Paul Kedrosky, one of my favourite bloggers, picked out a quote from Andy Rappaport of August Capital about social investing -- the idea that you can do good via investing in ethical funds. Andy says:
"A
lot of socially responsible funds have this idea that they’ll provide a
social return, but you’ll have to accept a below-average financial
return. I disagree. Once you give a business an opportunity to make a
below-average return, you make it more likely it will."
It kind of reminded me of one of my favourite quotations from Orson Welles, playing Harry Lime in the Third Man:
"In Italy, for thirty years under the Borgias, they had warfare, terror,
murder, and bloodshed; but they produced Michelangelo, Leonardo da
Vinci, and the Renaissance.
"In Switzerland they had brotherly love,
they had five hundred years of democracy and peace, and what did that produce?
"The cuckoo clock."
You need friction and struggle to create genius and heroism.
It is risk versus reward ... the more you risk, the greater the rewards.
Following yesterday's dialogue about the
long tail of banking being mobile focused, the EPC and
GSMA announced a cooperative agreement for mobile payments this week. Here's
the press release:
GSMA Press Release 2008 GSMA Teams Up With European Payments Council
Alliance will accelerate deployment of mobile payment services
30th
June 2008, London: The GSMA, the global trade body for the mobile industry, and
the European Payments Council, which represents 8,000 banks in the European
Union and EEA and Switzerland, are to work together to accelerate the deployment
of services that enable consumers to pay for goods and services in shops,
restaurants and other locations using their mobile phones.
Both the GSMA
and the EPC envisage that this cross-industry cooperation will enable banks to
deliver better mobile payments services to their customers, supported by mobile
operators' infrastructure. These services will be facilitated by a ‘Trusted
Service Manager', which will support banks and mobile operators in the
distribution, configuration and activation of the bank's payment application on
the UICC within users' NFC handsets. The GSMA, through its Pay-Buy-Mobile
initiative, and the EPC will focus initially on defining a contractual framework
document detailing the minimum set of requirements for a Trusted Service Manager
to interface with banks and mobile operators.
"Together, the European
Payments Council and the GSMA are well-placed to develop the tools our members
need to deploy mobile payment services that will work internationally to the
benefit of consumers," said Alex Sinclair, Chief Technology Officer of the GSMA.
"We look forward to a productive working relationship with the EPC."
"We
are convinced that this cross industry cooperation between GSMA and EPC is the
best way forward for efficiently enabling the mobile as a channel for initiation
of payments in SEPA, and this cooperation model could also be a model for other
parts of the world," said Gerard Hartsink, Chairman of the EPC.
Following this announcement, Commissioner Reding and Commissioner McCreevy
released an official response (pdf download) from the European
Commission:
EU Commissioner for Internal Market and Services, Charlie McCreevy, and EU
Telecoms Commissioner Viviane Reding welcomed the announcement today of GSMA,
the global trade body for the mobile industry, and European Payments Council
(EPC) to promote the use of mobile payment services. EPC and GSMA have agreed
today to accelerate the deployment of services that enable consumers to pay for
goods and services in shops, restaurants and other locations using their mobile
phones.
“Bringing more competition to the payment services market has been my aim and
agreements such as this show the possibilities that new technologies and
innovative approaches offer in this regard” said Mr. McCreevy. "This is exactly
what the Payment Services Directive, which comes into force at end of 2009, is
designed to promote", he added.
"Voluntary industry agreements by the mobile industry are always welcome
where they bring about concrete benefits of consumers and enhance the
level-playing field for European companies in due respect of competition rules",
said Commissioner Reding. "I therefore applaud today's announcement which should
bring Europe to the forefront of mobile payments."
Mr. McCreevy recalled that a huge effort is being made by industry and
stakeholders to create the conditions for a Single European Payments Area. In
this regard he said that standards and requirements resulting from the agreement
should be prepared in an open and transparent manner. "It is important that all
stakeholders can have access to the process so that the outcome is of benefit to
all." he said.
There’s a fascinating roundtable discussion in Prospect Magazine this month.
