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I just received this email from Corporate Watch and, for those in London this week, reproduce all details here so you are aware:
The leaders of the world's 22 largest economies are meeting in London this
week to 'restore confidence' in the failed capitalist system. Meanwhile, banks
and companies in the City are being boarded up and employees are being told to
come to work in plain cloths. But is it that easy to hide?
Different groups and
campaigns are planning different protests and actions over various, yet
interrelated, issues. What they all have in common is disillusionment and anger
at the system that the G20 summit represents.
A better representation, however,
may be London's financial district, or the Square Mile, where many of the
protests and actions are expected to take place. A detailed map of the Square
Mile, with numerous focal points, has been produced and is being circulated
widely among activists and protesters. Below is a list of the main (known)
protests and actions planned for this week.
The 'Squaring Up to the Square Mile' map can be found here.
Wednesday, 1st April:
- Financial Fools Day and G20 Meltdown at the Bank of England, from 11am at
different stations (Moorgate, Liverpool St, London Bridge, Cannon
Street).
Reclaiming the City, thrusting into the very belly of the beast:
the Bank of England.
"We can't pay, we won't pay and we are taking to
the streets."
"Capitalism has been heating up our world for years,
melting the icecaps, burning up the rainforests, pushing the planet to tipping
point. Now we're going to put the heat on them. At the London Summit , the G20
ministers are trying to get away with the biggest April Fools trick of all time.
Their tax-dodging, bonus-guzzling, pension-pinching, unregulated free market
world in meltdown, and those fools think we're going to bail them out. They've
gotta be joking!"
- Climate Camp hits the City, at the European Climate Exchange in Bishopgate
from 12:30 noon.
"Stopping Carbon Trading... Because nature doesn't do
bailouts... ''
"First the city traders speculated with our homes, jobs and money – with
disastrous results. Now they are speculating with our climate and the very
future of life on earth – and once again our governments are cheering them on...
Don’t let them get away with it: join our camp in the Square Mile! Bring a
pop-up tent, sleeping bag, wind turbine, mobile cinema, action plans and
ideas..."
- Fossil Fools Day: "Take aim at your local fossil fool and help speed up the
end of the fossil fuel empire, and the beginnings of a more just and sustainable
world."
(Early success: BP, which was going to celebrate its centenary with cocktails
and canapes at the British Museum, has cancelled the party allegedly due to
'traffic disruption'.
Thursday, 2nd April:
Shut down the G20: Autonomous actions and blockades against and around the
G20 Summit, which will be held at the ExCeL centre in East London, from early
morning.
"We're going to bang on their hotel doors @ the Excel Centre, Canning Town,
to deliver our message of a world beyond capitalism."
I've blogged regularly, predicting that video connectivity will revolutionse banking. In particular, it changes the game because face-to-face comes back as a critical differentiator, but also because I will be able to see directly into the back office, the call centre, the heart of bank operations.
Right now, banks don't take it that seriously and talk about remote advisor pilot projects in key branches using video to branch services ... and then I see this ad on TV this week:
Blogging about Twitter in January and February identified it as a new, social networking focal point, due to the rapidly growing numbers of fans of their service.
Now there are many folks asking questions about Twitter, as it gains momentum.
For example, in the last few days, Paul Penrose at Finextra asks: "What’s the point Twitter?" whilst, in an article for Marketing Week, Andrew Harrison claims that Twitter is the emperor’s new clothes.
The thing is that, as demonstrated by the latter view, it is easy to pour scorn on things we don’t understand or know how to use effectively but Twitter is rapidly emerging as a major source of financial innovation and should not be ignored.
For example, were any of you the ones who thought that a mobile phone was for yuppies, a blackberry was a waste of time or wonder why anyone would want to text message?
How wrong you can be and, if you have those attitudes, you can easily miss the biggest wave of change we have ever seen in our times.
That wave of change is illustrated by every other person on the planet now having access to a mobile phone and millions of text messages being used for payments.
The thing is that many of us try to shun things we don't understand, don't like or are scared of.
But that's wrong.
If people are embracing a new technology - and millions have chirped over to tweet lately - then it warrants understanding.
