The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Uncategorized’ Category

Internet of things is being trapped in paradigm of wearables

Off topic for this blog, at least for now is the concept of Internet of Things (IoT). I remain convinced there will be a convergence between IoT and financial services that we just haven’t seen yet.

Meantime wearables based on health matters are the next big shiny thing that fan folks are focussed on.

WEARABLE APPS: Inside The Race To Create A New App Ecosystem

On wrist-worn devices, we believe the health and fitness category will produce the killer apps. The whole field of personal fitness and health apps will boom as the hardware matures and adds more advanced sensors. Dieting apps, workout apps, and medical apps will try out different approaches — e.g., gamification, social media integration, and data visualization — to see what sticks.

Written by Colin Henderson

May 23, 2014 at 00:35

Posted in Uncategorized

eBay – “One of the biggest data breaches in the history of the internet”

When eBay became aware of the data breach that provided hackers access to the user information of 128 million users it heralded one of the largest data breaches to date. This gave the hackers access to the names, addresses, telephone numbers, email addresses and passwords of its 128m active users.

Lessons from the eBay cyber attack |

The company said it had only become aware of the intrusion two weeks ago. As a result, it is now asking its active users to reset their passwords – aiming to rectify what is probably one of the biggest data breaches in the history of the internet.

The eBay database that hackers accessed also contained no financial information on customers, such as credit card numbers, the company said in a statement.

The breach seems to have begun with hackers gaining access to employee credentials. It is not yet clear how that happened. Was it a hack, an inside job, social engineering or what. eBays own blog post gives us no more information on how the employee credentials were obtained.

What this really speaks to is that the concept of one person having the keys to the kingdom and under a simple username password combination is an out of date concept. Furthermore there needs to be logging and constant vigiligence of access to secure systems all the time.

This from the comments on Krebsonsecurity and if you read past the youthful wording it shows the weak methodologies behind eBays security even at the password level.

So, I changed my ebay acct pwd. Haven’t used it in 6+ months. Contact info is incorrect (old ph# from a job long gone). CC# expired and paypal not even linked.

Ebay uses a pathetic pwd algorithm check. Fails you if you use spaces. I had non-repeat, alpha-numeric, symbol and cases at 30 minimum characters and it said it was weak! It was generated by…1Password (agilebits) and *still* said weak or had white spaces. WTF? …

Written by Colin Henderson

May 22, 2014 at 22:45

Posted in Uncategorized

Nationwide to the future!! – Digital brings cups of tea to branch customers :-/

Really? I mean seriously …. really????

Tech breathes life into branches – Nationwide chief Beale

“A lot of people say that the impact of digital is going to remove branches from the high street. We’re forming an alternative view,” says Beale.

Nationwide says that 94% of customers who have used the video links think that the service is a good or excellent replacement for face-to-face meetings. Beale tells Finextra that the building society has made moves to make the system as personal as possible. For example, advisors ask customers if they want a cup of tea and then contact the in-branch team to get one delivered.

Written by Colin Henderson

May 19, 2014 at 23:25

Posted in Uncategorized

Retail experience – Nespresso does an Apple

Today I was under instructions to purchase a new coffee machine. My dear wife was away for a few days and comes back this weekend. She noted there is a new Nespresso store on Yorkville so, innocently, off I went.

Not sure what I was expecting but probably something close to a small Starbucks. Was I surprised.

This location used to be a movie theatre and first off is cavernous. At the door I was greeted by a young lady who asked if I was going to the boutique or the bar and could she book me a seat. Bear in mind I came to buy a coffee maker. Wasn’t sure how to answer that one.


Half an hour and an excellent cup of coffee later, I was fully up to date on latest model, which coffee to buy and headed off fully impressed. What was that?

I felt I’d just been Apple’d and wasn’t expecting that:





  • product selection which I’d understood from their website was simple clear and not complicated by options and that was the case
  • only option is colour (sound familiar)
  • all very high tech. No reference to bar codes. The machine knows by the coffee you insert whether it’s express, cappuccino, regular etc. Place coffee in and press go
  • the well dressed people working there never tried to sell me. Just asked questions and offered me coffee etc.
  • before leaving I sat at the bar to finish off my coffee and looked around. The Yorkvilletti were out in force and turns out they do lunch here too
  • and all this is taking place in an environment that is befitting Yorkville and no doubt 5th Avenue and Ginza.

This was all about experience. The experience is designed to be compelling, supported by technology that is beautiful and just works. It’s a great combination of product, experience and function. And at the end of the day you get a decent coffee maker that’s on a similar price range to an upper end Cuisinart or the likes.