The discussion features:
Jonathan Ford, Deputy Editor of Prospect and Chair of the discussion;
Anatole Kaletsky, Economic Commentator and Associate Editor of
the Times;
George Soros, Chairman of Soros Fund Management;
Mark Hannam, an independent who has previously worked for the Bank of
England, Citibank and Barclays;
Martin Wolf, Chief Economics Commentator at the Financial Times; and
Sir John Gieve, Deputy Governor for Financial Stability at the Bank of
England who stepped down shortly after this discussion took place.*
In light of Sir John Gieve’s departure, George Soros’s regular and outspoken
depressing comments about the credit crunch, and the regular
Economists’ Forum in
the Financial Times led by Martin Wolf, this was bound to be an
interesting dialogue.
It was, with George Soros saying we should shoot the directors of Bear Stearns and Citigroup.
The Long Tail in banking would be a mass market of
niche microgroups that incur no cost overheads to manage but, for each
transaction, creates a small profit. As the mass of niche transactions build,
the small profits become big profits. This is not far off what banking does
anyway – processes massive volumes of small transactions – but, right now, we focus upon making money out of account management.
Account management involves staff to deal with the
customer onboarding process, KYC and AML requirements, service on the telephone
and in branch, as well as transaction processing and account maintenance.
However, in the case of the long tail of banking,
there are no accounts. You want to reach people who were previously
underserved, because it would not be profitable. Using technologies
such as the internet means that, today, you can serve them. You can serve them because there are
no people involved, no account onboarding process, no branches or telephone
support services, and no account maintenance costs.
So, are we talking about the unbanked?
Yes, but a whole lot more.
We are talking about children, students, the
unbanked, the underbanked, the grey market, the welfare market, the pensioners,
the migrant workers and more. And we are talking about social lending
and saving, PayPal, prepaid and mobile.
Social lending sites, such as Zopa and Prosper, are
connecting the long tail of savers and borrowers. This is best
demonstrated by Kiva, where
anyone can invest a few dollars in microfinancing people globally. A
global connection of niche players. I've blogged about these sites before, but they show one aspect of internet financing that
is based around a long tail model.
PayPal is an even better example of showing a
great way to create profits out of the Long Tail, although its reach goes far
beyond the long tail.
As mentioned yesterday, PayPal provides a method of moving money between
people globally in multicurrency at low cost. PayPal claim to reach out to over
160 million registered users, with one in three requested at least one payments
transaction every quarter. PayPal make their profits and revenues by charging a
$0.30 flat fee per transaction as well as a variable percentage of 4.9%,
reducing to 1.9% or 2.9% for Premier and Business Accounts respectively. There
are also fees for cross-border transactions.
The real secret of PayPal’s operation is that:
(a)
it builds on the existing bank network, as you have to have a bank account to
use PayPal; and
(b) an email saying “you’ve got money” makes people open
accounts.
The overall result is that PayPal’s model has
increased reach and breadth immensely by linking people to money using viral
networking. They do reach the long tail through this structure but, in terms of
the long tail, they also have a major restriction. You have to have a bank
account and proof of identity to move monies around with PayPal.
So there’s a barrier for some of the children,
students, unbanked, underbanked, grey market, welfare market, pensioners and
migrant workers.
So we need to look at prepaid and mobile for these
folks.
Prepaid provides a great way to reach the unbanked
and underbanked, as mentioned last week.
In one of the best examples of a prepaid programme,
migrant workers in the United Arab Emirates, working on their massive
construction projects, are receiving their weekly and monthly wages on prepaid
cards.
They can get cash and pay for stuff around Dubai without a bank account,
and the beauty of this card programme is that it comes preloaded with one
cross-border money transfer per payment period for free.
Migrant workers can receive their monies and send
money home painlessly.
Prepaid for kids as gift cards, or for students as a
budgeting method due to weekly restrictions on balance limits of usage, or for government
welfare and company benefits is seen as one of the strongest markets for
reaching the long tail of finance.
However, there is still a restriction here.
To get cash, you have a habitual movement of people
that creates a criminal focus.
I only discovered this one recently, and it was the
idea of moving monies around on cards that highlighted an issue.
