Posts Tagged ‘Tempo’
It was refreshing to read this piece, and takes us exactly where innovation in financial services ought to be going – the new (old) grand ideas.
What if Starbucks opened an online-only retail bank offering competitive deposit rates and a modest range of loans and mortgages? It could do that by partnering with a finance company such as ING, which has the appropriate banking licences.
All it would need to do is install ATM machines in its outlets, which would involve investing some money but would allow it to get more out of its existing branches.
National supermarkets in the UK, such as Sainsbury and Tesco, have opened retail banks and placed ATM machines in their branches, but there is no national grocery chain in the US with a comparable reach. Even Wal-Mart lacks outlets on most urban high streets.
I recall the brainstorming sessions in the 90′s at the bank, where the discussion about competition arose not from other banks but from:
- Starbucks levering their distribution and cards as a bank
- ebay or Amazon offerring a credit card
- internet only banks – ING was on the horizon – mbanx and Wingspan already out there
- whether to join the S1 online banking commoditised platform
- offer an All in One account that pulled together lending and deposits into one account
- how to deal with the role of aggregation- offer it, join it, or ignore it
- bill presentment – same idea – offer, join or ignore
- shift in business model from generalist to:
- product (manufacturer) – offer loans and deposts through others channels
- distribution (channel) – sell products & services of others – Open Finance (Forrester)
- segmentation (customer type) – focus on a niche market, although most interpreted as the generalist, all things to all market which is where most banks ended
Relevance to Bankwatch:
The problem today is that Banks are on strategy defined 6 – 8 years ago to bricks and clicks, focussed on customer retention and wallet growth. Customer Relationship Management (CRM) became the strategy de jour. Who would claim that has worked? Seibel disappeared inside Oracle for a reason.
Banks are all on the same strategy, focussed on mortgage as the entree, and upsell with other services later.
There is nothing out there that aims at shifting the balance of share of market in a substantial way. This is not about acquisition or mergers – we have done that, and “too big too fail” is too fixated in everyone’s radar now, or until capitalisation is fixed, in any event.
No, this is about business model shifts … shifts that would have a target of:
- double digit percentage shift in share of payments,
- extraction of share of deposits and payments from an existing industry (the Starbucks example),
- exponential elimination of costs relative to competition
- focus on what your are good at and eliminate the stuff you are not good at
Business models –
Mr Bank Chairman … what is your business model, and how is it different than the competition?
Supplementary question -
Who is your competition? Do you lost sleep over Citibank and Wells, or Tempo and Wesabe? Does your answer worry you?
PS … as I finish this post the most telling thing is something I have become acutely aware of. The blog categories I set up 5 years ago no longer apply, until I do a retrospective post such as this. Either those were really bad ideas, or ideas yet to come.
Banks are at the centre of the economy. Business and consumers conduct their day to day business using money and they do this through banks. Stating the obvious you may say? This is why I study the economy so closely and try to understand how it will look in the future, because that has a direct relation to how banks will look in that future.
We are in a crisis of debt. It is a debt crisis because consumers and businesses are over-leveraged. Their debt is too high relative to todays asset values. Asset values have decreased by 25 – 60% in the West, whereas debt has reduced only minimally.
So what do we see around us that offer substantive clues to our near term future for banks?
- US economy reducing at annual rate of 6.1% – this has to be contrasted to growth rates of 2 – 3% pre crisis, so thats an almost 10% shift being experieinced
- Lithuania today seeing a 12% reduction in its economy
- Germany seeing 5% – 6% and talk of rioting on the streets, which of course will do no good except create panic
- Citibank and Bank of America today finally wisening up to the reality that they cannot grow out of their leveraged position – they must contract out of it by selling stuff
- corporate jets becoming an embarrassment rather than a status symbol
- Allens & Overy (lawyers in the City) introducing a ‘cull’ of 10%
- 80 – 100% growth in managerial and professional unemployment (UK)
- General Motors in Canada cutting dealerships from 794 down to 400 – 400 within one year
These headlines are all point in one direction. Less is the new reality. No-one knows precisely where the new balance will level off, but it is certainly going to be at a level less thn we saw at the peak in 2007.
A smaller economic base results in less of many other things that probably still have to happen; less restaurants, real estate agents, accountants, grocery stores, plumbers, construction workers, and of course bankers and banks.
Relevance to Bankwatch:
Operating in this new environement will require new thinking and recognition of new opportunities. This will be the time (for banks) to not just accept internet but to insist on internet as a core component of the business to drive efficiencies. It will require fresh looks at old ideas that were squandered away and hidden by the excesses of the good times, eg:
- # of branches required?
- style of branches required- which services will be offerred?
- what is the the role of tellers in the new operating model?
- is it time to eliminate cheques ?
- is it time to bring commercial banking into the and up to the same degree of automation as consumer banking?
- Why is business banking still being done by cheques and deposit books?
- What is the role of Head Office? How many are required to invent bank accounts, mortgages and loans?
In a smaller and more efficient world, new competitors will be prodding away at banks’ business model. I watched many of the presentations yesterday at FinovateStartup09 and was struck by how they all in some way chipped away a part of banking from banks. Whether it is Tempo and their de-coupled debit card, or Wesabe and Micronotes pro-actively helping consumers spend wisely, or Prosper and Lending Club introducing “Securitization 2.0′ (online secondary markets with clear line of sight between debtor and creditor), the coming of Web 3.0 is imminent and in a form that banks may not expect nor be prepared for unless they act now.
Caught a few of the participants this morning and as we wait for the next few rapid fire presentations, some highlights. Note there are 350 in the audience:
- highlighted some lender functionality, paricularly in the secondary market
- showed the ability of lenders to compare their returns to other lenders
Tempo Debit Card;
- decoupled debit card
- sign up online, with 90% approval success
- offers rewards on your debit card
- aim to to be the MBNA of debit cards
- always my favourite – Gabe showed off the new web interface
- highlighted accounts, and discussions
- ability to dig deeper aggregate certain cards and compare expense categories on those cards
- the iphone app which is significnatly more powerful than the Mint app. Allows sign up to Wesabe, and editing of expenses though the app
I came across Tempo on Netbanker – they will be presenting at the upcoming Finovate. Tempo are focussed on a space I have high hopes for – general disaggregation of banking services. In the case of Tempo they are in the de-coupled debit card market, something Capital One dabbled in 18 months ago.
Not much detail, but their value proposition is one of customer loyalty points attached to the card. While that is the obvious play, I remain convinced the power in this model will extend further. I say this because loyalty points have a limited appeal to a certain group and feel additional value can be attached to the card to provided deeper and broader appeal.
For example, what if a decoupled card was attached to Wesabe? Every transaction would be captured and analysed in the Wesabe eco-system. No more downloading from online banking.
Anyhow, I digress … Tempo is one to watch. The loyalty approach is a practical beginning to the de-coupled card.
Tempo is an entrepreneurial technology company focused on payments innovation. The company specializes in decoupled debit enablement.
Tempo is privately held and is headquartered in San Mateo, CA.