This is experience marketing and a company that has definitely learned from the Apple playbook.


Relevance to Bankwatch:

I hate to pick on my old alma mater bank that just redesigned in First Canadian Place. They’ve moved the desks around and have given the staff iPads. I know it’s not finished yet and eventually from the pictures will have large screen tv’s everywhere. But I’m not getting a sense of ‘experience’ banking. I’m getting a sense of trying to be cool. Carrying an iPad is not cool. Accessing, creating, and reading faster and more efficiently than anyone else, with no fuss from anywhere is cool, just as I am able to write this post on my iPhone.

I hear the argument that branches remain essential, just less of them. Some suggest a reduction from 1 per 10/20k population to 1 per 250k population.

I still ask why and what? We know we shouldn’t require transaction type branches but it’s too simplistic an argument to suggest the new type should be sales centres. Sounds like force feeding.

I bought my coffee maker today but I wasn’t being sold.

Written by Colin Henderson

May 17, 2014 at 16:29

Posted in Uncategorized

Branchless banks and the 8 year overdue post update

I was rooting around for data on success and profitability of Direct or Branchless banks and found this report from Bluecap. They are a Spanish based management consultant focussed on financial services. My old post on branchless banks which remains incredibly popular is way way overdue for an update.

State of Direct Banking 2013 | Bluecap

We recently analysed more than 100 direct banks, their past performance as well as future realistic product penetration rates. As a result we believe that direct banks will reach a market share of 25-30% of retail banking revenues by 2020. A look at other low budget industries indicates that this aggressive growth wouldn’t be exceptional. Low-cost airlines are a good example for that – their global market share went up from ~8% to ~26% in only a decade1.

The report references the density of bank branches per capita in a given country as a hold up to Direct Bank success. Spain in particular had an extraordinary number of branches and this is changing for the better.

It talks about the business model decision:

1. Choice of the right business model – fit for purpose but also fit for market
2. Scale, scale, scale
3. Efficient and effective delivery model

DB Business models

The Broker and Deposit led models are well known. There are less of the full service Direct Banks but they are becoming more prevalent as banks such as mbank in Poland storm the marketplace there.

The discussion about scale is interesting. They reference banks with acquisition costs in the 100’s of dollars/ euro’s. But they make point that banks are also exhibiting success with much lower costs because they focus on the disaffected demographic that traditional banks are just not serving.

As Chris Skinner has written at length, the old guard banks are trying to IP enable a real estate network. Whereas properly constituted Direct Banks are developing virtual networks based on internet, and only then determining how to integrate physical locations if at all. Internet first. That is the hard decision because it requires addressing employee fit, location fit, product fit, and even more fundamentally location purpose. Do we require location?


At some point the report points out it comes down to scale and cost per client. The fundamental question is whether the intrinsic attraction of the branchless bank will build a customer base large enough to produce more profit on a smaller footprint of capital employed than a branch based bank. For every dollar of capital employed which model produces greater profit.

It sounds like a simple question; no capital expended on branches would provide more profit. The kicker lies in the attraction of clients sufficient to generate the required profits.

The graphic in the Bluecap report above suggests it has been done by some niche players.

It goes on to speak about addressing the new digitally enabled demographic need by focussing on simplicity and product focus on that demographic’s needs. As an aside it notes that traditional banks typically have 200+ product types. They are product based institutions so of course you get, products. My recollection at a large bank was that number could be multiplied by 10 or 15.

Anyhow a great report and worth the read. It is written very clearly.

Relevance to Bankwatch:
When I read what I wrote in 2006 on branchless banks, which as I mentioned today is the single most searched post on this blog, I cringe. In 8 short years so much has evolved to make that post sound like the dark ages. 5 months after that post Steve Jobs said ‘just one more thing’ and the smart phone otherwise known as your pocket computer changed the world.

Technology today is pervasive and it no longer even feels like technology. This was the beauty of what Jobs did … technology was no longer something which you did at your desk. Technology is now with you all the time. I used to get weird looks in 1999 when I was reading my blackberry while standing in a public place. Fast forward to 2014 and watch on the street .. everyone is looking at their smart phone.

The successful direct banks are the ones that will make that connection with customers on their terms and timing.

Written by Colin Henderson

May 17, 2014 at 02:07

Posted in Uncategorized

PayExpo2014 – Europe’s multi-channel payments event

The subject of payments is a disorderly view of many disparate players, regulations, countries and organizations.