The issue is that in countries where the criminal
fraternity are represented typically by gentlemen with large muscles or big
guns, receiving money on a card is a problem. The problem is that you have to
go somewhere to get the card, and then convert the card into cash.
Apparently, for example, many people would know that
they were getting a prepaid card on a Friday morning from their offspring
overseas. So they would toddle down to the Post Office on a Friday morning,
pick up their post with their prepaid card, and then go straight to the cash
machine and convert the card into cash. As they walk out of their Post Office
with their lovely lolly, the men with big muscles and large guns jump out from
behind the nearest lamppost and nick the dosh off them.
Whoops. I apologise as I’m getting a little
colloquial here.
The point, I am told, is that card payments create
physical movements that can be tracked and targeted by criminals.
And so we come to mobile.
Mobile overcomes the
issue because you do not have to go and physically get a card and then
translate that card into money. You can receive a mobile payment anytime,
day or night, and then use the money flexibly either on your mobile account or
as cash, but not by always going to the same place at the same time, every week
or month.
Mobile overcomes these issues because:
almost everyone has one, or can get access to one,
you do not need to have a bank account to have a mobile,
mobile technology is cheap to access and easy to use,
mobile builds upon internet technologies to become even cheaper to access through VOIP
you can move monies wirelessly, silently and easily between people
the money movements do not create physical movements that are necessarily habitual and tracked by criminals
mobile is global
... one could go on and on.
Whether you prefer mobile or prepaid as your
focus, they combine to create the real long-tail of banking. Mobile
and prepaid can reach one and all, with micropayments that do not add
overhead to the bank infrastructure, but can build volume for small transaction
fees on each transaction.
Suddenly, the billions of unbanked and underbanked,
the long tail of society, can be served through the financial system at
virtually zero cost overhead, with margins that are attractive
enough through micropercentage fees on microtransactions. Billions
and zillions of microtransactions.
Think about it.
If Amazon and iTunes can make 40% of their profits
from the zero overheads of stocking the zillionth book and song, then banks can
make profits from the zero overheads of processing payments transactions
through internet, prepaid and mobile on the banking network.
That’s something that rings of the long tail of
banking isn’t it?
I wrote an indepth analysis eighteen months ago about PayPal’s 100 months birthday and now they’re celebrating their official tenth anniversary, so I thought I would add a small addendum. Although I say it’s a small addendum, it’s quite an interesting one.
Basically, I was updating some old slides about PayPal and thought
that I should track their number of users over the years, as they do
publish these numbers. First of all, I looked up the last published
quarterly results from PayPal on the eBay website.
In their latest company presentation, published June 16th, they have these figures:
PayPal operates in 190 markets using 17 currencies
Anita Elberse has created a great discussion in the Harvard Business Review this week about the Long Tail, the theory expounded by Chris Anderson, editor of Wired Magazine.
The theory goes that you can make as much money as an online retailer from the 80% of specialised products that sell occasionally, the tail, as retail merchants make from focusing upon the limited best-sellers in the head of the sales line.
Anita states:
"In 2006 just 20% of Grand Central’s (book publisher) titles accounted for roughly 80% of its
sales and an even larger share of its profits."
She also goes on to look at Rhapsody, the online music store, and finds:
"The top 10% of titles accounted for 78% of all plays, and the top 1% of titles
for 32% of all plays."
As a result, she concludes that:
"For Chris Anderson, the strategic implications of the digital environment seem
clear. 'The companies that will prosper,' he declares, 'will be those that
switch out of lowest-common-denominator mode and figure out how to address
niches.' But my research indicates otherwise."
Chris Anderson has already posted a response on his blog:
"She finds the top 10% of titles (out of more than a million in that data
sample) accounted for 78% of all plays, and the top 1% account for 32% of all
plays. That sounds pretty concentrated around the head, until you reflect, as
she notes, that 'one percent of a million is still 10,000--[...]equal to the
entire music inventory of a typical Wal-Mart store.'
"This is a good moment to remind everyone of the normal definition of 'head'
and 'tail' in entertainment markets such as music. 'Head' is the selection
available in the largest bricks-and-mortar retailer in the market (that would be
Wal-Mart in this case). 'Tail' is everything else, most of which is only
available online, where there is unlimited shelf space.