In my case, I didn't get Twitter as I'm not a mobile junkie and that's who I thought it was designed for, but I've now discovered lots of net-based tools for Twitter - such as Tweetdeck and Monitter - and it's become my essential text message service for the internet.
And sure, you get the odd person (did I say, ‘odd’?) who posts stuff like “just eaten a sandwich”, or “been to the toilet” ... and they’re the ones who probably rang folks with their mobile in the 1990’s saying “I’m on the train” or “I can’t hear you, you’re breaking up”.
You see there are things that Twitter’s fantastic for and, for those who are interested in trying to keep up-to-speed with information overload, having your mates say “another bank bankruptcy” or “look at this article on social media” is really useful.
Equally, for catching customer dialogue and responding it can be terrific too, as Commonwealth Bank of Australia (CBA) found out this week when a customer posted an angry Twitter.
The client was going through a lengthy mortgage process with CBA and was fed up with the wait for final approval which might mean they’d lose their house purchase. So they twittered their frustrations and, within an hour, had a CBA customer service rep Twitter back, sort out their issue and deliver great customer satisfaction.
Now there’s service for you.
So I can’t handle these folks who rain on someone’s parade just because they don’t understand it.
Mr. Harrision's article, for example, claims Twitter has 1.2 million users worldwide and this was published in the week of 26th March 2009. The actual number is seven million and rising. He does qualify this to be 'active' users and, whether it's 1 or 7 million, it's enough to get attention.
After all, we probably dismissed PayPal when they had 1 million active users and today they have over 70 million. It doesn't take long.
Bottom-line: to diss this stuff sounds like someone saying television will wipe out cinema or the internet is just for pornography and gambling.
From a financial market viewpoint, the question is whether there is opportunity to monetize and grow business through such services.
Most social media is targeted at a conversation, which creates an advisory and support service. Talking with customers through social media makes sense, but where’s the PayPal for Facebook or Twitter?
Surprisingly, there is very little monetary activity in Facebook for example.
Maybe that’s because of excellent stand-alone social finance services, such as Mint, Wesabe, Social Picks and more, who have all made some inroads to integrating their capabilities with Facebook ... or maybe Facebook's insecurities scare away any financial activities.
Regardless, the only service to gain any traction so far appears to be Spare Change.
Spare Change has 134,000 active monthly users.
Compare that with Pay Me, which has only 77 active monthly users, and you can see that capitalising on this social stuff may be hard after all.
There a couple of other interesting financial applications on Facebook, such as:
Money, a new application from Michael Moriarty that allows friends to send each cash; Chipin, which is useful for rasiing cash for parties; and MyMoney from
Fiserv, which is designed for credit unions to play in this space;
but, overall, the majority of financial applications on Facebook are games.
This is why we could generally claim that Facebook is for socialising and not for secure payment processing. That does not preclude advice, which is what I keep pushing financial providers to consider through such sites, but monetary transactions? Maybe not.
These are all sites offering some form of payment or social finance service through Twitter, and I have to thank JJ Hornblass at Bank Innovation for these tips, as he has been keeping a pulse on this activity.
Wesabe and other social finance websites are also integrating with Twitter, so they think it’s important, as do some innovative banks:
Wachovia: first Twitter post, August 18th 2008;
2,484 followers;
274 updates Bank of America: first Twitter post, January 7th 2009;
1,598 followers;
647 updates ING Direct: first Twitter post, February 6th 2009; 748 followers; 84 updates ANZ: first Twittter post, March 18th 2009; 147 followers; 29 updates Wells Fargo: first Twitter post, March 26th 2009; 346 followers; 81 updates
So the real reason Twitter is important is ...
It’s an SMS across all platforms, mobile and internet
It fits with the Attention Deficit Disorder, or ADD Generation (which includes me)
It’s got lots of add-ons for great functionality and usuability
It works
It’s useful
It’s quick and easy
It’s good
What more could you want?
Oh, and if still not convinced, here's 10 reasons to Twitter from Dave Lee, a technology journalist for the BBC and co-editor of the BBC Internet Blog:
You’ll know about stuff before everyone else does.
You can use it to find out what people think… about anything.
You can find people who like what you do.
You can use it to get help.
It can transform your career.
You can campaign for good.
You can talk directly to people in power.
You can read stuff you’d never normally have found.
