which? Consumer’s Association; and
• Andrew Chambers, Professor of Internal Auditing at London South Bank University.

It was an interesting dialogue covering bank, shareholder, employee, customer and auditor’s views of how to fix the banking system.

Charles began with a discussion of many of the issues in the industry: bonuses, trust, casino capitalism, risk and more.  He talked a little about how the bonus culture arose, as partners who risked personal capital moved to firms with no risk involved.

Banks only survive because of regulations

We recently celebrated the two hundredth birthday of Charles Darwin. 

Darwin, the man who broke through the prejudiced views of the religious world of the Victorian era by being brave enough to say we were descended from apes and not created by God.

You've been bacefooked

Building upon the theme that you cannot have privacy, even if you are a cybercriminal or cybersecurity expert, you cannot have privacy if you are a social media aficionado.

And no greater illustration of the social media aficionado is there than Mark Zuckerburg, uberfacebook leader of the world.

A man with over a billion followers, and a man with over a billion dollars.

You would think that a social media billionaire could keep things secret … but no.

Zuckerberg is the leakiest person I know.

Capitalism is dead, long live capitalism

Following on from my previous two polemics:

• Stop talking about mobile, it's not important; and
• Money is meaningless

I’m now moving on to the final contentious point which is that capitalism is dead.

We all knew that capitalism died in 2008 when the crisis hit, or at least the Anglo-Saxon version of capitalism that was all based upon selfish greed.

The self-serving focus of modern society was evident throughout the last decade, and no more so than the unexpurgated world of me.

That has changed and is changing.

Money is meaningless

I’ve blogged and presented about this subject many times before, so rather than repeating all that, here’s a summation with a new twist.

Money is meaningless because we no longer deal in money.

Stop talking about mobile, it's not important

My latest presentation is apparently a polemic.

That’s what my colleague said yesterday, when I said that my new presentation has three themes:

• Mobile is irrelevant;
• Money is meaningless; and
• Capitalism is dead.

I wondered what she meant by polemic, so checked out the definitions online and Wikipedia defines it quite well: a polemic is “a contentious argument that is intended to establish the truth of a specific belief and the falsity of the contrary belief. Polemics are mostly seen in arguments about very controversial topics.”

Oh goody.

I also found another definition I prefer from Merriam-Webster which is that a polemic is “an aggressive controversialist”.

Even better. 

Try to destroy yourself … and then do it

One of the panellists at this week’s conference said that he employed twenty people whose sole duty was to find a way to destroy the business.

I liked the idea of that.  It is a strong and emotive statement.  But what did he mean?

“I employ twenty people in my innovation department who purely look at ways in which they could destroy the current business.”

Regulators are cutting their nose off to spite their face

In another conversation, I gained a new dimension as to how the regulatory and governmental influence is changing a bank’s outlook.

I was talking with a very senior manager in a bank.  This person heads up risk, audit and compliance.  He is a member of the bank’s executive board.  A heavy hitting player.

He had been with the bank for a long time and had experience of every aspect of the bank’s business.  He knew the key people in every part of the bank, the foibles and fundamentals of all aspects of the business.

But he told me it meant nothing, was worth nothing and was no longer relevant.

All that experience, knowledge, understanding … for nought.

Fifty Shades of Law: America, Banking and World War III

No, it’s not about flagellation and sado-masochism, although the current regulatory regime is not far off that.  It’s also true that the regulatory regime is pretty mind-boggling these days, with fifty shades of interpretation of fifty shades of law.   This was made clear to me in dialogue with a group of European banks involved in the LIBOR fixing program last week. 

We were talking about the likely implications of American regulatory retaliation, and they made it clear to me that the United States is using LIBOR and money laundering as pure extortion from foreign banks to bolster their political coffers.

That sounds a bit extreme, but it made some sense as the conversation developed.

2013: an Economic Outlook

OK, OK, it’s time to get down to the real business of blogging, banking and bonuses.  As per my usual form, here are four specific forecasts for the economic movements of 2013:

1. The USA is a solid rock (but)
2. South America is the place to be
3. China becomes a hot consumer market
4. The Eurozone stays together with fissures, cracks and holes

Were Skinner’s 2012 predictions correct?

At the start of the year, I always make a few predictions about what will happen in the following year.  Watch this blog in January for 2013’s predictions.  But what were the predictions for 2012?

Well Economically, I made the following forecasts:

1. Asia’s light continues to shine, but not quite as bright
2. American equities is the place to invest
3. There will be a major European bank failure
4. A country will leave the Eurozone

Risk is a many splendored thing

I was asked to give a pre-dinner speech by SAS for a group of Chief Risk Officers (CRO’s) in Amsterdam recently. Here’s the speech.

Good evening ladies and gentlemen. 

I wasn’t sure how to start this evening, and decided to begin with the collective noun for a group of CRO’s.  You are collectively known as a murder.

Now I hope you won’t murder me for telling you that as a murder of CRO’s you are a collective failure. 

Oh dear, that’s not a good start, is it? 

Too fast to innovate, too slow to change

As mentioned yesterday, the regulator tries to keep up with the banks who try to keep up with customer, and I said that banks often innovate too slowly.

There are many examples of this, but the one that I come back to regularly is Chip & PIN.

Chip & PIN has been an enormous success, lauded and applauded by the Payments Council and now emulated worldwide with just the USA to follow.

The program was agreed in principle back in 2000 through APACS, the Association of Payments Clearing Services, and the implementation plan sorted out in 2003.  The EMV-based Chip & PIN program was introduced to the UK in 2005 and made mandatory in February 2006.

The great news is that after Chip & PIN was introduced card fraud decreased considerably, with lost and stolen cards down over half …

Why should we innovate?

I was talking at a conference and a regulator was on the panel.  

The panel chair asked him: “should we think about innovation first or regulation?” and he responded by saying: “It is not a question of regulation or innovation.  I would rather ask the question: why do we need innovation at all?  Who is it for?  Who does it benefit?”

I was a little bit surprised at this response, but then the regulators don’t really get what’s happening, do they?  Not only are regulators trying to sweep up issues in the market as they see them occurring, but they are always following behind the markets that are following the customers.

The customer is in the lead.

In this case, it is the consumer who is leading the corporations, who are requesting the banks for innovations that the regulators are then trying to regulate.