"So in the data she cites, the head of the online music market represents 32%
of the all plays, and the tail represents 68%. That's certainly no challenge to
the Long Tail theory; indeed, it's even more tail-heavy than the data I cited in
my book (probably because I used a more generous estimate of 50,000 tracks for
Wal-Mart's inventory)."
Nothing like a good argument is there?
Why am I bothered?
First, because the Long Tail is an important theory about modern retailing.
Second, because it plays to the heart of online channels and why we virally network socially through blogs and virals in a networked world.
Third, and most important for readers in banks, is that there is a Long Tail in banking that's emerging through prepaid cards and mobile telephones. Take note of the views of both Anita and Chris, as they are crticial discussions in how to make money in these markets.
I attended a long discussion yesterday about High Value Payments (HVP).
I wondered why we even bothered to discuss and delineate between Low Value
Payments (LVP) and HVP these days. Surely, we should just talk about Real-Time
Payments (RTP), near RTP (sub two hours) and D+n. Alternatively, urgent versus
non-urgent with T+n, dependent upon your view of the world.
Having introduced enough acronyms in my opening paragraph to confuse a rocket
scientist, I think I can see why we talk about HVP versus LVP … it makes us
sound more interesting and knowledgeable.
A question came up in today’s EBA sessions for Joe Pawelczyk, Vice President for
International Relations at CHIPS, the American Clearing House for over $2 trillion of
wire payments each day. The question seemed quite simple: “Why doesn’t America
use IBANs for their bank account numbers, as all of Europe has now standardised
on this?”
Joe looked a bit non-plussed and piped up with: “Because we
cannot define a stadnardised account number.”
Well, a standardised account number is an IBAN (International Bank Account
Number) and BIC (Bank Identifier Code) isn’t it?
According to a press release from the International Association of Money Transfer Networks, Zimbabwe's economy keeps going thanks to mobile remittances, even with an economy where inflation is
currently running at two million percent and is expected to reach six million percent by the end of June.
Less than 10% of the population is employed and a huge food
crisis looms ahead.
The answer is that the remittance market has been the
lifeline for thousands in Zimbabwe.
A remittance company operating in Zimbabwe says that up to US$1.5m a day moves into
the country in remittances. Western
Union is the principal company but can only operate with the blessing of the
Reserve Bank. The rest operate on the
'parallel' market, meaning the financial market running at the true value of
the Zimbabwean dollar, rather than the declared Government rate of exchange,
which today is running at 50% of the market rate.
The parallel market has been allowed informally by the
Government to function being a useful source of badly needed foreign
exchange. Remittance operators sell
their foreign exchange to the Reserve Bank in exchange for Zimbabwe dollars at
exceptionally good rates - in effect colluding with those who seek to destroy
them.
Not surprisingly normal money transfer channels have
suffered - as huge swathes of regular clients have moved to the unregulated
systems. Apart from the fact they get a
better rate of exchange, under the normal KYC rules they have also been fearful
that their identities would be passed to the Government which at a time of
intimidation and retribution could bring danger to themselves and their
families.
I have been attending a conference on Prepaid this week, one of the largest of its
kind with over 300 delegates all focused upon this burgeoning market. The fact
so many are attending says something, and most of these attendees appear to be
from organisations other than banks. Transit authorities, mobile telephones
operators, governments, utilities, retailers ... oh yes, and MasterCard, Visa
and AMEX.
Initially, I thought: what's the big deal about prepaid? It's just another
payment type, like credit and debit isn't it?
I don’t write about politics, because I am not a political creature. However,
I felt compelled to write about this subject after Europe’s soul-searching over
its identity since the Irish threw out the EU Treaty.
The fact that the Constitution and the Treaty are unwanted does not
de-stabilise our banking efforts under the Payment Services Directive and SEPA,
or does it?
The fact that citizens do not want more European integration, and
are happy to just have EMU, is fine for those creating the Eurozone, isn't
it?