It's not my usual thing to report news from other blogs but this entry on Zero Hedge is just incredible.
A trader who wishes to remain anonymous has sent them a letter claiming that AIG Financial Products (AIG-FP) built up billions of dollars of exposure to Credit Defaul Swaps (CDS) over the years, as we know.
Seeing the writing on the wall for another bailout, AIG-FP spent January and February unwinding their complete portfolio positions for many of these contracts with their investment banks. This means that the close-out with the trading desks gave those banks "the most profitable deals" ever.
In other words, AIG-FP unleashed the flood gates to move bailout funds from the Treasury through their books and into Citi, JPM and Bank of America, if true.
No wonder those banks claim to have seen a good start to the year, as do Deutsche and others.
In fact, $50 billion of the $180 billion AIG bailout were direct payments to other banks, according to Blogging Stocks.
On the basis of these portfolio changes, it may well be more.
I said I’d been thinking about trust, and this is down to a couple of marketing surveys on the subject.
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 Earners 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.”
True.
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.
Biggest news of the year so far, apart from the collapse of the financial system, is that the Canadians have found a vast computer spy network, according to New York Times.
"In a report to be issued this weekend, the researchers said that the system was being controlled from computers based almost exclusively in China, but that they could not say conclusively that the Chinese government was involved."
Woooohhh ... scary!
Especially when the NYT headline reckons they've been looting data from over 100 countries.
"They'll call round or phone and say they are interested in taking one of
our rescue cows or pigs or goats or whatever, then within a minute or two
they'll ask if the animal they have chosen is safe to eat."
But after reading Bank CEOs express support for Obama's plans in Welt Online, I've been watching CNBC's excellent news coverage of the US Bank CEO's meeting with Barack Obama on Friday.
Here's what Jamie Dimon had to say about it:
And Ken Lewis:
They also caught Vikram Pandit briefly, before running a detailed analysis over the whole affair:
Revolution Magazine is one of my favourite monthly reads, as it's all about innovation online.
Each year their awards ceremony recognises the best of British internet marketing across a range of categories, from best use of search engines to email, from mobile to websites, from using virals to much more.
This year's Awards magazine landed on my doorstep today and I counted 48 nominations in 8 cross-industry categories.
8 winners, 9 highly commended companies and 31 shortlisted organisations.
All industries represented, and all selected for being good online.
Guess what?
Not one bank.
None of the cross-industry categories has a single bank recognised or even shortlisted.
There are four financial firms in the 48, although not one winner.
And the four financial entrants were:
More Th>n Business, shortlisted for best B2B campaign;
Tesco Personal Finance, shortlisted for best use of search;
Experian, shortlisted for best use of email; and
Swiftcover mobile, shortliested for best use of mobile.
There was also a specific category for best Financial Services use of the web.
That one was won by an insurance company, the Prudential, for their targeting of retirement planning through an interactive service.
A bank doesn't even win in their own industry!
Barclays were highly commended for their student campaign, and NatWest was shortlisted for their personal banking website.
Illustration: Barclays launched a movie competition on YouTube for students in October 2007. The competition was to make a video of a famous movie scene to win free access to the cinema for a year.
With the competition finished, I went and had a look at Barclays Student Group on YouTube, and it has 7 videos, five of which were made by Barclays and two are older videos that students entered.
I applaud Barclays for trying, but if that's the best in our industry ...
Compare these with the two 'leaders' of Nike who won the innovation award, and Orange who won the Grand Prix prize, and it's like comparing the Model T Ford with the latest Formula 1 Racing vehicles.
I know I'm having a rant but it's a poor show when banking, a business based upon bits and bytes, doesn't have a clue how to use bits and bytes to grow business and reach customers.
"You must be different. If you can’t actually be different, at least look
different. Differentiation — even if only achieved on a cosmetic and
superficial level — will at least get you noticed, and that’s the first
step on the way to building a strong brand."
Ten comments had been posted so far, and one is from Fernando Egido Egaña who says:
"At CAN (Caja Navarra, Spain, a truly innovative bank) we think that Implemented differentiation leads to more
different results: economic ones and more far-reaching ones. We have
developed a new business model called Civic Banking. Based on the
promotion of (new and extended) rights, we want to be leaders in civic
finances, so that CAN becomes a benchmark for social and financial
innovation. Take a look to our website http://www.cajanavarra.es/en where you will find more information about us."