This conference which is chaired by our good friend Chris Skinner has a decent coverage of issues including the poor old consumer and the evolving needs of growing demographic cohorts.

PayExpo 2014 London

What will the payments market look like in 10 years? How does the regulation match up to this? How does the modern day consumer (Generation Y) want to pay for their goods?

If you want an idea of the complexity of the payment landscape then this post earlier today from another event Chris hosted recently is a brilliant example.

Lastly I have to admit I waited till today (15th) for arrival of Kindle version of Chris’s book, because I refused to pick up the hardcopy last September on principle. [it had better be worth it CK :-) ]

Written by Colin Henderson

May 16, 2014 at 00:34

Posted in Uncategorized

TD CanadaTrust launches mobile wallet

TD are out today with their mobile wallet which I just saw on Finextra.

Its a big deal for a bank to get this far, so congrats to TD.

Mobile Payment

The next time you’re on the go, like on your morning run or walking the dog, don’t worry about reaching for cash for your small purchases2 — all you need is your smartphone1. With TD Mobile Payment, just link an eligible TD Credit Card to the TD app and you can pay safely and securely in an instant.

Written by Colin Henderson

May 14, 2014 at 23:28

Posted in Uncategorized

Trends in use of debit and credit cards in the US | Aite Group

Ron has an interesting post here. From the title I automatically assumed his research would have uncovered concern for new payment methods that bypass interchange, but there are much simpler explanations.

Worth the read. Particularly the Target impact on use of cash.

Protecting Debit Card Interchange Revenue

A recent survey of credit union executives conducted by Aite Group and Filene Research found that roughly eight in 10 respondents said that growing debit card interchange revenue is “very important” to their firm’s revenue growth plans for 2014.

Written by Colin Henderson

May 13, 2014 at 23:25

Posted in Uncategorized

When entire states ban your company, you must be on to something positive Tesla

What possible reason could Missouri and other states have for banning a direct to consumer model, than lobbyists from old school auto companies.

Missouri Pulls a New Jersey on Tesla

Missouri has become the latest state to advance legislation that would ban Tesla’s direct-to-consumer sales model, a move the Palo Alto, Calif., electric car maker attributes to pressure from the auto dealers lobby.

The company said in a blog post that on Wednesday night “anti-Tesla” language was added to a bill, HB 1124, that then passed in the Missouri state Senate. The proposal, which made it through the House last month without that language, could soon come back to the House floor “for a final vote, essentially without debate.”

Written by Colin Henderson

May 9, 2014 at 22:11

Posted in Uncategorized

Is Apple a hardware rooted dinosaur? | Fred Wilson

This is an interesting thought study from Fred Wilson. He believes that by 2020 Apple will not be in the list of top 3 companies and here is why.

VC Fred Wilson: By 2020 Apple Won’t Be A Top-3 Tech Company, Google And Facebook Will | Techcrunch

“I think hardware is increasingly becoming a commodity,” he said. “Their stuff in the cloud is largely not good. I don’t think they think about data and the cloud.”

Now I’ll admit to being an Apple advocate, but lets break this thought down.

Hardware as a commodity:
Absolutely. Thats a given and already happened, although there are some less that minor adjuncts to that meme.

  • Google operates on proprietary hardware
  • commoditized hardware is comprised of the parts that you can pick up in Chinatown; how many of us actually operate on commoditized hardware?
  • Apple have a security and efficiency model that extends from their chips, through hardware and software

Apple Cloud is not good:
I am a long time windows and linux user. My introduction to Apple was iPhone. My first reaction to iCloud was ho hum. Everybody else gets that cloud is a remote hard drive; why can’t I look at, edit and manage my iCloud. Then I replaced an iPhone, my wife lost another one, etc. When you take new device and turn on to see your previous configuration there in a relative instant the power of iCloud sinks in.

Thats not to say iCloud couldn’t be a lot better. iCloud handling of photos sucks. The basic premise of photos is to store them for future viewing. iCloud treats photos as if the last 1,000 are all that matters.

Going back to the original main argument that hardware and cloud are Apple disadvantages. There is an argument that hardware is an Apple advantage because of things like security, battery efficiency, and application optimization.

Cloud computing is a different point and there are weaknesses there although I believe we don’t fully understand hoe cloud will evolve. So the jury is out on this one. My thought is that Apple are looking at cloud differently and thats not a bad thing.

We will see.

Written by Colin Henderson

May 5, 2014 at 23:15

Posted in Uncategorized


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