The Bankwatch

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Colin Henderson
The Bankwatch Consulting Inc.
The Bankwatch

Not often we see a plausible alternative in the payments space from banks, but here is one in the works.

German and French banks push ahead with new debit card scheme | finextra

Bundesbank board member Hans Georg Fabritius told the conference that a Visa and MasterCard duopoly is “an unsatisfying vision” for political and economic reasons. However, he warned that while the French and German project, called Monnet, is “promising” it is only a concept and he would want other countries to join in.

I found this piece on the upcoming Google OS useful for the Google quote.  There is so much debate on this new OS and most of it misses the point.  Its not about Linux versus Windows as many suggest – its about making computers become a simple tool.  This is something that unfortunately Microsft have failed to do.  It has been 14 years since the advent of Windows 95, and almost 30 years since the advent of the PC.  It has become accepted that you either have to be a compuer expert, or retain a support group for computers.  Why?

i think the attraction of a computer that just works will be strong for many people and strong enough to switch.

Can Google break Windows? The Times

“We hear a lot from our users and their message is clear — computers need to get better,” Sundar Pichai, vice-president of product management, wrote on Google’s blog last week.

“People want to get to their e-mail instantly, without wasting time waiting for their computers to boot and browsers to start up. They want their computers to always run as fast as when they first bought them.

“They want their data to be accessible to them wherever they are and not have to worry about losing their computer or forgetting to back up files. Even more importantly, they don’t want to spend hours configuring their computers to work with every new piece of hardware, or have to worry about constant software updates.”

It appears bank boards will be required to go beyond figure head status under upcoming regulation changes in UK.

Sir David Walker to shake up bank boards

The City grandee tasked with reforming corporate governance standards at Britain’s banks will this week set out plans for directors to receive formal training and annual re-election to the boards of financial institutions.

They will also address boardroom composition by stressing that boards need to have a proper balance of experience and understanding of a company’s risk strategy, and suggest that risk committees should be established alongside audit committees to aid risk management processes.

Sir David will also make a recommendation – already being dubbed “the Sir Fred Goodwin rule” by some City observers – that bank boards will need to demonstrate that they are capable of challenging an autocratic chief executive who they believe may be endangering the health of a systemically-important institution.

Here is a striking example of the power of collaborative ‘wisdom of crowds’ approach to information preparation, versus traditional top down beaurocratic approach.

I was reading the Obama speech in Ghana, and his references to the current and previous governments, including Jerry Rawlings which rang a history bell for me, so thought I would read up.  First off I checked what used to be my old favourite the CIA factbook, and it has not been updated since sometime before Dec 2008 [note highlight].

On the other hand a quick visit to Wikipedia had more than enough detail being up to date, including information about Obamas trip dd 10th July in the footnotes.  I copied one section from the history area below, and highlighted the notes about the recent election in 2009, something the CIA has not figured out yet apparently.

The efficiency and effectivness of the Wikipedia approach compared to the old style management and approval processes is stark.  [Incidentally, surely the CIA beaurocracy would at least update their site for the countries that their boss is visting?]

In fairness to the CIA it is probably impossible to maintain an up to date encyclopedia type site such as the FactBook within the constraints and context of their mandate.  To open the CIA up to a Wikipedia approach would not make any sense.  I only use this example to display that collaborative and engagement of the broader network wins every time for information dissemination.

CIA Factbook – Ghana

Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. Ghana endured a long series of coups before Lt. Jerry RAWLINGS took power in 1981 and banned political parties. After approving a new constitution and restoring multiparty politics in 1992, RAWLINGS won presidential elections in 1992 and 1996, but was constitutionally prevented from running for a third term in 2000. John KUFUOR succeeded him and was reelected in 2004. Kufuor is constitutionally barred from running for a third term in upcoming Presidential elections, which are scheduled for December 2008.

Wikipedia – Ghana

Rawlings soon negotiated a structural adjustment plan with the International Monetary Fund and changed many old radical economic policies; the economy began to recover. A new constitution restoring multi-party politics was promulgated in 1992, and Rawlings was elected as president then and again in 1996 to serve a second term. The Constitution of 1992 prohibited him from running for a third term, so his party, the National Democratic Congress, chose his Vice President, John Atta Mills, to run against the opposition parties. Winning the 2000 elections, John Kufuor of the New Patriotic Party was sworn into office as President in January 2001, and beat Mills again in 2004; thus, also serving two terms as President. In 2009, John Atta Mills took office as president with a difference of about 40,000 votes (0.46%) ^[23] between his party, the National Democratic Congress, and the New Patriotic Party, marking the second time that power had been transferred from one legitimately elected leader to another, and securing Ghana’s status as a stable democracy.^[24]

This is a variation on the theme I cover periodically called Vendor Relationship Management (VRM).

The variation here is that the Vendor must place the consumers product up for bif from competition when they are considering changing the terms, such as interest rates.  The consumer would then have the choice of accepting the change, or accepting one of bidders. (HT Payments News)

A Market Test for Credit Cards

We have an alternative solution, employing a market test of a proposed change. At the time when the lender proposes a unilateral change, it would be required to put the existing account balance up for auction on a LendingTree-like service that would allow other credit card issuers to bid for a chance to issue a new card and take over the existing balance.

Borrowers wouldn’t be forced to switch to the auction winner. They’d just be given the option. When an existing credit card issuer proposes a rate increase, it would be required to pass on the terms of the winning bid and a comparison with its own terms, and the borrower would decide whether he wanted to make the switch.

This breaking news from NY Times just a few minutes ago.  Long rumoured but if this is true then its welcomed by this linux user.

It does not show on techmeme or any tech blogs yet. Things could be getting interesting.

Google Plans to Introduce a PC Operating System

In a direct challenge to Microsoft, Google is expected to
announce on Wednesday that it is developing an operating
system for a personal computer based on its Chrome browser,
according to two people briefed on Google’s plans.

The move would sharpen the already intense competition
between Google and Microsoft, whose Windows operating system
controls the basic functions of the vast majority of personal
computers.

Update:  more here from siliconvalley.com

And the official word here from Google.

Speed, simplicity and security are the key aspects of Google Chrome OS. We’re designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds. The user interface is minimal to stay out of your way, and most of the user experience takes place on the web. And as we did for the Google Chrome browser, we are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don’t have to deal with viruses, malware and security updates. It should just work.

Finally we are seeing hints of what we all know is inevitable.  It has taken a long time and probably this latest economic crisis, but the long view on branches suggests a damatic shift with less of them.

Slow but inexorable move to online banking

Yet slowly but surely, the internet is starting to make its mark on the sector as more people move their banking online. Lloyds is to shut up to 400 branches as part of its integration of HBOS. Its rivals are likely to follow suit.

A decade from now, the local branch could well be an endangered species as “cyber-banking” grows ever more popular and more branches close.

Fascinating insght into US antitrust thinking that is quite mind boggling.  They actually believe that the antitrust case against Microsoft promoted Google Chrome and Firefox!  This is a great example of reverse analysis thinking where the result rationalises the approach.

Microsoft Internet Explorer became huge because it was better and faster than Netscape.  That was 1996.  Time passes and IE became known as slow.  Firefox emerged, followed by Chrome  I see no connection to antitrust stuff here.

My Interview With Antitrust Expert Gary Reback: Google’s Looming Antitrust Issues | TechCrunch

One interesting insight from the conversation: I ask Reback if he thinks we’d be in a better world if Microsoft had in fact been broken up into two or more companies as was originally ordered. His response – “no.” The investigation and lawsuits themselves, he said, did enough to force Microsoft’s hand and allow browsers like Firefox, Chrome and others to blossom.