So I took a look at their website, and Fernando is right:
The CAN site is a good, informative website. It's multilingual, interactive and instructive. And it has a strong message about why CAN is worth dealing with through a strong focus upon connection with community.
Like other Spanish Banks, such as BBVA, I see innovations in new media in parts of Europe.
Why not in the UK, which is one of the most wired countries in the EU?
I fly back to London last night and see this headline in the Evening Standard:
The full story is all about how anyone in a spivvy City suit will be lynched next week as the G20 arrives in London.
Add to this Professor Chris Knight's comments on the radio yesterday: "We are going to be hanging a lot of people like Fred the Shred from
lampposts on April Fool's Day and I can only say let's hope they are
just effigies. To be honest, if he
winds us up any more I'm afraid there will be real bankers hanging from
lampposts and let's hope that that doesn't actually have to happen."
In case you're wondering who is targeted and where, here's a nice little map courtesy of G20-meltdown (double-click picture to get a clearer view):
So yes, there will be trouble.
In fact, put "banker anger" into Google and you find there are over 180 headline news items and 1.5 million returns. People are pissed off with this industry.
Should the fat cats be running in terror and does anyone ask: how must Sir Fred feel? Does anyone care?
I mean less than two years ago, he’s sealed a deal to create one of the largest banks in the world, after taking over ABN AMRO in an acrimonious battle. He walks on water, is given accolade after accolade, and does not suffer fools.
Today, he’s a pariah. A parasitic leech. The scourge of society as a beacon of blame for this crisis that affects everyone.
This is why his home was targeted for attack from a group calling themselves: “Bank bosses are criminals”.
But what must it feel like to move from the cosseted world of multimillion pound bonuses, private aircraft trips, meeting the highest ranking members of business and society at Davos and through the Queen’s invitation ... to suddenly finding yourself hiding away, hoping that no-one recognises you and realising that, if they do, they might hang you from the nearest tree.
How must it feel to be master of the universe, lord and master of all you see, to running scared at night away from those who seek to do you harm.
And, no matter how much money or protection you receive, can you ever hold your head high and walk with pride ever again?
Probably not.
And it’s not just Sir Fred who has suffered this ignominious fall but Dick Fuld, Stan O’Neal, Chuck Prince, the AIG bonus crowd and many other City and Wall Street Investment Banker who fed at the trough of easy money and now are exposed to the ire of the taxpayer, public, politicians and more.
I cannot think of any equivalent of such a massive fall to such public outrage since the storming of the Bastille and Marie-Antoinette’s screams as she and her children were forced from the Palais of Versailles by a baying crowd.
The idea of a modern day guillotining of our banking leadership seems incomprehensible ... but if the media continue to stoke up the debate, such that the ardent viscious few make their point because they feel they have to, then my prediction of a riot will seem mild by comparison to what may happen.
Now I know this will fall on deaf ears, but it just might be time we bought some humanity back into banking as, no matter how right or wrong you believe Misters Goodwin, Fuld, Prince and O’Neal to be, they were:
(a) operating within the law,
(b) applauded for their good work,
(c) felt by investors, shareholders, employees and government to be doing absolutely the right thing for their institutions, and
(d) rewarded for doing so, quite rightly, within the remit of their obligations of employment.
What went wrong were all the parameters by which we measured and rewarded their success.
As a result, they are now paying the price and, for those of us who work in this industry, maybe we should be saying “tonight thank god it’s them instead of you”.
I spent a bit of time today thinking about trust in banking, a subject I’ve blogged about lots before.
One thing we know is that times have changed. How have they changed?
Well, have a look at this advert from 1991 for NatWest:
She’s a mortgage adviser for NatWest in 1991: “it’s my job to make sure they get the right mortgage, which means one they can afford” ... not a five-times salary self-cert then?
The advert finishes with the line that NatWest has mortgage advisors in every high street branch.
Now, move on fifteen years, and here is a more recent NatWest advert:
This is taking the mickey out of naff sales folks from another bank, and saying how good NatWest’s mortgage offer is. The focus moving away from finding the right mortgage and buying a house, to getting people to move mortgages and switch providers.