It is fascinating to watch the fight that is going on between the traditional
exchanges – Deutsche Bourse, Euronext and London Stock Exchange (LSE) – and the
new guys – Chi-x, BAT, virt-x, PLUSMarkets, Boat, Turquoise, NYFix Millennium,
NASDAQ OMX, Equiduct …
The fight is over liquidity, trading, order execution,
pricing, clearing and settlement.
In fact, on that note, we should throw in
LCH.Clearnet, Clearstream and Euroclear in their battles with EuroCCP, Rainbow
and friends.
There is no doubt that MiFID has been a trigger for change, although the
resulting changes are yet to be seen. In other words, we are seeing change, but
just do not know the long-term landscape, winners and losers as yet.
The reason for mentioning this today is two-fold.
First, LSE came out yesterday saying that the new guys had to fight on some
other ground than latency. Second, Turquoise’s leadership – Eli Lederman, CEO
and Adrian Farnham, COO – are addressing the Financial Services Club next
Thursday with their views of what it takes to win in the future.
EBAday, or is that days as it is now
2 days, is upon us next week. This is the annual jamboree for the Euro Bankers
Association to celebrate the arrival of SEPA, after much anticipation since EBA
days started three years ago.
This year it is in Helsinki on Wednesday and Thursday of next week, and I
have the honour to chair the plenary session with Werner Steinmüller, Head of
Global Transaction Banking at Deutsche Bank, and Mark Garvin, Chairman of
JPMorgan Treasury & Securities Services International. Coincidentally, these
are the two sponsor firms of EBAday this year.
In planning this plenary session, we have discussed a few ideas and decided
to get away from SEPA specifics, as that’s covered in all the other sessions,
and talk about the big picture. And the big picture focuses upon how the markets
have changed since the last EBAday in Rome last year.
There was a lot of buzz around this year’s Federal Reserve Bank of Chicago’s
Payments Conference, “Payments Fraud: Perception versus Reality”.
First, there’s the sheer numbers involved. For example, it is estimated that
each year $3.5 billion worth of chargeback losses occur in the USA through
fraudulent transactions, according to Orbitz.
Bruce Cundiff of Javelin Research had some particularly interesting stats,
that show identity fraud is on the decline in the USA from 10.1 million cases in
2003 to 8.1 million today, with the cost reducing 12% during this period from
$56 billion to $45 billion. Ouch! $45 billion losses through identity fraud is
still pretty steep, with the average amount defrauded in each case coming in at
just over $5,500.
Picking up on one of the points made in the debate this week about identity and authentication that it is the government’s
responsibility to manage identities, I was kind of surprised by this view. This
view stated that banks have no control over identities because governments issue
identities in the form of passports, driving licences and social security
numbers. Therefore, it is the government’s role to protect identity and ensure
that unique identities are provided to citizens.
This was called a ‘cop-out’ during the debate, namely that we are abrogating
our responsibilities if we think that it is governments who should manage
identities.
But I think there is a more important point being made here.
Governments are forcing us into biometric banking.
Last night’s debate, “This house believes our current authentication and
identification methods are good enough” was a healthy one, focusing primarily upon card authentication in retail
transactions.
Today is a day that’s all about authentication, identification and
verification.
First, I have been asked to make a speech at a payments conference all about
how to minimise risk; and, second, we have a meeting of the Financial Services Club this
evening, in the form of an Oxford Society style Debate with the motion: “This house believes our current authentication and
identification systems are good enough”.
I’ll report on the latter topic tomorrow, but thought I would write a summary
of my speech just to see how it plays out.
With oil prices falling to as low as $10 a barrel in 1998, rising to $72 in
2007 and now hitting $139
on Friday, what is happening? Forecasters are now saying that oil may break
over the $200 per barrel price barrier before the end of the year. Will this
bubble never burst?
Sure it will, but in the meantime everyone is laying blame on someone
else.
UK Prime Minister Gordon Brown blames the Organisation of the Petroleum Exporting Countries,
OPEC. What a load of baloney. OPEC were responsible for price-fixing and
shorting production in the 1970's, which caused the last crisis, but now these
countries produce only about 4 in 10 barrels. If anything, OPEC has tried to
maintain fair pricing for the past three decades, rather than fixing.
