The Bankwatch

Celent and others continue to tout mobile banking as the next big thing. Mobile is certainly big but its not clear that Banks have figured out the mobile banking model. It cannot be simply sticking online banking into a phone.

Finextra: M-banking set to grow in Western Europe - Celent

New research from Celent predicts that adoption of mobile banking is set to increase rapidly in the major markets in Western Europe over the next two years as banks look to take advantage of improvements in technology to provide new services.

The study covered five Western European countries - Germany, France, Italy, Spain and the UK - and found that an average of six per cent of people over the age of 16 currently use m-banking services. Germany was found to have the lowest number of users in the study with just four per cent, while in Spain nine per cent of adults are signed up to services.

• Twitter / Robert Scoble: @dtan just reported an eart…

  Scoble | First report this morning in North America on the China earthquake.

  tags: scoble, dtan

  • @dtan just reported an earthquake in Beijing. Wonder how large it is? Off to check out USGS site.

• FT.com / Companies / Financial services - Citigroup considers $400bn asset sale

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  • Citigroup will on Friday identify as much as $400bn in non-core assets that could be sold as part of plans to reduce costs and restore profit growth to double-digit rates, according to people close to the situation.

• FT.com / World - Inflation threat to world economy, IMF says

  tags: ft.com, clblog

  • Global inflation has re-emerged as a major threat to the world economy, the International Monetary Fund said on Thursday in a stark warning that marked an abrupt change of tone from its emphasis on the risks to growth.

I am surprised to read this on a marketing blog in 2008. Conversations happen everywhere. To my simple mind the issue is not that the stock price event occurred … the issue is how the branch dealt with it. If there is a TV in the branch, the staff need to be aware, the PR dept need to be aware. Staff can chat with the customers about it …. this is the new world. Not the sanitised version outlined in the 2nd paragraph quoted below [strikethrough emphasis mine ]

The Story » Blog Archive » Know how to use your bank technology

During the summarization of that day’s stock market activities, a newsflash came up in gigantic letters stating that my bank’s stock prices had dropped significantly. To say the least, that’s probably not what the bank wants to broadcast in its own branches.

What this little blunder said to me was that the bank marketing team didn’t fully think through their purchase of these LCD monitors. They snapped up the new technology before they knew what to do with it, or how it was going to enhance their brand.

There is a fascinating, though apparently esoteric debate going on in Banking circles. It is worth understanding the high level points though because it actually matters to bank employees, vendors, and bank customers.

Libor (London Interbank Offerred Rate) is set daily, and represents the rate that banks will lend money to each other on the money market. It is one means of managing liquidity for Banks. Lately this rate has been much higher than expected and than historic rates. The going assumption was that Banks were afraid to lend to each other since the credit crisis due to inadequate risk identification relative to ABCP based on sub prime US mortgages.

FT.com / Companies / Financial services - Battle-scarred bankers lapse into a hoarding habit

Some observers blame this pattern on shortcomings in the way that Libor itself is calculated. However, behind the scenes, some investors are also starting to argue that it could be time to rethink what the Libor rate is telling the market.

Until now, bank analysts have assumed that the high cost of interbank
borrowing stemmed from a sense of mutual distrust. This would suggest
that, on two occasions in the past eight months, banks have been so
nervous of counterparty risk - the danger of one’s trading partners
failing to honour their financial commitments - that they did not wish
to extend funds to each other

The level of risk identification is getting closer to resolution relative to sub prime, yet libor remains steadfastly high. This is bringing anaysts to rethink the situation, and rather than replace libor as some suggest but observe and understand what the higher rates are telling us.

… … some observers are now thinking that the interbank, or money, market
has entered a new, third, phase, one that has less to do with
counterparty risk and everything to do with the risk that any
institution could face a run on its deposits or other short-term
funding.

Thus, the problem is not that banks are paranoid about
each other, or so the argument goes; instead, banks are paranoid about
their own funding state - not least because they have seen what a lack of liquidity did to Bear Stearns.

In simple terms … Banks are concerned about their own cash holding to protect against a good old fashioned run on the Bank. By holding on to cash, they are creating a scarcity in the market, hence higher libor.

An articulate summary of this thinking from head of the ECB, noting that one instrument validates the reduction of risk, yet libor remains high.

Jean-Claude Trichet, president of the European Central Bank, …. “That
would explain the simultaneous diminishing of credit risk as seen in
the [credit derivatives] market and the [elevated] spreads between
three-month money market and overnight swaps.”

• Prosper Kicks Off Nationwide Lending with New Slogan and TV/Radio Advertising (NetBanker)

  Prosper introduces their new tag line

  tags: clblog, prosper

  • “Let’s bank on each other,”

• The Facebook Effect - Harvard Business Online’s Umair Haque

  tags: umair haque, the facebook effect

  • Here’s the simple version. Facebook wanted to rule the world; to dominate it; to be the next Microsoft. That’s not revolution - it’s just strategic fascism.

This is an impressive about face from Bank of America, and I commend them. It was only one year ago at the Forrester Research Financial Forum in NY, that I heard senior BofA people state they would listen to online criticism, but not participate because of the risks. A small toe in the water, but its a start.

Bucking tradition, firms increasingly let customers vent on corporate sites - The Boston Globe

“We felt that in the offline world customers communicate with other customers about our products and services, so why not allow them to do it in the online world?” said Tara Burke, a spokeswoman for the bank, which has 303 branches in Massachusetts, including 202 in Greater Boston. “We wanted other customers to learn from each other the good and the bad of our products and services.”

Interesting goings on in Tokyo this week. I know people in Roppongi, and the traffic is completely snarled by the effect of this visit which is for several days it turns out. Locally it is out of the ordinary.

Its a dramatic shift from the days of Mr Koizumi, and has consequences for international trade and banking given the combined size of these two economies relative to US or Eurozone.

FT.com / Asia-Pacific / China - Japan and China cement relations

The leaders of Japan and China agreed on Wednesday on measures, including annual summit meetings and stepped-up civil and military exchanges, to cement a recent improvement of relations after talks in Tokyo that Japanese officials described as “extremely productive and meaningful”.

Hu Jintao, China’s president, the first head of state to visit Japan in a decade and only the second ever, said: “Prime Minister (Yasuo) Fukuda and I believe that Sino-Japanese relations are at a new historic starting point.”

Payments News makes a point that is becoming consequential in strategic terms for Banks. Mobile Payments = cheap remittances for the unbanked. Yet the ‘banked’ continue to pay high fees … hmmmm

Payments News: A Look at Orange Money - May 07, 2008

As we’ve seen previously with M-PESA in Kenya, the mobile operators are focusing much of their mobile payments initiatives on markets where a large majority of the population is unbanked.

• Here Comes the P2P Economy - Harvard Business Online’s Conversation Starter

  Just located the entire HBR article online with no subscription required

  tags: harvard business review, clblog, HBR, p2p

  • It is only a matter of time before these digital systems close the arbitrage enjoyed by large banks, which lend at up to 15% interest but pay only about 5% on capital. Why do business with a bank when your network’s lending and savings interest rates are both 7%? To grasp the power of such a system, imagine your local credit union with the membership and social networking capabilities of MySpace.