Now we get to NatWest’s UK adverts today:
The focus is to say: "we’re being really helpful because every penny counts".
It’s all about being open and honest and is part of NatWest’s Money Sense programme.
NatWest stress that this a programme designed for customers, with 1,000 advisors in branches who are there to give good advice, not to sell.
Sounds like a bit of a return to 1991, the last time Britain went through a crisis of finance and housing, with many people facing negative equity.
In fact, the message is the same: “we have advisors in every branch who can give you good, honest advice”.
It sounds great in principle but, in practice, something has fundamentally changed.
The confidence has gone. The trust is blemished. The bank’s brand is not the same.
Wrapped up in the folds of the Royal Bank of Scotland and Sir Fred Goodwin daily headlines, the idea of giving good money sense advice is a bit laughable, especially when national newspapers such as the Times have cartoon half-pages such as this:
This is not to say that NatWest shouldn't advertise but, as I will discuss later, they should stop spending on advertising in traditional media only and start leveraging new media.
HBOS has changed from its old ads declaring the wondrous world of cash machines:
To the frivolous Howard:
To the idea that you now have to reward customers to stay with you:
Does all this work?
Not really, as customers are more aware of their finances than ever and do not trust institutions that have bad headlines, bad rates or bad vibes.
That’s why folks are churning their money around, looking as far as they can for a flight to safety.
For example, I’ve already said a few times that some of the less flashy banks are doing quite well, and here’s what you see these days in the windows of mutual institutions such as the Nationwide Building Society:
For those overseas, Nationwide is not some itsy-bitsy credit union but the world’s largest building society, with 15 million members and assets of around £200 billion ($290 billion).
Nationwide do advertise, but their focus is much more around being lovable, nice and working in the customer's interests because you are a member of the Nationwide, not a customer.
And all of this is focused around branch-based banking debates.
In branches, the idea of money sense and rewards programs for staying with the bank probably seem great in the marketing corridors of head offices but, in the high road, far more convincing is the human experience of staff you trust and like, and brands you see as being trusted and liked.
Result?
Nationwide’ s new account openings have risen massively in the last year. For example, last December the Society released this press release: "Savers put their trust in Nationwide", with this quote from Nationwide’s savings director, Matthew Carter:
“Following the collapse of the Icelandic banks, Bradford and Bingley and Northern Rock and the proposed takeover of HBOS by Lloyds TSB, we have seen consumers move their savings to Nationwide as they look for a safe home for their savings. In the first half of this financial year we took £2.6 billion in net receipts giving us a 34% market share. Indeed, the entire building society sector has seen an increase in deposits being made as consumers reacquaint themselves with the benefits of being with a mutual.”
Banks with branches fighting for trust and confidence could learn something from the consumer championing, member-based interest approaches of the Building Society sector as a whole, not just the Nationwide.
Meanwhile, the Building Society sector festers as they are paying the price of the banks’ frivolous lending policies through the Financial Services Compensation Scheme (FSCS). But that's an aside.
The real point is that those who want to be able to touch their financier’s bricks and mortar may well find that the prudent and quiet thrifts gain a ‘trusted’ position over those who feature in the headlines every day as being the creators of this crisis.
So what should the banks with damaged brands do?
Stop advertising in mainstream media.
Funnily enough, Nielsen came out with some analysis of this area this week, and the headline was: "Banks should advertise more to regain consumer confidence".
The Financial Brand picks through the meat of this news though and, like me, conclude that banks should stop advertising on TV if their brand is damaged.
So what should they do?
Focus upon leveraging remote relationships through new media.
The fact is that UK banks are mainly fighting a branch-based battle and yet totally ignoring online and remote channels. UK banks' ideas of marketing online are, to be honest, pathetic.
Oh, a banner ad here, a link placement there.
Great.
Doesn't work though.
You look at the NatWest Money Sense website and the focus is advisory, but its still very customer meeting advisor in branch oriented. Or that's how it looks to me.
Where are NatWest’s online or viral campaigns? Where's their blog?
Where's HBOS, Lloyds, Barclays or Nationwide blogs for that matter?
They don't exist or, if they do, then they're very well hidden as I can't find them and I'm looking.
Google these company names and the word "blog", and nothing official comes back.