OPEC therefore blames the Federal Reserve's policies on the dollar in light
of the credit crisis. Did Greenspan and Bernanke mess up this badly? Some would
say yes, as the price of oil bounces unendingly upwards on each day of bad news
USA. Friday's spike up was caused by the sharpest one-month rise in American
unemployment rates since 1986.
But then the Fed and other investors, such as George Soros, blame speculators and hedge funds. Everyone's trying to make a
quick buck out of commodities such as oil and gold in light of the credit
crunch.
Front Page of Business Week today: Banks versus Consumers - who wins?
The focus is upon credit cards and debt collections and, with American credit-card debt hitting a record high of $957 billion in Q1 2008, up 8% from the previous year, according to Federal Reserve data, this is a growing market. One of the market leaders in debt collections is the National Arbitration Forum (NAF), used by many banks to chase up
delinquent accounts.
The article then goes into a few statistics:
NAF handled 33,933 collection arbitrations in California, from January 2003
through March, 2007; of the 18,075 that weren't dropped by creditors, otherwise dismissed, or
settled, consumers won just 30, or 0.002%, of these cases;
NAF employs 1,700 freelance arbitrators - mostly moonlighting lawyers and
retired judges - who handle some 200,000 cases a year, most of them concerning
consumer debt; and
NAF’s presentation to clients tells them that, in cases in which an award or
order is granted, 93.7% are decided without consumers ever responding and that
only 0.3% of consumers ask for a hearing (the rest just tussle through the
debate via mail).
As a result NAF is becoming the target of a legal action with
consumers claiming that rather than arbitrating, they are purely acting on
behalf of banks. For example, 1,400 Virginia residents claimed that they had
been promised, in writing, that they could appear at hearings before an NAF
arbitrator but that the law firm representing NAF, Wolpoff & Abramson,
failed to arrange the hearings. The case was settled in favour of the
residents.
With so many websites, blogs, voicemails, emails, text messages, adverts,
media, feeds and chatrooms twittering at the poor individuals who inhabited
earth in 2008, the citizens of the world found it impossible to keep up with
everything.
Everything had become so fragmented, that workers of the world were drowning in an
information overload. As a result, they rebelled by using consolidation
services, alternatively known as aggregation, to overcome the overload.
In the theme of dialogue about our changing world, the conversations
continued with my USA friends about how hard it is to get the marketing right
these days. They lamented the fact that their marketing team are so traditional
that they still wait until the brochure is perfect for mailing before posting
details on the internet.
The problem with this is that the internet costs you nothing, and you can
post anything immediately, and then change and evolve it in real time. Who needs
brochures?
I spent yesterday discussing themes for a major conference in the USA later
this year.
My American friend was a bit down on it all ... but then that’s not
surprising when Ken Thompson, one of the most respected retail bankers in the
USA until this year, had been asked to step down from Wachovia. Rumours are rife
of a takeover bid for Wachovia from Santander or some other non-domestic bank.
Combine this with the step down of Kerry Killinger as Chairman of WaMu, and
Standard & Poor’s downgrading of Merrill Lynch, Lehmans and other big name
bank stocks, and it’s not been a good week for American banking.
Again.
So my colleague was pretty down about the prospects for tradeshows later in
the year.
He made it clear that big, strategic themes, such as innovation and
disruptive strategies, were off the agenda. When banks are fighting for
survival, the last thing they are going to think about is big picture ideas.
They want practical ideas to survive.
I must admit, I can understand this mentality, even though I don't agree with
it.
I've been asked by a few folks to comment on the Investment
Roadmap that SWIFT is pulling together with FIX Protocol Ltd (FPL), the
Financial products Markup Language (FpML) and the International Securities
Association for Institutional Trade Communication (ISITC).
I was going to comment on this roadmap, but restrained myself due to a fairly
cynical view expressed by a fellow
blogger, and because I wanted to wait to see some action or
outputs. However, after several people in the SWIFT community asked me to
express a view, here’s my twopenneth worth.
As you walk the streets of Rome, you find modern and ancient intertwined. The
streets are full of gorgeous clothes from designers ranging from Salvatore
Ferragano to Versace, Louis Vuitton to Gucci, Prada to Armani. All the names are
here in beautifully presented shops that ooze money.
