The Financial Services Club's Blog

The bank that removes the friction will win

Talking of no-one giving a jot about customer service in banking, there is a subtle nuance here which I thought someone might have spotted or commented upon but …

The nuance is that any organisation that takes friction out of the transaction process has the potential to change banking considerably.

There are several examples of how such friction removal or rather frictionless commerce occurs, and they are all the subjects we usually choose:

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.

How to catch a cybercriminal

Growing up in 21^st century is wondrous, amazing and fun.

You can connect to everyone on the planet.

You can find friends from Tokyo to Timbuktu.

You can catch an airplane like your dad caught a bus.

You can pay carry a roomful of music around in your pocket and watch movies through the air.

You can even pay for things without paper!

Wow!

Hasn’t the world changed a lot?

And yes, it’s going to change a whole lot more as everything becomes wirelessly connected.

But there’s a flaw to all of this.

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.”

Innovation has nothing to do with technology

Just been talking about innovation with a bunch of folks and found myself getting more and more wound up about the way people bandy the word around without knowing its meaning.

It’s not that I’m some pedant or radical who believes that every word has to be used in context correctly, but more to do with the way people talk about innovation as the core of growth and the essence of what they do, when they don’t even know what it is.

The conversation went something like this.

2013: The Technology Landscape

2012 didn’t really see any new technology outcomes. I look around the house today and see an iPad, iPhone and other things, but nothing essentially radically new from 2012 that’s big and different.  But something is about to happen that will change things fundamentally.

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

2012: Technologies create the Perfect Storm

The #1 buzz phrase that everyone has grown to hate (especially Ron Shevlin) is Big Data.  Sure, you may hate it, but it is still pretty important, as I blogged a wee while ago.

A second area that has become so over debated that it is dull is Mobile.

Add Cloud and Social to the mix and you have the perfect storm of overheated technobabble.

TARGET2 for Securities [T2S] - the latest news

The ECB just released their latest Quarterly Update Magazine and, as we have a plenary meeting of the Clearing & Settlement Working Group next Tuesday, I thought you might be interested in an update on T2S from the ECB.

Mobile domination: half of all Visa payments will be made by mobile in 2020

The Sunday Times had a specially sponsored section on mobile business this weekend.  The section gave some interesting stats that are worth repeating (just in case you didn’t think mobile payments is big business):

Can banks meet the hybrid challenge?

It’s taken me a while to work out why  social media and stuff is such a fundamental change for banking, but I finally think I've got there and it's clearer.

It started with the rise of blogging and social media such as YouTube.

I still retell the story of McKinsey’s Chief Executive who was side-blinded by the appearance of YouTube back in 2006.

The morning papers appeared on his desk with the headline: Google acquires YouTube for $1.65 billion.

He had never heard of this company and so called in his team and asked the question: “What is YouTube?”

None of them knew.

£3 million from a simple ATM skim

I was just surfing the BBC news for information about the new Governor of the Bank of England and found this as the #1 most viewed video clip today.

 

The story is about a Romanian fraudster who admitted to stealing £3 million from a card-skimming scam.  He couldn’t exactly deny it, as he was caught red-handed on CCTV when he returned to collect his high-tech skimmer.

After his arrest, police discovered he had obtained about 9,000 bank card PIN numbers.

The only thing that gets me is that I’ve seen these skimmers for years, and would have thought that the ATM technology would have developed far enough by now to stop such fraud happening.

Oh, it has?

We just need to upgrade those ATMs.

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.

The last typewriter ... what next?

I just saw a note today that the Science Museum has acquired the very last typewriter produced by the Brother factory:

“The factory’s 200 employees witnessed the final model of the Brother CM-1000 being packed into its box to a soundtrack of emotional sighs and cheers. This object is the 5,855,533rd of its type to be produced but the only one which has a place in the Science Museum collection.”

Ah, did anyone shed a tear?

Maybe you should as the typewriter was the instrument that provided the inception for modern, ubiquitous computing (Charles Babbage et al aside).

Bank's biggest weakness: drowning in data

I recently met Big Data in person.

In real life.

THE BIG DATA.

Yes, I did.

And here he is …

Virtual currencies will explode thanks to mobile games

The European Central Bank (ECB) has just issued a report on Virtual Currency Schemes, with case studies on Second Life and Bitcoin (both previously covered in depth here).

In the report, the ECB calls Bitcoin “the most successful — and probably most controversial — virtual currency scheme to date.”

The ECB goes on to say that the concept of Bitcoin stems from the Austrian school of economics, where business cycle theory developed by Mises, Hayek and Bohm-Bawerk floated the idea that virtual currencies could be the starting point for ending central bank money monopolies.

A hundred years of cash

A hundred years ago, things were different but the same.

We needed to eat, but what we ate was very much a national rather than international cuisine.

We had to travel, but we would walk, bicycle of take the train.

We enjoyed entertainment, with a visit to the cinema once a month as a treat.

We had to talk, and most of this communication would be face-to-face.

A century later, we eat an international cuisine, catch a plane as easily as a train, watch the movies on our telephones and communicate 24 by 7 by remote media.

But one thing hasn’t changed much.

Cash.