The fact is that the only UK banks I’ve noticed doing anything with Facebook, MySpace, Twitter or new media is the Co-operative Bank, who created a few nice green pages on MySpace two years ago (note this attempt to network has now been deleted); Barclaycard, whose advert for contactless gained great viral viewing; and Lloyds TSB, whose irritating theme tune made the charts.
Mind you, rather than their annoying advert tune, you are far more likely to find a YouTube customer-generated advert such as “I fought the Lloyds and the Lloyds lost” instead of a bank generated ad, when looking for some form of online presence.
So here’s the rub.
Banks today are stuck in branches fighting for customer confidence through traditional marketing media where they position themselves as trusted.
Meanwhile, customers are searching online for advice and support through social networks and communities of friends, where the banks don’t even exist.
UK banks are doing nothing to reach out to customers online and gain their confidence and trust and yet, as I've said so often, this is the best place to build it.
After all, you can't hide anything anymore (this link is worth reading as it puts context to this post, and makes clear how online transparency changes the dynamics of our industry).
In the UK, there must be something wrong here … and there is.
The fact is that banks should be creating transparency and communicating with customers through mobile and online channels in an honest and open exchange. This is a huge opportunity, not a threat.
I’ve blogged about this so much before, and would cite this series on the subject rather than writing it all again:
The fact is that the UK banks have lost the plot when it comes to marketing and customer relationships.
Please get it back and start to focus upon how to reach out to customers through social media and social networking, as well as other remote channels, to rebuild customer confidence.
Meanwhile, if you want to know how to spot a leading bank in the new world of remote finance, look at the ones who get onto Twitter first:
Wachovia First Twitter post, August 18th 2008. 2,403 followers 272 updates
Bank of America 25 million internet banking customers, 2 million mobile banking customers First Twitter post, January 7th 2009. 1,578 followers 635 updates
ING Direct First Twitter post, February 6th 2009. 670 followers 79 updates
Wells Fargo First Twitter post, yesterday. 193 followers 43 updates
A few indications of more crisis impacts with the Norwegian pension fund losing $90 billion last year, the world's oldest bank Monte Paschi de Sienna getting into trouble, and IBM and Google laying off staff (Google, yes Google!):
Zopa announced results this week that showed lending had risen 140 percent year on year.
In short, Zopa offers a lean and mean, razor thin margin system for loans. As an lender, I enter Zopa and place an amount – let’s say
$10,000 – in the system. Zopa then spreads that loan
across a range of borrowers who I select as being appropriate for my money.
The beauty of the system is two-fold.
First, it offers great investment returns and borrowing rates, because it works on razor thin margins. The Zopa rates today offer up to 12% on investments per annum if you are willing to take on board higher risk borrowers.
Equally, it offers loans as low as 8% for lower risk borrowers. Compare that to the less than 4% on savings and typical start rates of 12% on laons and you can see why Zopa becomes attractive.
As mentioned, it also manages the risk of lending on your behalf.
This means that it spreads the risks of your loan across many borrowers, and uses credit rating agencies like Experian and Equifax to work out who is a higher risk or lower risk borrower.
The second part is the beauty of the system though. If I am a borrower, I can see who I’m borrowing from. Similarly, if I am a lender, I can see who I’m lending to. That’s why it’s called social lending.
The fact that I’m in hock to someone I now know and can see makes the system a dependable ecosystem, with less than 2% of loans in default, which is far better than traditional systems.
So, you have something that works, which is why Zopa has been copied worldwide with Smava, Boober and others in Europe; Prosper, Kiva and the Lending Club in the USA; ppdai in China; and many more.
Are they making money?
Not really.
Most of these fledglings are just learning to fly, but Zopa did announce yesterday that business was up 140% year-on-year. In practice, that still means only £35 million of lending however which, for a business that’s as many months old working hand-to-mouth is not a lot.
In fact it barely covers expenses.
But hand to mouth can soon change into a feast.
A decade ago we all thought that PayPal was irrelevant, and yet today PayPal has over 70 million active users in over 200 countries processing billions of dollars of transactions.
Is that irrelevant?
No.
Equally, Facebook went from no users to 150 million in the same time as Zopa has been around.
Twitter has gone from no users to 10 million in as many months.
This again illustrates the new economics of the world and of finance.