These shops are squeezed into streets laid with tiles and cobbles that date
back over 2,000 years. The shops and office blocks are often built upon tombs
and temples, where the new Rome sits on top of the old.
These thoughts ran through my head as I sat at the conference this week where
we had a number of presentations about upgrades and releases of core software
systems. The firm hosting the conference produces a new release every year, and
is now on Release 9. They spent hours in the opening keynote discussing the
latest features, capabilities, functions and specifications of the new product.
It is not a product I use, so much of it went over my head, but I was struck by
one thought.
Why do customers need to upgrade to a new release?
John Cleese: And yes, all right, but apart from the sanitation, medicine,
education, wine, public order, irrigation, roads, the fresh water system and
public health, what have the Romans ever done for us?
The Faster Payments project goes live today after over three years in the
planning, $300 million investment in new systems and some delay - it was meant
to go live in November but required such significant systems redevelopment that
it took six months longer.
It should be good for all, as it means D+0 is finally here with most
standing orders, internet and telephone payments processed end-to-end within two
hours and within 15 seconds for a directly connected processor.
Lightspeed payments for the 21st century ... watch this space to see how it
goes.
You can find out a lot more
background here, and more from APACS here.
This makes clear that standing orders come into play on 6th June, so it's
just internet and telephone payments today.
Barclays, Citi, Clydesdale and Yorkshire Banks, HSBC, Lloyds TSB, Northern
Bank and RBS allow the sending and receiving of payments; Co-op Bank and Abbey
are going to offer this later, but right now only offer receiving; whilst
Alliance and Leicester, HBOS, Nationwide and Northern Rock only receive payments
for the moment.
I'll leave a longer diagnosis after a few days of the system being live.
The European Commission is running a conference this
week about financial inclusion and the unbanked. According to the
Commission, almost half of all of the citizens of the EU10 – Poland, Hungary,
Czech Republic, Slovakia and other recent joiners, but not Bulgaria and Romania
– have no bank account.
According to their research, 47% of the EU10 adult population are unbanked,
compared with only 10% in the EU15 (France, Germany, Italy, Spain, UK …).
The conference is all about establishing rights for citizens to get basic
financial matters covered, such as a "right of all citizens to a transaction
bank account" and "a defined minimum package of transaction bank services".
LSE reported a 52% rise in annual operating profits today,
primarily related to trading which, thanks to bulk discounting to market makers,
has doubled in the past year. Combine this with their acquisition of the Milan
Borsa Italiana and LSE’s Earnings Before Interest and Tax (EBIT) reached £265.2m
($520 million) for the year to March 31st, up from £174.2 million ($340 million)
a year ago.
These results might be even better if the LSE had their own integrated clearer
rather than using LCH.Clearnet, as margins should improve. This is one thing
they may change this year, through the acquisition of Borsa Italiana which gives
them a clearing operation as part of the deal.
Meanwhile, LSE's shares are trading on a price/earnings ratio of 17.9, which
is slightly behind Deutsche Bourse at 19 and way behind the Chicago Mercantile
Exchange (CME) at 33.4.
However, the good times are going bad and, if I were them, I would be worried.
Another excellent collection of folks at the annual Gateway conference, a
meeting of British American Business leaders.
Sir Wim Bischoff, Chairman of Citigroup, gave the keynote speech all about the impact of Sovereign Wealth Funds
(SWF). Although they have been around for decades, it has only been the recent
experiences with Middle Eastern, Chinese, Russian and other nation's funds
buying big chunks of foreign businesses, that this has really appeared above the
radar.
Bearing in mind their lack of transparency and potential threat to national
interests, the idea of Chinese or Russian funds buying up large swathes of
American and British businesses is something that many are wary of, and Sir Wim
asked the question: should we be?
We had a great conversation today about bank brands at the Asian Banker’s Retail Excellence Program (I'm an advisor to the program and sit on the judging panel for their Awards).
It started with Nielsen sharing some data about a branding analysis project they ran over the last year, across 179 bank brands across Asia. The results looked at the Brand Equity Index (BEI) for each bank, with BEI being comprised of va