A few bright minds with a server can launch a brilliant business overnight for virtually no cost.
So don’t dismiss Zopa too easily as today’s minnow may be tomorrow’s gorilla.
This is particularly true when the banking system is broken, turning away prime and subprime and offering pensioners and savers zero returns on their investments.
In fact, if you consider Zopa's growth of 140 percent in the last year, is this because their model finally works or something else?
I think it's the something else.
It’s that their model has finally been awoken thanks to the banking system being broken and loans being harder to get than Viagra in a monastery.
In other words, the fact that banks are not lending loosely, as they were, or offering decent savings rates, as they did, is pushing customers straight into the hands of the social lending platforms.
As a result, watch out for social lending ... and also watch out for social saving, social insurance, social mortgages and more too.
Flying around Europe today gives you plenty of time to read the papers back to front, which kind of showed that the banking market is a bit nuts right now, as if we didn't know.
For example, I normally read the Financial Times online, but scouring through its pages in tactile form is more satisfying in some ways, as you catch the bits your eye would otherwise miss.
I missed David Cameron’s announcement that the Bank of England would get its old powers back, which would allow it to step in and take control of any UK bank if it suspected weakness or foul deeds. In other words, the Bank would be the core powerbroker in UK Finance, not the Financial Services Authority, should the Conservatives win the next election.
I would have missed the footnote in the FT Notebook that comments on one of my favourite Web 2.0 services, Zopa – an eBay for loans – which has seen 140% increase in lending year on year with £35 million ($50 million) in loans flowing through the upstart thus far. Sure, that’s since launch in April 2005 but there’s definitely a movement starting here.
I would have missed Nicholas Stern’s call for an unbiased global risk assessor. Unbiased means one that has no lending operation or policy themselves, which immediately demands a risk assessor that is not part of the financial system.
Radical.
But, in particular, I would have missed this critical article about a return to 1950s style savings vehicles and the end of the equities era. There are some key statements in the article that all of us would find useful to consider:
"The crash has forced professional investors and academics to question
the theoretical underpinnings of modern finance. The most basic
assumptions of the investment industry, and the products they offer to
the public, must be reconsidered from scratch. Indeed, the very reason
for the industry to exist - a belief that experts make the smartest
decisions on where people's money will do best - is up for scrutiny as
a result."
Lots of stats and facts flow through the article and it convinced me that equities is not all it's cracked up to be.
Some light relief needed and so it was then on to the Daily Mail.
This rag had some laudable stuff, such as the letter from Lloyds TSB encouraging borrowers to take more money out on their credit cards ... in order to gamble.
Not the best advice, but then Lloyds did do the same in taking over HBOS so at least they practice what they preach.
There was also the column about Charles Darwin’s accounts from his student days of 1828 to 1831, which have just been made public, and show that he spent the equivalent of £250 in today’s money on shoes each year.
Stiletto’s or flats, Mr. Darwin?
Equally, there is good news in the Madoff hills at last, as one chap used Bernie’s prison number to gamble on the lottery and won $1500 for a $3 ticket. Brilliant, although I wouldn’t suggest doing that for everyone as you might end up with some complex sales scheme where that first $1500 is used to pay the next wave of $3 investors who think they have then won and, before you know it, you have a massive scheme in operation ... now, what’s that called again? (ed: Ponzi)
Finally, jumping off the flight and sitting in the taxi, I start flicking through emails and have time to checkout the New York Times updates, which has this letter from an AIG executive:
"Dear A.I.G., I Quit!
"The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.
"DEAR Mr. Liddy,
"It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:
"I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
"After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials.
"In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself."
It goes on and on, and on and on, and on.
Almost like an essay in fact.
Not bad for a brief leaving note to Mr. Liddy …
… or was it an email to the NYTimes editorial desk I wonder?
This is the sixth post in a series about why banking will be free (you can find Parts One,Two,Three, Four and Five if you want to).
In this area let's get into collaborative technologies and, more specifically, collaborative competition.
It seems like an oxymoron to talk about collaborative competition and yet for years we talked about coopetition, which is almost the same thing.
Cooperate or collaborate to compete implies both cartels and price fixing but, in today’s reality, has nothing to do with this, or should not. Rather it’s the idea of collaborating to improve business models through robust and reliable open source architectures, whilst identifying the components internally that differentiate within these collaborative models for competitive purposes.
Let’s illustrate with an example that’s top of the list today: risk.
When Lehmans collapsed last September, it happened to be the same day that the SIBOS conference started in Vienna.
SIBOS had various themes and finished on the Thursday with a great presentation by Don Tapscott, the author of the book Wikinomics.
Don talked about his whole approach to the social network stuff and the new age of the internet youth of digital natives, and illustrated the power of such thinking with a great story about writing his latest book.
Apparently he finished the book at Christmas time and asked his son what he thought of it. His son said that it didn’t matter what he thought about it but what the collective view was, and offered to create a Facebook group to critique the book.
“Sure”, says Dad and son dutifully created the group at lunchtime on Christmas Eve.
By the end of day, 300 teenagers amongst his son’s peer group were actively reading, digesting, dissecting and critiquing the book such that, by Christmas Day, it had pretty much been re-written and was far better for it.
That’s the power of the collective, the collaborative cohesion of the whole rather than the fragmented view of the one.
Now I know I’m starting to sound like someone writing about the Borg in Star Trek, and maybe I am, but I took on board Don’s words, particularly his appeal at the end of his presentation.
He made this appeal at SIBOS and then again at BAI’s Retail Delivery two months later, both of which I was attended, and here’s what he said:
“The risks in the financial system must be better managed in the future so why don’t we create an open source group for risk managers? A Facebook for Risk Professionals if you like. This group could then share and discuss risks in the financial systems and have contributions from all. Effectively, risk management becomes an open source arena so that everyone can build a more robust, reliable and resilient future.”
Since he proposed such a system, what’s happened?
Duh ... not much. Or not much in the risk management space that I can identify anyway.
It seems we’re all waiting for the governors to come up with their plans before implementing ours, but isn’t that wrong?
Which brings it back to the theme of collaborative competition, which is another dimension of the new economics of banking.
Collaborative competition says that for things that are commodity or things that are industry wide issues and structures we should just widgetise and gadgetise, and make them plug and play processing capability and knowledge that is available to all.
These pieces add little value, are commoditised, should be free or near free, and paid for by ... advertising or not at all.
That’s the nature of collaboration. For example, through Google ads we can give away lots of knowledge and processing power, so why not have Google ads pay for banks' commodity processes and transactions.
Then, as a bank, you focus upon the bits where you differentiate. These are all the customer-centric parts of engagement, acquisition, delivery and fulfilment.
The result is that we could outsource compliance and plug AML/KYC into our client account opening processes by dropping in a cheap widget of functionality from a third party.
We could drop a gadget into our system for payments processing too - just use a white labelled processor - and even find a wiki for a bit of credit risk management based upon an open source structure.
Then we provide a little bit of service improvement by offering SmartyPig as our savings vehicle for kids, for example, whilst focusing upon our own deployment of service around high-end wealth management for the kids’ mums and dads.
The only bit of our banking operation we’ve developed and deployed in this model is wealth management servicing.
The rest – all the processing, compliance, risk and ancillary products – we’ve just dropped in as widgets of functionality into our banking structure. And those bits are all the bits of collaborative competition therefore.
We may compete with the providers of our widgets, but we also collaborate with them to use their processing where it makes sense or where it makes our own infrastructures more robust and reliable.
The result is that banking starts to look more and more like the car industry.
A quarter of a century ago, car manufacturers prided themselves on having the best manufacturing.
They produced all of the car's components and the manufacturer with the best components offered the most expensive cars.
Today, nearly all cars are based upon standardised and commoditised manufacturing of the pieces.
The manufacturer no longer manufactures, but just assembles the pieces into the whole and adds their own unique recipe of chassis and engine to differentiate.
BMW in 1980 manufactured 1,000’s of unique components for their cars; today they just assemble them. But it’s still BMW and the final product is still an aspirational brand that shows that they may use commodity components which VW, Ford and others use, but they assemble them into a brilliant car that swishes, swooshes and whizzes far more sleekly and smoothly than many others.
That’s how banks will compete.
All the components they just get off the assembly line of banking functionality, but the banks that assemble them to address a specific target audience in the most appropriate way will win that audiences business.
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